PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION
CALDERWOOD & HARKNESS LLP One Liberty Plaza, 42nd Floor New York, NY 10006 Tel: (212) 558-4000
Fax: (212) 558-3588
www.calderwoodharkness.com
Matter No. 1032-00003
February 10, 2026
VIA SECURE EMAIL AND COURIER
Wilhelm Ostermann Chefjustitiar (General Counsel) Halcyon Semiconductor Aktiengesellschaft Maximilianstraße 72 80539 Munich, Germany
Re: Halcyon Semiconductor AG — Prospective US Initial Public Offering via Level III ADR Program — Status Report and Next Steps
Dear Wilhelm,
1. Introduction and Purpose
We write in our capacity as US securities counsel to Halcyon Semiconductor Aktiengesellschaft ("Halcyon" or the "Company") in connection with the Company's proposed initial public offering in the United States through the establishment of a Level III American Depositary Receipt program (the "Offering"), as contemplated by the engagement letter executed between Calderwood & Harkness LLP ("C&H" or the "Firm") and the Company on January 12, 2026.
The purpose of this letter is to provide you and the broader Halcyon team with a periodic status report summarizing the progress we have made since the organizational meeting held on January 22, 2026 (the "Organizational Meeting") and the formal commencement of due diligence on January 27, 2026. This letter also identifies key open items requiring action from the Company and its advisors to maintain the projected timeline for the Offering.
We are pleased to confirm that the Offering remains on track, targeting gross proceeds of approximately $900,000,000 through the issuance of American Depositary Shares ("ADSs"), each representing two ordinary shares (Stammaktien) of the Company (the "Ordinary Shares"), at a ratio of one ADS to two Ordinary Shares (the "1:2 Ratio"). The ADSs are expected to be listed on the Nasdaq Global Select Market under the ticker symbol "HCYN." Registration of the Offering will be effected through the filing of a registration statement on Form F-1 under the Securities Act of 1933, as amended (the "Securities Act"), together with a registration statement on Form F-6 for the establishment of the American Depositary Receipt facility (the "ADR Facility").
Set forth below is a detailed summary of each active workstream, followed by a discussion of confirmed offering terms, key open items, and the upcoming milestone schedule.
2. Summary of Organizational Meeting Outcomes
The all-hands Organizational Meeting was held on January 22, 2026, at C&H's offices at One Liberty Plaza, New York, with certain participants attending via videoconference. The following individuals participated:
Halcyon Semiconductor AG:
• Dr. Friedrich Wendt, Vorstandsvorsitzender (Chief Executive Officer)
• Katarina Dalmqvist, Finanzvorstand (Chief Financial Officer)
• Wilhelm Ostermann, Chefjustitiar (General Counsel)
Calderwood & Harkness LLP (US counsel to Halcyon):
• Vivienne St. Claire, Partner, Capital Markets
• Robert Adeyemi, Partner, Capital Markets
• Claire Dempsey, Associate
• Audrey Zhou, Associate
• Leonard Cross, Partner, Tax
Westbridge Securities LLC (lead left bookrunner):
• Jonathan Hartwell, Managing Director, Equity Capital Markets
Pinnacle Morgan & Co., Inc. (joint bookrunner):
• Sarah Okonkwo, Managing Director, Technology ECM
Andover Barcliffe Group Inc. (joint bookrunner):
• David Reinhardt, Director, International ECM
Northpointe Capital LLC (co-manager):
• Lisa Cheng, Vice President, Equity Syndicate
Varen & Kessler LLP (US counsel to underwriters):
• Martin Ashford, Partner
• Priya Ranganathan, Associate
Bähr Stein Rechtsanwälte (German counsel to Halcyon):
• Dr. Christoph Maurelban, Partner
Blackmere & Whitfield LLP (auditors — New York):
• Graham Templeton, Partner, Capital Markets Audit Group
Meridian Trust Company, N.A. (depositary bank):
• Patricia Novak, Vice President, ADR Services
The following key decisions and workstream assignments were confirmed at the Organizational Meeting:
(a) Master Timeline. The master timeline and responsibility chart prepared by C&H was adopted by all parties, subject to ongoing adjustments as circumstances require. A copy of the updated Master Timeline is enclosed with this letter. Key milestone dates are summarized in Section 13 below.
(b) Due Diligence Request List. A comprehensive due diligence request list was circulated to the Company and to Bähr Stein Rechtsanwälte for coordination of document production. The request list covers corporate organizational documents, material contracts, intellectual property, litigation, regulatory compliance, environmental matters, employee benefit plans, related-party transactions, tax matters, and sanctions and export controls, among other categories.
