CENCORP AND AVERY DENNISON CORPORATION HAVE SIGNED A MEMORANDUM OF UNDERSTANDING ON CONDUCTIVE BACKSHEET BUSINESS ACQUISITION, CENCORP DECREASES ITS EBITDA ESTIMATE AND ANNOUCES NO LONGER FINANCIAL GUIDANCE, CENCORP ANNOUCED LONG-TERM O
OMXCencorp Oyj Stock Exchange Release 21 August 2012 at 09.25 Finnish timeCENCORP AND AVERY DENNISON CORPORATION HAVE SIGNED A MEMORANDUM OFUNDERSTANDING ON CONDUCTIVE BACKSHEET BUSINESS ACQUISITION, CENCORP DECREASESITS EBITDA ESTIMATE AND ANNOUCES NO LONGER FINANCIAL GUIDANCE, CENCORPANNOUCED LONG-TERM OBJECTIVES FOR MANAGING DIRECTOR, - CENCORP ISSUES ACONVERTIBLE BOND AND COMMENCES PREPARING A SHARE ISSUE1. CENCORP AND AVERY DENNISON CORPORATION HAVE SIGNED A MEMORANDUM OFUNDERSTANDING ON CONDUCTIVE BACKSHEET BUSINESS ACQUISITIONCencorp Corporation (Cencorp) and Avery Dennison Corporation (AveryDennison), a US based company, have signed a Memorandum of Understanding(MOU) according to which Cencorp acquires Avery Dennisons Conductive BackSheet business (CBS) and related intellectual property rights. The MOU isnon-binding. The purchase price stated in the MOU is USD 500,000 cash and6,711,409 Cencorp shares at the time of the acquisition, where the number ofshares will be adjusted for the difference in the EU/Dollar exchange rate atthe time of issuance to the EU/Dollar exchange rate on August 7, 2012.Avery Dennison agrees not to sell its Cencorp shares received as purchase pricepayment within 12 months from the effective date of the definitive purchaseagreement. It is also expected that Cencorp will separately enter intoagreements with the key persons that were involved with the business beingacquired to join Cencorp team.As stated in Cencorps new strategy published in the spring 2012 one of thecompanys core businesses is to develop Cleantech applications in cooperationwith the customers. The acquisition, in accordance with the MOU, will provideCencorp with a strong market position as manufacturer of conductor technologyused in new generation photovoltaic (PV) modules, says Iikka Savisalo,Cencorps CEO.Since the spring 2011 Cencorp has developed CBS technology used in efficientnew generation PV modules together with Avery Dennison. In January 2012 Cencorpannounced that it has signed a significant frame agreement with Avery Dennisonon delivering CBS technology to Avery Dennison. That time Cencorp announcedthat the value of the agreement may exceed EUR 50 million over the course ofthree years.In the MOU published today Cencorp and Avery Dennison agree on transferringownership of certain of the intellectual property rights and technologyplatform to Cencorp, and Avery Dennison getting a shareholding at Cencorp.The final terms of the transaction are still under negotiations and realizationof the acquisition is not yet certain. Additionally, the transaction is stillsubject to several issues such as due diligence and especially to Cencorpsshort and long term financing required to run the business being acquired.Thus, Cencorp is not yet able to estimate possible realization, effective date,acquisitions influence in Cencorp nor risks relating to the transaction.Cencorp will announce further information as soon as the negotiations have beenfinished, which is expected to take place before the end of 2012.2. CENCORP DECREASES ITS EBITDA ESTIMATE AND ANNOUCES NO LONGER FINANCIALGUIDANCECencorp has emphasized in its strategy that the companys growth drivers willbe new Cleantech solutions and especially applications for new energies.Provided the transaction will be realized it will change the companys coststructure and targets for the near future. As Cencorp is now in a strongbreaking point which is essential for following the new strategy, Cencorpcannot assess how the Avery Dennison transaction and change in companysbusiness focus will impact the company, due to which Cencorp has decided itwill not announce financial guidance for the time being.Flexible circuit deliveries pursuant to the frame agreement signed with AveryDennison in January will be delayed due to the aforesaid transaction with AveryDennison and the targets set for the financial year 2012 will not be reached.Decrease in the the EBITDA results partly from Cencorp redirecting its businessfocus and human resources into new targets pursuant to the companys newstrategy and into Cleantech applications development. Cencorp estimates thatthis years net sales of its former continuing businesses i.e. Laser andAutomation Applications segment and Special Components segment will be smallerthan EUR 21.6 million as announced earlier, provided that no essential changetakes place in the operating environment or in the current