DGAP-Adhoc: PAION AG STARTS CAPITAL INCREASE WITH

PAION AG / Key word(s): Capital Increase 18.06.2014 14:30 Dissemination of an Ad hoc announcement according to § 15 WpHG, transmitted by DGAP - a company of EQS Group AG. The issuer is solely responsible for the content of this announcement. --------------------------------------------------------------------------- NOT FOR DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, JAPAN, AUSTRALIA OR ANY OTHER JURISDICTION IN WHICH THE DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL. AD-HOC ANNOUNCEMENT ACCORDING TO §15 WPHG PAION AG STARTS CAPITAL INCREASE WITH SUBSCRIPTION RIGHTS THROUGH THE ISSUE OF 18.5 MILLION SHARES AT EUR 2.50 PER SHARE - PAION AG to issue 18.5 million shares at EUR 2.50 per share in capital increase with subscription rights - Subscription ratio 5:3 - Subscription period from 20 June to 4 July 2014 - Subscription trading period from 20 June to 2 July 2014 - Subsequently all new shares that are not subscribed for shall be placed with institutional investors by way of an accelerated bookbuilt offering Aachen (Germany), 18 June 2014 - The Specialty Pharma Company PAION AG (ISIN DE000A0B65S3; Frankfurt Stock Exchange Prime Standard: PA8) has today decided with the approval of the Supervisory Board to increase the Company's registered share capital pursuant to the Annual General Meeting resolution dated 21 May 2014 by cash contributions granting subscription rights for existing shareholders from EUR 30,842,178.00 by up to EUR 18,505,305.00 to up to EUR 49,347,483.00 through the issue of up to 18,505,305 new no par value bearer shares, each with a notional value of the Company's share capital of EUR1.00 per share. The new shares will be issued at a minimum share price (Ausgabebetrag) of EUR1.00 per share. The new shares carry full dividend rights from January 1, 2014. The Close Brothers Bank AG, Frankfurt commits to offer the New Shares for sale to the existing shareholders of the Company at a subscription ratio of 5:3 (indirect subscription right). That is five old shares entitle the shareholder to subscribe for three new shares. The subscription price is EUR 2.50 per share. Shareholders may subscribe to the new shares during the subscription period in the rights offering, which is expected to begin on 20 June 2014 at 00:00 midnight CEST and end on 04 July 2014 at 24:00 midnight CEST. The subscription rights to the New Shares (ISIN DE000A11QL38 / A11 QL3) are expected to be traded during the period from 20 June 2014 up to and including 02 July 2014 in XETRA trading on the Frankfurt Stock Exchange under the ticker symbol PA8B. All new shares that are not subscribed for shall be placed with institutional investors by way of an accelerated bookbuilt offering. For further details of the capital increase with subscription rights please see the prospectus, which will be published after approval by the German Federal Agency for Financial Services Supervision (BaFin) and prior to the start of the subscription period, and the subscription offer provisionally planned to be published in the Federal Gazette on 20 June 2014, and each also available on the PAION website (capital.paion.com). The net proceeds from the offering shall be used primarily for the further development of Remimazolam in the US and the EU. For the completion of the Phase III programs PAION currently anticipates, subject to further consultations with the regulatory authorities, costs in the amount of approximately EUR 20-25 million for the US and approximately EUR 15-20 million for the EU. Remaining proceeds from the capital increase in the amount of approximately EUR 5-10 million could be invested in premarketing activities. In this transaction, Close Brothers Seydler Bank AG (Germany) act as the Sole Global Coordinator and Bookrunner. Blättchen Financial Advisory GmbH acts as advisor to PAION on the transaction. ### About PAION PAION AG is a publicly-listed Specialty Pharma Company headquartered in Aachen, Germany with a second site in Cambridge, UK. The company has a track record in developing hospital-based treatments for which there is substantial unmet medical need. PAION AG is transforming its business model from a pure development company to a specialty pharmaceutical company with a focus on anaesthesia products to take advantage of the unique profile of its main compound, Remimazolam. Contact Ralf Penner Director Investor Relations / Public Relations PAION AG Martinstrasse 10-12 52062 Aachen - Germany Phone: +49 241 4453-152 E-mail: r.penner@paion.com www.paion.com Disclaimer: This release contains certain forward-looking statements concerning the future business of PAION AG. These forward-looking statements contained herein are based on the current expectations, estimates and projections of PAION AG's management as of the date of this release. They are subject to a number of assumptions and involve known and unknown risks, uncertainties and other factors. Should actual conditions differ from the Company's assumptions, actual results and actions may differ materially from any future results and developments expressed or implied by such forward-looking statements. Considering the risks, uncertainties and other factors involved, recipients should not rely unreasonably upon these forward-looking statements. PAION AG has no obligation to periodically update any such forward-looking statements to reflect future events or developments. This release does not constitute an offer of securities for sale or a solicitation of an offer to purchase securities of PAION AG in the United States, Germany or any other jurisdiction. Neither this announcement nor anything contained herein shall form the basis of, or be relied upon in connection with, any offer or commitment whatsoever in any jurisdiction. The offer will be made exclusively by and on the basis of a securities prospectus that will be published following approval by the German Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht). It is anticipated that this prospectus will be published on PAION AG's website and that free-of-charge copies will, inter alia, be made available at the premises of PAION AG (Martinstrasse 10-12, 52062 Aachen, tel.: +49 241 4453-0). The securities of PAION AG may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended (the "Securities Act"). The securities of PAION AG have not been, and will not be, registered under the Securities Act. In the United Kingdom, this document is only being distributed to and is only directed at persons who (i) are investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) (the "Order") or (ii) are persons falling within Article 49(2)(a) to (d) of the Order (high net worth companies, unincorporated associations, etc.) (all such persons together being referred to as "Relevant Persons"). This document is directed only at Relevant Persons and must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment activity to which this document relates is available only to Relevant Persons and will be engaged in only with Relevant Persons. 18.06.2014 DGAP's Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------------- Language: English Company: PAION AG Martinstr. 10-12 52062 Aachen Germany Phone: +49 (0)241-4453-0 Fax: +49 (0)241-4453-100 E-mail: info@paion.com Internet: www.paion.com ISIN: DE000A0B65S3 WKN: A0B65S Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin, Düsseldorf, Hamburg, München, Stuttgart End of Announcement DGAP News-Service ---------------------------------------------------------------------------