(c) Drafting Responsibilities. Drafting responsibilities were allocated among counsel as follows: C&H will prepare the initial draft of the Form F-1 registration statement (including the prospectus), the Deposit Agreement, the Underwriting Agreement, the lock-up letters, and the selling shareholder documentation. Varen & Kessler will prepare the initial draft of the Agreement Among Underwriters and will review and comment on all transaction documents from the underwriters' perspective. Bähr Stein will prepare German law opinion letters, assist with German corporate governance disclosures, and advise on German regulatory filings. Prumvane Thornton LLP, as German counsel to the underwriters, will prepare the German law negative assurance letter and coordinate with Varen & Kessler on German-side due diligence.
(d) Working Group List. The finalized working group list was distributed to all participants. An updated copy is enclosed with this letter, reflecting the addition of Prumvane Thornton LLP and certain personnel changes at the depositary bank.
3. Due Diligence Progress Report
Since the commencement of due diligence on January 27, 2026, C&H has initiated a comprehensive review across all material workstreams. Set forth below is a summary of progress and outstanding items in each area.
3.1 Corporate and Organizational Due Diligence
We have commenced our review of the Company's corporate charter (Satzung) and the relevant entry in the Commercial Register of the Local Court of Munich (Amtsgericht München), registered under HRB 217458. Our review of the Satzung is focused on authorized share capital provisions, management and supervisory board structures, dividend policies, and any special rights or restrictions attaching to the Ordinary Shares. We are coordinating with Bähr Stein on the interpretation of relevant provisions under German law.
We have confirmed that the Company's authorized and issued share capital currently consists of 215,000,000 ordinary registered shares (auf den Namen lautende Stammaktien) without par value (Stückaktien). No other classes of shares are outstanding.
We have also commenced our review of the organizational documents of the Company's material subsidiaries, which include:
(a) Halcyon Semiconductor USA Inc. — a corporation organized under the laws of the State of Delaware, with its registered office at 1209 Orange Street, Wilmington, Delaware 19801, and its principal place of business at 2500 Augustine Drive, Suite 100, Santa Clara, California 95054 (EIN: 84-3927561). This subsidiary houses the Company's US sales, marketing, and applications engineering operations and serves as the principal vehicle for the Company's North American business.
(b) Halcyon Power Solutions GmbH — a German limited liability company (Gesellschaft mit beschränkter Haftung) organized under the laws of the Federal Republic of Germany and located in Dresden. This entity operates Fab 2, the Company's primary silicon carbide (SiC) fabrication facility, and is the entity through which Fab 3 (currently under construction) is being developed. Given the significant capital expenditure associated with Fab 3, the organizational and contractual documents of this entity are of particular importance to the Offering.
(c) Halcyon Asia Pacific Pte. Ltd. — a private company limited by shares organized under the laws of the Republic of Singapore. This subsidiary manages the Company's sales, customer support, and distribution activities in the Asia-Pacific region (excluding the People's Republic of China).
(d) Halcyon Shanghai Semiconductor Co., Ltd. — a wholly foreign-owned enterprise (WFOE) organized under the laws of the People's Republic of China and located in Shanghai. This entity provides design support, applications engineering, and localized technical services for customers in mainland China. Given the heightened regulatory sensitivity surrounding semiconductor operations in the PRC, we are conducting an enhanced review of this entity's organizational documents, business licenses, and regulatory filings.
(e) Halcyon Automotive Components s.r.o. — a limited liability company organized under the laws of the Czech Republic and located in Brno. This subsidiary operates the Company's back-end assembly and testing facility for automotive-grade power semiconductors.
In connection with the corporate organizational review, we request that the Company provide us with an updated shareholder register (Aktienregister) confirming the current holdings of all major shareholders. Based on the information provided at the Organizational Meeting, we understand the current major shareholder structure to be as follows:
We ask that you confirm these figures and provide any updates reflecting changes in holdings since the register was last reconciled.
3.2 Material Contracts Review
We have issued document requests for all material contracts of the Company and its subsidiaries, including supply agreements, customer contracts, joint development agreements, technology licensing arrangements, and credit facilities. We are applying a materiality threshold generally consistent with SEC reporting standards—that is, contracts not made in the ordinary course of business or upon which the Company's business is substantially dependent, as well as any contract involving annual revenues or expenditures in excess of €50 million.
We wish to draw particular attention to the revolving credit facility (the "RCF"), as the Company has indicated its intention to apply approximately $100,000,000 of the net primary proceeds of the Offering toward partial repayment of an outstanding tranche under the RCF. It is essential that we review the full credit agreement to assess the following:
(a) whether the Company's US listing, the issuance of new Ordinary Shares, or the establishment of the ADR Facility constitutes a "change of control" or other triggering event under the credit agreement;
(b) whether the consent of the administrative agent or lender group is required in connection with any aspect of the Offering;
(c) whether any prepayment penalties, breakage costs, or minimum commitment maintenance obligations apply to the contemplated partial repayment; and
(d) whether any negative pledge, limitation on indebtedness, or other restrictive covenants could be implicated by the transaction structure.
