CENCORP CORPORATION STOCK EXCHANGE RELEASE 17 September 2014 at 19.05 Finnish time
THE SALE OF CENCORP’S ELECTRONICS AUTOMATION BUSINESS HAS BEEN COMPLETED
On 25 August 2014 Cencorp Corporation (“Cencorp”) announced that the company had signed an agreement according to which FTTK Company Limited (”FTTK”) acquires a majority shareholding in the electronics automation business of Cencorp (“Transaction”).
Pursuant to the agreement between Cencorp and FTTK, Cencorp has transferred the company’s electronics automation business into Cencorp Automation Oy (”Cencorp Automation”), a fully-owned subsidiary of Cencorp. Further, in accordance to the agreement signed earlier, FTTK has purchased 70 percent of the shares in Cencorp Automation for EUR 2.66 million payable in cash. The parties have today confirmed that the conditions precedents to the Transaction have been fulfilled and thus the Transaction has been closed. At the closing a shareholders’ agreement regarding Cencorp Automation Oy between FTTK and Cencorp has come into force as well.
FTTK has an option to decide by 17 December 2014 whether it will use its 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 i.e. from today. The option is subject to FTTK to arrange a bank guarantee for the remaining unpaid purchase price issued by a bank accepted by Cencorp.
Cencorp has received consents of the holders of Cencorp's business mortgages for the business transfer. As a part of the closing of the Transaction Cencorp has agreed with Danske Bank that the export credit limit available to the company decreases from EUR 1.5 million to EUR 1.0 million; the bank guarantee limit decreases from EUR 1.25 million to EUR 0.75 million; and the limit of the overdraft facility decreases from EUR 1.25 million to EUR 0.95 million. Additionally, the company has agreed with Danske Bank on a cash deposit of EUR 0.4 million that will be released when a bank guarantee, arranged by Cencorp for advance payment of EUR 0.4 million from FTTK, will be released, on 31 October 2014 at the latest. Further, the company has agreed with Finnvera that Finnvera’s guarantee for the company’s financing limits continues to be in force against a cash deposit of EUR 0.3 million. In the short run decrease in the limit of the overdraft facility together with decreasing export credit limit and presumably short-term cash deposits of totally EUR 0.7 million for Danske Bank and Finnvera will affect sufficiency of the company’s bridging financing.
Cencorp has previously estimated that with the Transaction now closed with FTTK Cencorp’s bridging financing will be secured until the end of the first quarter of 2015, provided the company has at least the credit limits corresponding to its current limits of EUR 4.0 million. However, decrease in the financing limits to EUR 2.7 million and the cash deposits of totally EUR 0.7 million for Danske Bank and Finnvera, unless they are released soon as planned, will put pressure in schedule terms on the company to arrange long-term financing and to secure realization of the company’s cleantech strategy according to the plans. In the future Cencorp may require clearly bigger limits for the company’s technology export projects accordant with its cleantech strategy. Cencorp is having negotiations with international investors to find an arrangement for its long-term financing. The negotiations, in which an investment bank in London assists Cencorp, are going on and based on Cencorp’s previous view results from these negotiations could be expected in the first quarter of 2015.
Despite the closing of the Transaction, there continue to be significant risks in sufficiency of Cencorp’s financing and working capital for the next twelve months. In Cencorp’s current view, due to decrease in the financing limits from Danske Bank and the cash deposits for Danske Bank and Finnvera, unless they are released soon as planned, the company may require more bridging financing until long-term financing arrangement has been secured and the cash flow of the business operations of the company has turned positive. The company continues to have a significant deficit in its working capital until the first delivery of production technology for solar modules will start to generate positive cash flow, and/or production of RFID components and flexible electronics for mobile phones has been sold.
With the closing of the Transaction Cencorp’s business operations will mainly be focused on the 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; solar 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 the cleantech strategy.
According to Cencorp’s estimate of the closing time the Transaction will have slightly positive effect on Cencorp Group’s result considering translation difference. The final effect on the result will be known during the fourth quarter.
In Mikkeli, 17 September 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 specializes in the clean energy, especially in photovoltaic solutions. Cencorp provides automated production technology for solar modules based on the company’s own technology; production lines for modules; solar modules and special components for solar modules. The product range also includes EMI shielding solutions, RFID antennas and other flexible circuits including for example conductive back sheets used in photovoltaic modules and mobile phone antennas. Cencorp also owns 30 percent of Cencorp Automation Oy, a company providing electronics automation solutions. Cencorp's head office is located in Mikkeli, Finland. The company is part of the Finnish Savcor Group.