CENCORP CORPORATION STOCK EXCHANGE RELEASE 25 August 2014 at 09.30 Finnish time
CENCORP HAS AGREED TO SELL ITS MAJORITY SHAREHOLDING IN THE ELECTRONICS AUTOMATION BUSINESS
FTTK Company Limited (”FTTK”) and Cencorp Corporation (”Cencorp”) have signed an agreement according to which FTTK acquires a majority shareholding in the electronics automation business of Cencorp. FTTK is an investment company specializing in capital investments in industrial automation. The company is based in Hong Kong.
Pursuant to the agreement, in the first phase Cencorp transfers the company’s electronics automation business into Cencorp Automation Oy (”Cencorp Automation”), a fully-owned subsidiary of Cencorp to be established. Without delay after this FTTK has agreed to purchase 70 percent of the shares in Cencorp Automation for EUR 2.66 million payable in cash ("Closing"). FTTK pays the aforesaid purchase price at the Closing. FTTK has agreed to pay EUR 0.4 million of the aforesaid purchase price as down payment immediately should Cencorp arrange a bank guarantee for the said amount to secure FTTK's receivable in the event that the Closing shall not take place.
No unusual conditions have been agreed for the Closing which is expected to occur right after Cencorp has incorporated Cencorp Automation and transferred the electronics automation business, the object of the transaction, into the said company. According to Cencorp’s estimate the Closing will occur in September 2014. The business transfer will require consent of the holders of Cencorp's business mortgages. In addition, the Closing is subject to risks normally relating to closing of a corporate transaction.
As a part of the transaction Cencorp has agreed to stop using the trade name Cencorp in the Cencorp Group by 15 June 2015. The Board of Directors of Cencorp will make a proposal on a new trade name at the latest at an annual general meeting to be held on spring 2015.
Additionally, within three months from the Closing FTTK has an option to purchase the remaining 30 percent of the shares in Cencorp Automation for EUR 1.14 million, payable in cash, added with a yearly interest of 10 percent until the purchase price has been paid. Should FTTK decide to exercise the aforesaid option, FTTK pays the corresponding purchase price in twelve equal installments. The first installment shall be paid after twelve months from the Closing.
FTTK and Cencorp have agreed to sign a shareholders’ agreement of Cencorp Automation with rules and regulations for, among other things, administration and share transfers in Cencorp Automation, at the Closing. Cencorp has a right to nominate at least one member of the Board of Directors of Cencorp Automation as long as Cencorp has a shareholding in the company. In accordance with the shareholders’ agreement Cencorp also has a right to oblige FTTK to purchase the remaining 30 percent shareholding in Cencorp Automation after two years from the Closing, at the earliest, for purchase price of EUR 1.14 million, payable in cash, added with annual interest of 10 percent until the purchase price has been paid.
The electronics automation business of Cencorp, the object of the aforesaid corporate transaction, includes the company’s Laser and Automation Solutions segment and the Life Cycle Management segment as a whole. The debts of Cencorp as well as other liabilities accrued prior to the transaction will be on Cencorp’s responsibility. In addition, Cencorp will be liable for the costs of the existing orders and deliveries and entitled to the related revenues.
The now agreed transaction is based on Cencorp’s strategic objective to become a cleantech company providing solely clean energy solutions and specializing in production technology and manufacturing of solar modules and their components. Another reason for the transaction is financing of the Cencorp Clean Energy business segment, the company’s core business area as defined in Cencorp’s cleantech strategy.
With the Closing of the transaction Cencorp moves to the next phase in its cleantech strategy. In accordance with its strategy Cencorp has decided to sell all of the operations outside the strategy. The now agreed transaction with FTTK regarding Cencorp’s electronics automation business is the first step. Negotiations for selling the production of RFID components and flexible electronics for mobile phones are pending with other third parties.
With the Closing of the transaction Cencorp’s business operations will mainly be focused on clean energy solutions which, at this stage in the company’s cleantech strategy, include automated production technology for solar modules based on the company’s own technology; production lines for modules; photovoltaic modules and special components for solar modules.
The sale of Cencorp’s electronics automation business will improve Cencorp’s operational situation e.g. as follows: the company’s cash situation improves; the cost structure decreases; and the company is able to focus on the clean energy solutions giving the company better basis to advance Cencorp’s cleantech strategy.
As Cencorp has previously announced it has reviewed different options for its long-term financing and for ensuring the company’s strategy to be materialized as planned. Cencorp has begun negotiations with international investors to find an arrangement for its long-term financing. The negotiations, run by an investment bank in London hired by Cencorp, are going on and based on Cencorp’s view results from these negotiations could be expected in the first quarter of 2015. When the now agreed transaction with FTTK is closed, in Cencorp’s view bridge financing will be secured until the end of the first quarter of 2015, provided the company has at least the credit limits corresponding to the current limits of EUR 4.0 million.
According to Cencorp’s current estimate the transaction will have slightly positive effect in Cencorp Group’s result. More accurate effect on the result will be known by the Closing.
Cencorp will release further information on the effects of the transaction on Cencorp’s business operations and financial position at the Closing.
In Mikkeli, 25 August 2014
CENCORP CORPORATION
For more information:
Iikka Savisalo
President and CEO
Cencorp Oyj
Tel. +358 40 521 6082,
Email: iikka.savisalo@cencorp.com
Distribution:
NASDAQ OMX, Helsinki
Main media
Cencorp Corporation is a leading provider of industrial automation solutions. The equipment in the product portfolio include, automated applications of odd-form assembly and depaneling for the electronic boards, testing equipment and advanced materials processing by laser. All Cencorp's offering improves the efficiency of the customers' production. Cencorp has clean technology, especially photovoltaic (PV) solutions as its other business segment. Cencorp now offers its automated manufacturing technology of the PV modules, manufactures and sells photovoltaic modules, based on Cencorp´s own technology as well as key components of photovoltaic modules. 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.