We ask that the Company provide us with the identity of the administrative agent under the RCF and furnish a complete copy of the credit agreement (including all amendments, schedules, and ancillary documents) at the earliest practicable date.
In addition, we have commenced a review of assignment restriction and notification clauses in key supply agreements. Certain long-term supply arrangements—particularly those involving silicon carbide substrate suppliers—may contain provisions requiring notice to, or consent from, the counterparty upon a change in the Company's public listing status, a new equity issuance, or a material change in ownership. We request that the Company provide us with a complete list of any contracts that contain consent, notification, or approval requirements that could be triggered by the Offering or the US listing.
3.3 intellectual Property
We have commenced an initial review of the Company's intellectual property portfolio, with a focus on the Company's core silicon carbide (SiC) and gallium nitride (GaN) power semiconductor technology patents. The Company's patent portfolio is a critical asset and will be described in detail in the prospectus. We are working to verify the status of key patents, including filing dates, expiration dates, jurisdictions of coverage, and any pending patent applications.
In addition, we are reviewing the Company's trade secret protection policies, trademark registrations, and domain name portfolio. We have also identified several intellectual property licensing agreements to which the Company is a party, and we are reviewing these for any restrictions on the Company's use of licensed technology, royalty obligations that could be affected by the Offering or by increased revenue levels, and any provisions that could limit the Company's ability to sublicense technology to its subsidiaries.
We request that the Company confirm whether there is any pending or threatened intellectual property litigation, patent opposition or invalidity proceedings, or other challenges to the Company's patents, trademarks, or trade secrets. This information will be critical both for the litigation disclosure in the prospectus and for our assessment of risk factors.
3.4 Litigation and Regulatory Proceedings
A comprehensive litigation questionnaire has been circulated to the Company's legal department, covering all pending and threatened litigation, arbitration, administrative proceedings, and regulatory investigations involving the Company and each of its subsidiaries. We are awaiting responses to this questionnaire and ask that the Company complete and return it at the earliest opportunity.
Upon receipt of the Company's responses, we will analyze the disclosure obligations applicable to each identified matter under Item 8 of Form 20-F (which is incorporated by reference into Form F-1) and the corresponding requirements of Regulation S-K. We will also assess whether any proceedings are material to the Company's financial condition or results of operations and therefore require specific risk factor disclosure.
3.5 Environmental and Manufacturing Compliance
We have issued document requests for all environmental permits, hazardous materials handling protocols, waste disposal documentation, and manufacturing facility compliance records for each of the Company's principal manufacturing and assembly locations, including:
(a) the Munich headquarters and design center;
(b) the Dresden campus, including Fab 2 (operational) and Fab 3 (under construction); and
(c) the Brno assembly and testing facility.
The semiconductor manufacturing process involves the use of various hazardous chemicals and materials, and we are particularly focused on ensuring that the Company's environmental compliance posture is adequately disclosed in the registration statement. We are also evaluating the Company's environmental, social, and governance ("ESG") practices and disclosure considerations in light of evolving SEC requirements, including the SEC's climate-related disclosure rules. While certain aspects of these rules remain subject to ongoing litigation, we believe it is prudent to address ESG matters proactively in the prospectus.
3.6 Employee Benefit Plans and Compensation
We are reviewing the Company's employee benefit plan documentation, including German statutory benefit obligations, supplemental pension arrangements, and incentive compensation plans applicable across all jurisdictions in which the Company and its subsidiaries operate.
Of particular significance is the Halcyon Employee Stock Ownership Trust (the "ESOT"), which currently holds approximately 3.1% of the Company's outstanding Ordinary Shares (6,665,000 shares). We are evaluating the ESOT's trust deed and governing instruments to assess their implications for prospectus disclosure, including the potential impact on the calculation of diluted shares outstanding, any selling restrictions that may apply to shares held in the ESOT, and the treatment of the ESOT under US tax rules. We will also need to determine whether any shares held by the ESOT will be subject to the lock-up arrangements described in Section 7 below.
In addition, we are compiling executive compensation information for the members of the Vorstand (Management Board), including Dr. Friedrich Wendt (CEO), Ms. Katarina Dalmqvist (CFO), Dr. Helder (whose first name and title we ask that you confirm), and Ms. Baumann (whose first name and title we similarly ask that you confirm). This information is required for the preparation of the compensation tables and related narrative disclosure in the registration statement, consistent with the requirements applicable to foreign private issuers under Form 20-F.