economic outlook.However, increased costs will turn EBITDA negative in the financial year 2012.Cencorps previous estimate was as follows: The company estimates thefull-year net sales of its continuing operations to be smaller than last year'scorresponding sales that were EUR 21.6 million and the full-year EBITDA isestimated to be positive provided that no essential change takes place in theoperating environment or in the current economic outlook.Cencorps future outlook will be highly dependent on the companys ability toreach the targeted market position in the global photovoltaic module market.However, the companys goal is to to reach strong market position as providerof locally produced high-quality photovoltaic modules.3. LONG-TERM OBJECTIVES FOR MANAGING DIRECTORCencorps Board of Directors has published long-term financial and otherobjectives, relating to the companys new strategy, for Managing Director asfollows:In January 2012 Cencorp announced it had signed a remarkable frame agreement ondelivering flexible circuits for renewable energy solutions for Avery Dennison.At that time the company estimated that the value of the frame agreement mayexceed EUR 50 million in the course of three years. Based on this evaluation,companys new strategy published in the spring 2012 and on the fact that theAvery Dennison transaction, if realized, enables Cencorp providing itscustomers with wider and multiple times of value offering related to thephotovoltaic modules and other renewable energy solutions, the Board ofDirectors has set the following long-term objectives for the companys ManagingDirector:- Thorough but fast transition from a company manufacturing only productionautomation applications and special components into a company that develops andprovides Cleantech applications, with a strong market position as provider ofhigh-quality photovoltaic modules, with automation and laser technology, thatare locally produced in various market areas.- Cencorps goal is to increase its shareholder value with growth andprofitability. Cencorp aims for growth in Cleantech business where the companyhas good opportunity to achieve a strong global position and grow fast.- Laser and Automation Applications segment has its main focus on the lifecycle management of systems and equipments with clear growth expectations forservice business.- In long-term Cencorp is aiming for remarkable growth in its net sales withnet sales target of more than EUR 200 million for 2016, provided that thecompany has required sufficient capital, the growth coming mainly fromCleantech operations and fuel cell applications.The long term objectives set for the Managing Director involves also risks andthe long term objective should not be considered as the companys financialguidance. Even though the objectives are based on market knowledge andtechnical surveys, the risk are significant and it is not certain if theManaging Director reaches all or part of the targets set for him.4. CENCORP ISSUES A CONVERTIBLE BOND AND STARTS PREPARING A SHARE ISSUE In order to secure the financing required to strengthen Cencorps capitalstructure the company issues convertible bond with the maximum amount of EUR1,500,000 and simultaneously issues stock options with maximum amount of21,428,571 free of charge. One (1) stock option is issued per each subscribedloan capital amount of EUR 0.07. The convertible bond is issued in deviationfrom the shareholders' pre-emptive subscription rights to those current Cencorpshareholders who directly on the record day of 31 June 2012 own at least onemillion (1,000,000) Cencorps shares or who otherwise are approved by the Boardof Directors. Convertible bond can also be subscribed against a loan receivablefrom Cencorp, undisbuted on the record day, by converting the loans capital orinterest into convertible bond according to the terms of the convertible bond.Loan period starts as of the payment of a loan to the company and ends on 7September 2014 when the convertible bond will be due in its entirety pursuantto the loan terms. The shareholders'pre-emptive subscription rights are being deviated from as the stock optionsare issued to secure financing required to strengthen Cencorps capitalstructure cost effectively and considering the size of the financing. Thus,there is, from the companys point of view, a weighty financial reason to issuethe stock options.An annual interest of eight (8) % will be paid on the convertible bond from thewithdrawal of the bond. A holder of the bond has a right to subscribe an amountof shares, equivalent to the bondholders shareholding percentage at the time,in Cencorps possible future share issues