CENCORP CORPORATION STOCK EXCHANGE RELEASE DECEMBER 10, 2013 AT 10:05 FINNISH TIME
CENCORP OYJ: CENCORP CORPORATION DISCLOSES INFORMATION RELATED TO ITS FINANCIAL POSITION AND FINANCING NEEDS
Cencorp Corporation ("Cencorp" or the "Company") has published a stock exchange release on December 9, 2013 on the share issue (the "Share Issue") resolved by its Board of Directors to its shareholders and to the holders of its convertible bonds in order to strengthen the capital structure of the Company, to improve the liquidity of the Company, particularly to repay its due trade payables, and to carry out investments related to its clean energy business plan, on the terms of the Share Issue and on the approval and availability of the prospectus related to the Share Issue. The prospectus consists of the registration document (the "Registration Document") and of the summary and the securities note (the "Securities Note"; the Registration Document and the Securities Note together the "Prospectus") dated December 9, 2013.
The Company discloses by this stock release in addition to the previously disclosed information more detailed information on the Company's financial position and financing needs as described in the Prospectus.
One of the most significant risks of the Company is the sufficiency of its working capital. In light of the available forecasts, the financial position of the Company will remain tight. According to the understanding of the management of the Company, during the next twelve (12) months the working capital and available funds of the Company will not be sufficient, on the one hand, to ensure the normal business of the Company and, on the other hand, to carry out the investment plan in accordance with the strategy of the Company. The Company has overdue trade payables in the total amount of approximately 2.8 million euros which the Company intends to pay partly by the funds raised in the Share Issue and partly by the cash flow from its business operations. Additionally, the Company has loans maturing during the next twelve (12) months for the total value of 6.9 million euros, of which significant part (4.9 million euros) will mature on January 31, 2014. The loans maturing on January 31, 2014 consist of the export credit limit and credit account limit granted to the Company by Danske Bank Oyj and the loan granted to the Company by Savcor Invest B.V. and the convertible bond granted to the Company by Savcor Group Oy which convertible bond is intended to be used by Savcor Group Oy to set-off its subscription price in the Share Issue related to the subscription to be made by it on the basis of its conditional subscription commitment as disclosed previously.
The Company tries to negotiate on the postponement of the maturity dates of its financing agreements and has already started negotiations with Danske Bank Oyj on the renewal of its export credit limit, bank guarantee limit and credit account limit so that they would remain in force also after January 31, 2014 in their current sizes for the next 3-6 months during which time period the parties would negotiate again on their further renewal in accordance with the past practice of the Company and Danske Bank Oyj. The Company has also started negotiations with Savcor Group Oy and Savcor Invest B.V. on the postponement of the maturity dates of the financing agreements maturing on 31 January, 2014.
The total maximum amount of the Share Issue disclosed by the Company on December 9, 2013 is approximately 4.9 million euros. The Company tries to raise at least 2.5 million euros of new funds (excluding the part of the subscription price to be paid by set-off) in the Share Issue, of which approximately 2.0 million euros is intended to be used for covering the working capital needs of the normal business operations of the Company and for improving the liquidity of the Company, and particularly to pay its overdue trade payables, and approximately 0.5 million euros for carrying out the investments related to the clean energy business plan. Pursuant to the estimate of the Company on the date hereof, carrying out the investments related to the Company's clean energy business plan will, in addition to the aforementioned financing of 0.5 million euros, require new financing in the approximate amount of 9.5 million euros, of which approximately 5.0 million euros needs to be raised and used during the next (12) months following the date hereof.
In case the Company is successful in raising in the Share Issue more than the minimum amount of 2.5 million euros (of which 2.0 million euros is intended to be used for covering the working capital required by the normal business operations of the Company and for improving the liquidity of the Company), the excess amount is intended to be used for the investments related the Company's clean energy business plan.
In case the Company manages to raise at least 2.5 million euros of new funds (excluding the part of the subscription price to be paid by set-off) in the Share Issue (of which 2.0 million euros is intended to be used for covering the working capital required by the normal business operations of the Company and for improving the liquidity, and particularly to pay its overdue trade payables), pursuant to the understanding of the management of the Company on the date hereof the Company shall thereby ensure the sufficiency of its working capital for the period of next twelve (12) months, provided that the Company has at its disposal at least the credit limits corresponding to the current limits of 4.0 million euros; the Company has managed to negotiate postponement of the maturity dates also for its other loans maturing on January 31, 2014 to the extent those loans are not used for setting off the subscription price in the Share Issue; the Company has in its use separate financing for the investments pursuant to its investment program as planned; and the cash flow of the business operations of the Company will turn positive during the second half of the year 2014, at the latest.