3.7 Related-Party Transactions
We are conducting a detailed review of all transactions between the Company and its related parties. Our primary focus in this area is on the relationship between the Company and Rheintal Industrieholding GmbH ("Rheintal"), the Wendt family holding company that is the Company's largest shareholder, holding approximately 22.3% of the outstanding Ordinary Shares. We understand that Rheintal is controlled by Margarethe Wendt, who is the sister of the Company's Chief Executive Officer, Dr. Friedrich Wendt.
We are reviewing all existing and historical transactions between the Company and Rheintal, including any supply agreements, services agreements, licensing arrangements, shared services arrangements, or other commercial relationships. We are also examining whether any members of the Supervisory Board (Aufsichtsrat) have affiliations with Rheintal or the Wendt family that would create interlocking directorships or other conflicts of interest.
These matters will be disclosed in the registration statement in accordance with the requirements of Item 7.B of Form 20-F, which requires disclosure of the nature and extent of any transactions with related parties that are significant to the Company. We will work with you and Bähr Stein to ensure that the disclosure is both accurate and compliant with applicable SEC requirements.
3.8 Sanctions, Anti-Corruption, and Export Controls
We have commenced a comprehensive compliance review covering US economic sanctions administered by the Office of Foreign Assets Control ("OFAC"), European Union sanctions regulations, the US Foreign Corrupt Practices Act (the "FCPA"), and the UK Bribery Act 2010. This review is particularly important given the Company's global operations and the involvement of a PRC subsidiary.
In addition, we are conducting an analysis of the Company's compliance with US export control regulations, including the Export Administration Regulations ("EAR") administered by the Bureau of Industry and Security. Given the nature of the Company's semiconductor products and the operations of Halcyon Shanghai Semiconductor Co., Ltd. in the People's Republic of China, this analysis will focus on:
(a) the export control classification of the Company's semiconductor products and technology under the EAR, including the applicable Export Control Classification Numbers ("ECCNs");
(b) the applicability of the Entity List, Military End-User List, and other restricted party lists to any of the Company's customers, suppliers, or business partners in the PRC;
(c) the scope of any deemed export restrictions that may apply to the transfer of technology to foreign national employees at the Company's PRC subsidiary; and
(d) the potential applicability of the International Traffic in Arms Regulations ("ITAR") to any of the Company's products or technology, although our preliminary assessment is that the Company's commercial power semiconductor products are unlikely to be subject to ITAR jurisdiction.
We request that the Company provide us with its existing compliance policies and procedures in each of these areas, as well as any documentation relating to prior compliance incidents, voluntary self-disclosures, government inquiries, or enforcement actions.
3.9 Coordination with Bähr Stein and Underwriters' Counsel
C&H has established a structured due diligence protocol with Varen & Kessler LLP, underwriters' US counsel, to facilitate efficient coordination and avoid duplication of effort. Robert Adeyemi and Martin Ashford have agreed to schedule joint due diligence sessions on a bi-weekly basis, with the first substantive joint session scheduled for the week of February 17, 2026.
We are also coordinating closely with Bähr Stein Rechtsanwälte on all German law matters, including the verification of the Company's corporate governance structure, the analysis of requirements under the Aktiengesetz for the issuance of new shares, and the coordination of any regulatory filings required by the Frankfurt Stock Exchange (where the Company's Ordinary Shares are listed under the symbol "HCY" on the Prime Standard segment). Dr. Christoph Maurelban and his colleague Johanna Weiß at Bähr Stein have been highly responsive and we anticipate a productive working relationship throughout the transaction.
We also note that Prumvane Thornton LLP has been formally engaged as German counsel to the underwriters. Dr. Stefan Braun of Prumvane Thornton is coordinating with Varen & Kessler on German-side due diligence and will be responsible for preparing the German law negative assurance letter.
4. Structuring and Legal Analyses — Status
4.1 Foreign Private Issuer (FPI) Status Analysis
We are conducting a detailed analysis of the Company's status as a "foreign private issuer" as defined in Rule 3b-4 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Qualification as a foreign private issuer is a threshold requirement for the Company's use of Form F-1 for the registration of the Offering and Form 20-F for ongoing periodic reporting, and it provides the Company with certain accommodations in the areas of corporate governance, executive compensation disclosure, and proxy solicitation.
Our preliminary assessment indicates that the Company qualifies as a foreign private issuer. Specifically, we have determined on a preliminary basis that more than 50% of the Company's outstanding voting securities are held by non-US residents, and that none of the alternative disqualifying conditions set forth in Rule 3b-4(b) are present—that is, a majority of the Company's executive officers and directors are not US citizens or residents, more than 50% of the Company's assets are located outside the United States, and the Company's business is administered principally outside the United States.
