The Management Board of Grupa Niewiadów-PGM S.A., with its registered office in Warsaw (“the Issuer”, “the Company”), announces that on October 21, 2025, the Issuer signed a Term Sheet with Forum 119 Closed-End Investment Fund, with its registered office in Kraków (“the Investor”), Proguns Group S.A., with its registered office in Warsaw (“Proguns”), and Zakłady Sprzętu Precyzyjnego Niewiadów sp. z o.o., with its registered office at Osiedle Niewiadów 49 (“ZSP”).
The Term Sheet sets out the key terms of the Investor’s planned investment, valued at PLN 60 million, to establish a factory in Poland for the production of 40 mm medium-caliber ammunition (“the Project”).
The project will be carried out in cooperation with ST Engineering Advanced Material Engineering Pte. Ltd., based in Singapore (“ST Engineering”). The Issuer announced the signing of a Memorandum of Understanding (“MoU”) between ST Engineering and ZSP in its current report ESPI No. 56/2025 dated September 3, 2025.
The Term Sheet constitutes a preparatory stage for the technology transfer and the launch of 40 mm ammunition production at the Issuer’s subsidiary, Fabryka Amunicji Pocisk S.A., based in Warsaw (“FAP”). Pursuant to the Term Sheet, the target shareholders of FAP during the implementation of the Project will be: ZSP, which will hold shares representing 51% of FAP’s share capital, and Proguns, which will hold shares representing 49% of FAP’s share capital.
In accordance with the provisions of the Term Sheet:
1. The Issuer will exercise the rights attached to Proguns Series A, B, and C subscription warrants, thereby acquiring—in exchange for PLN 7.4 million—shares representing, together with the shares already held, 50.20% of Proguns’ share capital, as a result of which Proguns will become a subsidiary of the Issuer.
2. Proguns will then issue new shares, which will be subscribed to as follows:
(a) The Issuer will subscribe for 7,916,667 new shares in exchange for a contribution in kind, in the form of FAP shares, representing 25 percent of FAP’s share capital;
(b) The investor will subscribe for 4,519,167 new bearer shares (“New Issue”) in exchange for a cash contribution of PLN 20 million;
3. The Investor’s subscription to the New Issue will be subject to the fulfillment of the following conditions precedent:
(a) registration of changes in Proguns’ shareholding structure confirming that the Issuer holds shares representing at least 50.20% of Proguns’ share capital;
(b) the acquisition by ZSP of at least 67 percent of the shares in FAP’s share capital;
(c) ZSP must submit a signed agreement with ST Engineering that provides for the transfer of the rights and obligations under that agreement to an entity in which ZSP holds at least a 51 percent stake.
4. Proguns will issue subscription warrants to the Investor, entitling the Investor to acquire up to 10% of the shares in Proguns’ share capital.
5. Proguns and ZSP will sign a cooperation agreement setting forth the terms for implementing the Project and establishing Proguns’ obligation to transfer PLN 4 million to ZSP in support of the cooperation, specifically regarding the production of 40 mm ammunition under a license granted by ST Engineering.
6. The Issuer and ZSP will enter into a share purchase agreement under which ZSP will acquire 670,000 bearer shares in FAP’s share capital, representing no less than 67 percent of FAP’s share capital.
7. Proguns will enter into an agreement with FAP to acquire shares representing 24% of FAP’s increased capital in exchange for a cash contribution of PLN 19 million.
8. Following the acquisition and subscription of FAP shares, in accordance with the provisions of sections 2a and 7, Proguns will hold FAP shares representing a total of 49 percent of FAP’s share capital.
9. The Issuer and ZSP will take steps to obtain ST Engineering’s consent to transfer all rights and obligations arising from the MoU and the agreement previously entered into with ST Engineering for the production of 40 mm ammunition to FAP.
10. The Issuer, ZSP, and Proguns will take steps to ensure that FAP becomes the owner of the property located in the Niewiadów Housing Estate, on which a building will be constructed that meets the requirements necessary to commence production of 40 mm ammunition, as agreed with ST Engineering (“the Property”).
11. Following the registration of the changes in FAP resulting from the subscription and purchase of shares by ZSP and Proguns, the FAP Management Board will convene a General Meeting to adopt a resolution regarding the issuance of participation bonds (“Bonds”) for a total issue price of PLN 40 million, which will be subscribed by the Investor in accordance with the agreed terms of the issuance.
The implementation of the investments described above is contingent upon the successful completion of due diligence (legal, financial, tax, and commercial) by Proguns and FAP, the signing of detailed transaction documentation, including agreements and documents setting forth the terms of the investment, including the purchase and subscription of shares and bonds, the obtaining of all necessary corporate approvals, and the absence of any material adverse changes in the operations of Proguns and FAP.
The terms and conditions under which the Investor will subscribe for the Bonds will be set forth in the transaction documentation. The Bonds subscribed for by the Investor will be secured, among other things, by a pledge on the FAP shares owned by Proguns and a mortgage on the Real Estate, as well as a call option granted by Proguns to the Investor.
The signing of the Term Sheet marks the first step toward strengthening cooperation between the parties and achieving their shared goal of building a modern factory in Poland to produce 40 mm medium-caliber ammunition.
The completion of this investment will enable the Issuer’s Capital Group to establish an integrated medium-caliber ammunition production segment within the holding company’s structure, encompassing the design, licensed production, and sale of ammunition and components.
According to data from the European Defence Agency (EDA) and a report by the NATO Industrial Advisory Group (2024), the European market for 40 mm ammunition is worth over €2 billion annually, with growing demand from the armed forces of NATO member states and industrial partners in Central and Eastern Europe.
The signing of the Term Sheet marks the next step in the Issuer’s strategy, which aims to develop domestic capabilities in defense technology and establish a private defense industry holding company.
The Issuer considers the above information to be material, given its significance for the development of the Issuer’s Capital Group and its potential impact on its value. In the opinion of the Issuer’s Management Board, the execution and implementation of the Term Sheet will contribute to the development of the Issuer’s Capital Group and lead to a significant improvement in its financial results.