Based on the current information available to the Company, the Company believes that the cash flow of the business operations of the Company will turn positive during the second half of the year 2014 with the Company's current costs structure, provided that the Company achieves its minimum turnover objective for 2014 the likelihood of which is in the Company's view reasonable given its previous turnover levels, recent order book and tender activity.
In case the cash flow of the Company will not turn positive at the latest during the second half of the year 2014 pursuant to the objective of the Company; and/ or the Company does not have at least the credit limits corresponding to the current limits of 4.0 million euros; or the Company does not manage to negotiate postponement of the maturity dates for its maturing loans; and/or the Company does not manage to acquire separate financing for its investments pursuant to the investment program of the Company (from clients, partners, venture capital investors or from other third parties such as Tekes – the Finnish Funding Agency for Technology and Innovation), the Company may be obliged to reconsider the scope of its clean energy business and to lower its growth target for the future. As other alternatives, the Company has considered, and will consider in the future, the possibilities to divest such business operations that do not belong to its key business operations pursuant to the current strategy of the Company. Such business operations are, inter alia, RFID and flexible electronics for mobile phones businesses. At the moment, the Company is investigating possible buyers for these business operations as disclosed previously.
In case the Company is not able to raise the aforementioned new funds needed by it in the minimum amount of 2.5 million euros in the Share Issue, or in case one or more of the aforementioned other requirements, such as cash flow turning to positive during the second half of the year 2014; renewal of the loans maturing on January 31, 2014; financing from the clients, partners or venture capital investors; or selling of the non-key businesses of the Company, would not be realized to sufficient extent, the Company may have to change significantly its strategy or objectives or schedules thereof, or in the worst case, the situation may lead to the corporate reorganization of the Company or in case of a failure of such corporate reorganization, to the bankruptcy.
The risks related to the Company's financial position, financing needs and continuity of its business operations have been described in more detail in the Prospectus dated December 9, 2013.
The Prospectus is available from December 10, 2013 on at the head office of the Company, at Insinöörinkatu 8, 50100 Mikkeli, Finland during the normal office hours; at the reception of NASDAQ OMX Helsinki Ltd (2nd Floor), at Fabianinkatu 14, 00130 Helsinki, Finland, during the opening hours of NASDAQ OMX Helsinki Ltd; and in the electronic form on the website of the Company, www.cencorp.com/cencorp-s-investor-site/ and on the website of Evli Pankki Corporation, www.evli.com.
The shareholders, convertible bond holders and other investors are requested to familiarize themselves in more details with the information included in the Prospectus.
In Mikkeli, December 10, 2013
For more information:
President and CEO
Tel.: +358 40 521 6082
NASDAQ OMX Helsinki Ltd
Cencorp Corporation is a leading provider of industrial automation solutions. The equipment included in the product portfolio designed for depaneling, odd-form assembly, testing and laser materials processing substantially improves the efficiency of customers' production. Cencorp has selected clean technology as its other business segment, especially photovoltaic solutions. Cencorp manufactures and sells photovoltaic modules, based on Cencorp´s own technology, key components of photovoltaic modules as well as their manufacturing technology. The product range also includes EMI shielding solutions, RFID antennas, other flexible circuits including for example conductive back sheets used in photovoltaic modules and mobile phone antennas. Cencorp's head office is located in Mikkeli, Finland. The company is part of the Finnish Savcor Group.
The information in this stock exchange release is not intended to be disclosed or distributed, directly or indirectly partly or in whole, in Australia, South Africa, Japan, Hong Kong, Canada or in the United States or in any other country where the disclosure of this stock exchange release would be contrary to law.
The information of this stock exchange release does not constitute an offer to sell securities in the United States, and securities subject to this release shall not be offered or sold in the United States unless they have been registered in accordance with the Securities Act of 1933 (including amendments) and provisions and regulations issued under the Act or unless the registration requirement has been waived. No offer to sell the securities or no part of such offer will be registered in the United States, and the securities will not be offered to the public in the United States.
This release must not be interpreted as a direct or indirect offer to sell or acquire the securities, and none of the securities will be sold in areas where it is contrary to law to offer, acquire or sell securities before the registration of such securities or before an exception has been granted or an approval has been issued in accordance with the applicable securities legislation.