We are in the process of finalizing our analysis and will circulate a complete memorandum on this topic shortly. The memorandum will include a detailed assessment of each prong of the Rule 3b-4 test and will address the ongoing monitoring obligations that will apply to the Company following the Offering to ensure continued FPI qualification.
4.2 PFIC Analysis
Leonard Cross, the C&H tax partner assigned to this matter, is conducting a comprehensive analysis of the Company's status under the passive foreign investment company ("PFIC") rules set forth in Sections 1291 through 1298 of the Internal Revenue Code of 1986, as amended (the "Code"). PFIC status is determined on an annual basis and, if the Company were classified as a PFIC for any year during which a US investor holds ADSs, adverse tax consequences would apply to such investor, including potential penalty interest charges and the loss of preferential capital gains and dividend tax rates.
Leonard's preliminary analysis, based on the financial information provided to date, indicates that the Company satisfies the active business exception to the PFIC income and asset tests. Specifically:
(a) Income Test: Less than 25% of the Company's gross income for each of FY2023, FY2024, and FY2025 consists of passive income (as defined in Section 1297(b) of the Code), which is well below the 75% threshold that would trigger PFIC classification under the income test.
(b) Asset Test: Less than 50% of the average value of the Company's assets during each of FY2023, FY2024, and FY2025 consists of assets that produce, or are held for the production of, passive income, which is below the 50% threshold that would trigger PFIC classification under the asset test.
Based on this preliminary analysis, we expect to conclude that the Company is not, and has not been, a PFIC for any of the three fiscal years under review. However, to finalize this analysis, Leonard requires detailed income and asset breakdowns for FY2023 through FY2025 from Ms. Dalmqvist and from Blackmere & Whitfield. We ask that these materials be provided at the earliest opportunity.
4.3 ADR Program Structuring
We have prepared a memorandum comparing the three types of ADR programs available to foreign issuers—Level I (unsponsored or sponsored OTC trading), Level II (exchange listing without capital raising), and Level III (exchange listing with capital raising)—and confirming that a Level III ADR program is required for the Company's proposed US IPO.
The following key terms of the ADR Facility have been confirmed in consultation with Meridian Trust Company, N.A., the proposed depositary bank:
(a) ADS Ratio: 1 ADS representing 2 Ordinary Shares, as confirmed with Patricia Novak of Meridian Trust Company, N.A.
(b) Depositary Fee: $0.05 per ADS per annum, payable by ADS holders, which is consistent with market practice for depositary receipt programs of comparable size.
(c) Transfer Agent and Registrar: Crestfield Transfer Services Inc. (Angela Moretti) has been confirmed as the transfer agent and registrar for the ADSs.
(d) Deposit Agreement: The Deposit Agreement among the Company, Meridian Trust Company, N.A. as depositary, and the holders of ADSs will be governed by the laws of the State of Delaware, without regard to conflict-of-laws principles. C&H will prepare the initial draft of the Deposit Agreement and circulate it to all parties in conjunction with the first draft of the Form F-1.
4.4 Registration Statement Forms
As noted above, the Offering will require dual registration with the SEC:
(a) Form F-1 — for the registration of the ADSs and the underlying Ordinary Shares being offered in the Offering. Form F-1 is the general registration form available to foreign private issuers that are not yet eligible to use the short-form registration statements (Form F-3) by virtue of their reporting history.
(b) Form F-6 — for the registration of the depositary shares evidenced by American Depositary Receipts issued pursuant to the Deposit Agreement. Form F-6 is a relatively streamlined filing, but its effectiveness must be coordinated with the effectiveness of the Form F-1.
We are mapping the filing sequence and coordination between the two registration statements to ensure simultaneous effectiveness. Claire Dempsey will serve as the lead drafter on the Form F-1.
4.5 German Corporate Law — New Share Issuance
The Offering contemplates the issuance of 30,000,000 new Ordinary Shares by the Company, which will be deposited with the depositary bank and represented by 15,000,000 ADSs. We are coordinating with Bähr Stein on the requirements under the German Stock Corporation Act (Aktiengesetz, or "AktG") for this issuance, including the following matters:
(a) Authorized Capital (*Genehmigtes Kapital*). We are analyzing the authorized capital provisions of the Company's Satzung to determine whether the Vorstand currently has sufficient authority to issue 30,000,000 new Ordinary Shares without a general meeting resolution. We ask the Company and Bähr Stein to confirm the current status of the Company's authorized capital, including the maximum number of shares that may be issued thereunder, any prior utilizations, and the expiration date of the authorization.
