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Biofrontera AG: Statement of Biofrontera AG on the open letter of Maruho Deutschland GmbH dated March 31, 2022

Leverkusen, Germany (pta019/04.04.2022/12:05 UTC+2)

Maruho Deutschland GmbH has published an open letter to the co-shareholders of Biofrontera AG on March 31, 2022 regarding the extraordinary general meeting on April 07, 2022.

In this letter, Maruho Deutschland GmbH addresses, among other things, the proposed resolutions made by the Management Board and the Supervisory Board of Biofrontera AG in the notice convening the extraordinary general meeting on 07 April 2022. In this regard, Biofrontera AG would like to make the following comments:

  • The authorization to issue convertible bonds and/or bonds with warrants proposed to the Annual General Meeting under agenda item 1 and the proposed ordinary capital increase under agenda item 2 are in an alternative relationship. According to the proposals of the Executive Board and the Supervisory Board, therefore, only one of the measures is to be implemented, with a maximum volume of EUR 8,000,000.
  • The conditions of the capital measures proposed under agenda item 1 and under agenda item 2 do not favor any of the shareholders. Instead, the granting of subscription rights and the regulations on additional subscription while maintaining equal treatment of shareholders, the priority of additional subscription over placement with third parties and the mandatory establishment of trading in subscription rights create comprehensive equal treatment and protection of shareholders against disadvantages.
  • In the opinion of Biofrontera AG, the issue price provided for under agenda item 2 is also not objectionable, especially since the discount on the stock market price also appears to be customary and appropriate in the market, taking into account the general conditions, in particular volatile markets as a result of the turnaround in interest rates and the Ukraine crisis.
  • The proposed resolutions were adopted by the Executive Board and Supervisory Board in accordance with legal requirements and not by a single shareholder.

The background to the proposed measure is, as already announced on February 24, 2022, that extraordinary liabilities have to be settled, which is not possible with the cash funds currently available. The Company had announced on November 29, 2021 that it had entered into a settlement with DUSA Pharmaceuticals, Inc. under which payment obligations were agreed. It was originally planned in November 2021 to generate the necessary liquidity through the sale of shares in Biofrontera Inc. which remains in principle as a possible course of action. There are also prospects that debt capital may be raised. Ultimately, the shareholders of Biofrontera AG will be given the opportunity by the extraordinary general meeting to participate in the decision as to the form in which the liquidity requirement described may be generated. Therefore, the accusation of discrimination against shareholders is not justified.

Insofar as Maruho Deutschland GmbH raises possible conflicts of interest and a further complaint by Deutsche Balaton AG, the following should be noted.

Every member of the Supervisory Board is obliged to act in the interests of the company. They may not pursue personal interests in their decisions or use business opportunities to which the company is entitled for themselves without a resolution of the Supervisory Board. The Rules of Procedure of the Supervisory Board stipulate that each member of the Supervisory Board shall disclose conflicts of interest to the Supervisory Board. This applies in particular to conflicts of interest that may arise as a result of a consultancy or board position with customers, suppliers, lenders or other business partners. Material and not merely temporary conflicts of interest in the person of a Supervisory Board member shall lead to the termination of the mandate. If conflicts of interest arise, this fact as well as the means by which such conflict of interest is dealt with are to be presented in the Report of the Supervisory Board in accordance with the recommendations of the German Corporate Governance Code.

Deutsche Balaton AG has filed a declaratory lawsuit against Biofrontera AG with the Regional Court of Cologne on December 13, 2022. Mr. Wilhelm K.T. Zours indirectly holds the majority of shares in Deutsche Balaton AG and is the Chairman of the Supervisory Board of Deutsche Balaton AG. Since December 14, 2021, Mr. Zours has also been a member of the Supervisory Board of Biofrontera AG and is its chairman. The lawsuit is mainly about the fact that Deutsche Balaton AG is of the opinion that the initial public offering of Biofrontera Inc. including the IPO would have required the approval of the Annual General Meeting of Biofrontera AG. The complaint was served on Biofrontera AG on February 09, 2022. The action is directed against Biofrontera AG, represented by the Management Board and represented by the Supervisory Board. The Management Board and the Supervisory Board of Biofrontera AG, with the exception of Mr. Zours, who was aware of the filing of the lawsuit due to his position as a member of the Supervisory Board of Deutsche Balaton AG, became aware of the lawsuit on February 09, 2022 when the complaint was served. The Supervisory Board then resolved on March 02, 2022 - with Mr. Zours abstaining - that the Company should defend itself against the lawsuit. It was also resolved that a committee consisting of Dr. Helge Lubenow, Mr. Karlheinz Schmelig and Dr. Jörgen Tielmann should be formed for further decisions in relation to the lawsuit.

Notwithstanding the fact that Deutsche Balaton AG has reserved the right to review the background to the IPO of Biofrontera Inc. in the USA as part of the mediation agreement, the Executive Board fundamentally regrets any legal conflicts with shareholders.

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Emitter: Biofrontera AG
Hemmelrather Weg 201
51377 Leverkusen
Germany
Contact Person: Investor Relations
Phone: +49 (0) 214 87 63 20
E-Mail: ir@biofrontera.com
Website: www.biofrontera.com
ISIN(s): DE0006046113 (Share)
Stock Exchange(s): Regulated Market in Dusseldorf, Frankfurt; Free Market in Berlin, Munich, Stuttgart, Tradegate
Other Stock Exchanges: Nasdaq
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