(b) Supervisory Board Approval. Under the Aktiengesetz, the issuance of new shares from authorized capital typically requires the consent of the Supervisory Board (Aufsichtsrat). We ask the Company to confirm whether such consent has been obtained or whether a Supervisory Board meeting must be convened for this purpose.
(c) Pre-emptive Rights Exclusion (*Bezugsrechtsausschluss*). Under Section 186 of the Aktiengesetz, existing shareholders generally have pre-emptive rights (Bezugsrechte) with respect to newly issued shares. The issuance of new shares in connection with the Offering will require the exclusion of these pre-emptive rights. We ask that Bähr Stein confirm whether the existing authorized capital authorization includes a provision permitting the exclusion of pre-emptive rights and, if so, whether any limitations on such exclusion could affect the proposed issuance.
(d) General Meeting Approval. In the event that the existing authorized capital is insufficient or has expired, it may be necessary to convene an extraordinary general meeting (außerordentliche Hauptversammlung) to authorize additional capital. Given the timeline for the Offering, we ask that this question be resolved as a matter of priority.
4.6 Sarbanes-Oxley and Nasdaq Compliance
We are preparing a comprehensive compliance roadmap addressing the Company's obligations under the Sarbanes-Oxley Act of 2002 ("SOX") and the listing standards of the Nasdaq Global Select Market.
Sarbanes-Oxley Act. As a foreign private issuer, the Company will benefit from an extended phase-in period for certain SOX requirements. In particular, the Section 404(b) requirement for an attestation report by the Company's independent auditor on the effectiveness of the Company's internal control over financial reporting will first apply for the fiscal year ending December 31, 2027 (i.e., the second annual report filed after the Offering). However, the Company will be required to include management's assessment of internal controls under Section 404(a) in its first annual report on Form 20-F. We will work with the Company and Blackmere & Whitfield to develop an appropriate timeline for the implementation of SOX-compliant internal controls.
Nasdaq Global Select Market. Our preliminary analysis indicates that the Company meets the quantitative listing requirements for the Nasdaq Global Select Market based on the market capitalization standard. As of January 10, 2026, the Company's market capitalization on the Frankfurt Stock Exchange was approximately €8.6 billion, and the Company's revenue and other financial metrics comfortably satisfy the applicable thresholds. We are preparing a detailed listing standards analysis for submission to Nasdaq.
With respect to corporate governance, the Company will be entitled to rely on the home-country practice exemption available to foreign private issuers under Nasdaq Rule 5615(a)(3) for certain corporate governance requirements that differ from German corporate governance norms. We are preparing the required corporate governance exemption notice, which must be filed with Nasdaq in connection with the listing application. We will identify specific areas where the Company intends to follow German home-country practices in lieu of Nasdaq requirements and will ensure that these are disclosed in the prospectus.
Notwithstanding the home-country exemptions, the Company will be required to establish an audit committee that satisfies the requirements of Rule 10A-3 under the Exchange Act. We will discuss the composition and independence requirements for this committee in greater detail below in connection with our action items for the Company.
In addition, we are preparing drafts of the following corporate governance documents for the Company's adoption prior to effectiveness of the registration statement:
(a) Code of Business Conduct and Ethics (compliant with Nasdaq Rule 5610);
(b) Audit Committee Charter (compliant with Rule 10A-3 and Nasdaq Rule 5605(c)); and
(c) Whistleblower Policy (compliant with SOX Section 301 and implementing regulations).
4.7 US/German Tax Treaty Analysis
Leonard Cross is also preparing a comprehensive memorandum analyzing the German withholding tax implications for holders of ADSs who are US tax residents. The key aspects of this analysis are as follows:
(a) Statutory Withholding Rate. Under German domestic law, dividends paid to non-resident shareholders are subject to German withholding tax (Kapitalertragsteuer) at a statutory rate of 25%, plus a solidarity surcharge (Solidaritätszuschlag) of 5.5% on the withholding tax amount, resulting in an effective combined statutory rate of 26.375%.
(b) Treaty-Reduced Rate. Under Article 10 of the Convention between the United States of America and the Federal Republic of Germany for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital and to Certain Other Taxes (the "US-Germany Income Tax Treaty"), the withholding tax rate on dividends paid by a German corporation to a US resident entitled to treaty benefits is generally reduced to 15% (or 5% in the case of a corporate shareholder owning at least 10% of the voting stock of the paying corporation).
(c) Qualified Intermediary Analysis. Leonard is analyzing the status and procedures of Meridian Trust Company, N.A. as a Qualified Intermediary ("QI") under Section 1441 of the Code and the applicable Treasury Regulations, in order to ensure that treaty benefits can be efficiently claimed by eligible ADS holders.
(d) Treaty Benefit Certification. We are analyzing the procedures by which ADS holders will certify their eligibility for treaty benefits, including through the use of IRS Forms W-8BEN (for individual beneficial owners) and W-8BEN-E (for entity beneficial owners), and the corresponding German tax reclaim procedures.
The tax disclosure in the prospectus will include a detailed summary of these matters, and we will coordinate closely with Leonard on the drafting of this section.
5. Offering Structure Summary — Confirmed Terms
Based on the discussions at the Organizational Meeting and subsequent communications with the underwriters, the following key terms of the Offering have been confirmed:
Gross Spread. The underwriting discount (gross spread) has been set at 3.50% of the aggregate offering price, which on the base deal of approximately $900,000,000 equals $31,500,000. The gross spread will be allocated among the underwriters as follows:
Net Proceeds. Based on the foregoing assumptions and deducting the gross spread, the estimated net proceeds of the Offering are as follows:
• Net proceeds to the Company (primary offering, base deal): approximately $607,950,000
• Net proceeds to selling shareholders (secondary offering, base deal): approximately $260,550,000
Post-IPO Capitalization. Following the issuance of 30,000,000 new Ordinary Shares in the primary offering, the Company's total outstanding Ordinary Shares will increase from 215,000,000 to 245,000,000. The post-IPO ownership of the selling shareholders will be as follows:
• Rheintal Industrieholding GmbH: 39,445,000 Ordinary Shares, representing approximately 16.1% of the outstanding shares (reduced from 22.3%)
• Kestrel Capital Partners AG: 16,555,000 Ordinary Shares, representing approximately 6.8% of the outstanding shares (reduced from 9.7%)
6. Use of Proceeds
The Company has indicated the following planned allocation of the estimated net primary proceeds of approximately $607,950,000:
We note that the use-of-proceeds disclosure in the registration statement will be refined as drafting of the Form F-1 progresses and as the Company's capital allocation plans are further crystallized. We will work with Ms. Dalmqvist and the Company's financial advisors to ensure that the disclosure is sufficiently specific to satisfy SEC requirements while preserving appropriate flexibility for the Company's management.
7. Lock-Up Arrangements
Consistent with market practice for IPOs of this size, the Offering will be subject to lock-up arrangements with a 180-day restriction period commencing on the pricing date. Based on the current target pricing date of July 1, 2026, the lock-up period would expire on December 28, 2026.
The lock-up restrictions will apply to the following parties:
(a) The Company, with respect to any new issuances of Ordinary Shares, ADSs, or securities convertible into or exercisable for Ordinary Shares or ADSs;
(b) The selling shareholders, Rheintal Industrieholding GmbH and Kestrel Capital Partners AG, with respect to their remaining post-Offering shareholdings; and
(c) All officers and directors of the Company, including all members of the Vorstand and the Aufsichtsrat, with respect to any Ordinary Shares or ADSs they hold or may acquire during the lock-up period.
The lock-up consent—that is, the authority to waive or modify the lock-up restrictions—will be held by Westbridge Securities LLC in its capacity as lead left bookrunner. C&H is currently drafting the lock-up letter forms for officers and directors and for selling shareholders. We will circulate these forms for review in the coming weeks.
8. Selling Shareholder Coordination
We have prepared selling shareholder questionnaires to be circulated to the two selling shareholders participating in the secondary offering:
(a) Rheintal Industrieholding GmbH — to the attention of Margarethe Wendt, Managing Director (Geschäftsführerin); and
(b) Kestrel Capital Partners AG — to the attention of Henrik Sørensen, Managing Partner.
The questionnaires will collect the information required for the selling shareholder disclosure in the prospectus, including the number of shares beneficially owned before and after the Offering, the nature of any material relationships with the Company, and confirmation of certain representations and warranties required under the Underwriting Agreement.
In addition, we are preparing custody agreement and irrevocable power of attorney forms for each selling shareholder. These documents will authorize the depositary bank to hold the selling shareholders' Ordinary Shares and to execute the delivery of ADSs to the underwriters at closing on behalf of the selling shareholders.
We have also sent a coordination letter to Bähr Stein regarding the German law requirements for the mechanics of the secondary share transfer, including any requirements for entry of the depositary in the share register and the waiver of pre-emptive rights with respect to the secondary shares.
9. D&O Insurance Program
Clearwater D&O Insurance Brokers Ltd. (Emma Callister, Account Director) has been engaged to place a US-compliant directors' and officers' liability insurance program (the "D&O Program") that will provide coverage to the Company's directors and officers in connection with claims arising from the Offering and the Company's subsequent status as a US-listed public company.
The proposed D&O Program has been structured as follows:
The estimated annual premium for the D&O Program is $2,800,000. This premium level is consistent with market rates for a technology company of the Company's size and profile completing a US IPO.
It is important that the D&O Program be bound prior to the SEC's declaration of effectiveness of the registration statement, as coverage must be in force at the time the Offering is consummated. We ask that the Company review and provide comments on the D&O insurance proposal from Clearwater at the earliest opportunity so that placement can proceed in a timely manner.
10. Auditor and Comfort Letter Coordination
The Company's independent auditors for purposes of the Offering are Blackmere & Whitfield LLP (Graham Templeton, Partner, Capital Markets Audit Group, New York) and Blackmere & Whitfield GmbH Wirtschaftsprüfungsgesellschaft (Dieter Kaufmann, Partner, Munich). We have confirmed that Blackmere & Whitfield is registered with the Public Company Accounting Oversight Board ("PCAOB") and is in good standing.
C&H is in the process of preparing a comfort letter request specifying the requirements under Statement on Auditing Standards No. 72 (SAS 72), "Letters for Underwriters and Certain Other Requesting Parties," and the International Standard on Assurance Engagements 3000 (ISAE 3000). The comfort letter request will also address the circle-up procedures to be followed in connection with the pricing and closing of the Offering. We anticipate transmitting this request to Blackmere & Whitfield within the next two weeks.
As context for the Offering, we note that the Company's financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board. Based on unaudited financial data provided by the Company for the fiscal year ended December 31, 2025, the Company's key financial metrics are as follows:
We will coordinate with Ms. Dalmqvist and Blackmere & Whitfield on the timing of the completion of the FY2025 audit and the preparation of the PCAOB-compliant audit report, which is a prerequisite for the filing of the Form F-1.
11. Other Advisors — Status
In addition to the legal and accounting advisors described above, the following advisors have been engaged in connection with the Offering:
Ashton & Burke Advisory GmbH (Lukas Frey, Managing Partner) — engaged as the Company's independent financial advisor. Ashton & Burke's engagement terms include a flat advisory fee of €2,500,000 plus a success fee of 0.10% of gross offering proceeds upon completion of the Offering (estimated at approximately $900,000 / €835,000 at the current EUR/USD exchange rate of 1.078). Ashton & Burke is advising the Company on valuation, market timing, and investor relations strategy.
Bridgeport Investor Relations LLC (Thomas Harding, Senior Vice President) — engaged as the Company's US investor relations advisor. Bridgeport's engagement terms include a monthly retainer of $35,000, with an initial term of 12 months commencing upon the filing of the registration statement with the SEC. Bridgeport will assist the Company in developing its US investor communications strategy, preparing investor materials, and managing relationships with US institutional investors and sell-side analysts.
Crestfield Transfer Services Inc. (Angela Moretti) — confirmed as the ADS transfer agent and registrar, as noted in Section 4.3 above.
12. Key Open Items and Action Items for Halcyon
To maintain the projected timeline for the Offering, we respectfully request the Company's prompt attention to the following open items:
1. Due Diligence Document Production. Complete and return all outstanding responses to the due diligence document request list. Target completion date: February 21, 2026. Timely delivery of these materials is essential to maintaining the March 9 first-draft target for the Form F-1.
2. Shareholder Register. Provide an updated shareholder register (Aktienregister) confirming all major shareholder holdings as of the most recent practicable date.
3. Authorized Capital / Corporate Approvals. Confirm the status of authorized capital (genehmigtes Kapital) under the Company's Satzung and, in coordination with Bähr Stein, schedule any required Supervisory Board or Hauptversammlung resolutions for the issuance of 30,000,000 new Ordinary Shares and the exclusion of pre-emptive rights.
4. PFIC Analysis — Financial Data. Provide detailed income and asset breakdowns for FY2023, FY2024, and FY2025 to Leonard Cross for finalization of the PFIC analysis. This information should include a schedule of passive and non-passive income by category and a schedule of the average quarterly fair market values of passive and non-passive assets.
5. Selling Shareholder Questionnaires. Circulate the selling shareholder questionnaires to Rheintal Industrieholding GmbH (Margarethe Wendt) and Kestrel Capital Partners AG (Henrik Sørensen) and ensure their prompt completion and return.
6. Audit Coordination. Coordinate with Blackmere & Whitfield on the timing of the completion of the FY2025 audit and the issuance of the PCAOB-compliant audit report.
7. Revolving Credit Facility. Confirm the identity of the administrative agent under the revolving credit facility and provide a complete copy of the credit agreement (including all amendments) for our review of change-of-control provisions and consent requirements.