with subscription period endinglatest by 7 September 2014, at a subscription price that is 10 % lower than thesubscription price in the share issue in question.The holder of the bond is entitled to converse the promissory note into theshares of the Company. One (1) stock option pursuant to the promissory noteentitles the bond holder to subscribe for one (1) new share of the company.Based on the subscriptions made pursuant to the stock options, the Companyshall issue in maximum of 21.428.571 new company shares. The Company has one(1) class of shares.The terms of the convertible bond are, without the technical appendices,attached to this release as Attachment 1.Cencorp also starts preparing a share issue. The target of the issue is tocollect capital to realize the photovoltaic business plan. The share issue isexpected to be carried out by the end of this year. Cencorp will informseparately on the terms and schedule of the share issue.Realization of a convertible bond and a share issue involve risks. It is notsecured that the company will be able to collect EUR 1.5 million with theconvertible bond to strengthen its capital structure or with the share issue tofinance the establishing of photovoltaic module business plan.In Mikkeli, 21 August 2012CENCORP OYJBOARD OF DIRECTORSFor more information, please contact:Cencorp: Iikka Savisalo, President and CEO, tel. +358 40 521 6082,firstname.lastname@example.orgDistribution:NASDAQ OMX, HelsinkiMain mediawww.cencorp.comCencorp Corporation is a leading provider of industrial automationsolutions.The equipment included in the product portfolio designed fordepaneling,odd-form assembly, testing and laser materials processingsubstantiallyimproves the efficiency of customers' production. The productrange alsoincludes EMI shielding solutions, flexible circuits and RFIDantennas. Cencorp's customers are automotive electronics manufacturersandmanufacturers operating in telecommunications, industrial automation andEMS.Cencorp's head office is located in Mikkeli, Finland. The company is partof the Finnish Savcor Group.Attachment 1.The Board of Directors of Cencorp Corporation (hereinafter the Company) has,based on the authorization granted to it on January 30, 2012, resolved to takeloan from its certain current shareholders (Convertible Bond I/2012) so thatthe Company issues stock options to the lenders of the loan so that the lendersshall have the right to subscribe for the Companys shares based on therespective stock options and that the lenders shall have the right to pay thesubscription price of the shares by setting it off against the loan receivablereferred to in this document (hereinafter Convertible Bond) in accordancewith the following terms:I TERMS OF THE CONVERTIBLE BOND 1. Principal of the Convertible BondThe total principal amount of the Convertible Bond is one million five hundredthousand euro (EUR 1,500,000.00) (the Convertible Bond). 1. Subscription Right for the Convertible Bond and Stock OptionsThe Company shall take the loan referred to in this Convertible Bond and shallissue simultaneously against the loan with maximum amount of 21.428.571 stockoptions free of charge. The number of stock options to be issued shall be one(1) stock option against each subscribed loan capital amount of 0,07 euro.The Convertible Bond is issued for subscription, in deviation from theshareholders pre-emptive subscription rights, to such shareholders who on July31, 2102 (hereinafter the Record Date of the Convertible Bond) own directlyat least one million (1.000.000) Company shares or to other parties separatelyapproved by the Board of Directors. The Convertible Bond can also be subscribedagainst the undisbuted loan receivable from the Company as per the Record Dateof the Convertible Bond by converting the loan capital or interest receivableinto the Convertible Bond in accordance with the terms of this ConvertibleBond.The minimum subscription of the Convertible Bond shall be ten thousand(10.000,00) euro.The shareholders pre-emptive subscription rights are deviated from as thestock options are issued to secure financing required to strengthen the capitalstructure of the Company cost effectively and considering the size of thefinancing. Thus, there is from the Companys point of view a weighty financialreason to issue the stock options. 1. Subscription Period and Venue for Subscription of the Convertible BondSuch shareholders who are interested in to subscribe for the Convertible Bondand who meet the conditions mentioned above in Section I.2 on the Record Dateof the Convertible Bond are asked to sign and submit the subscription formattached as Appendix 1 to this Convertible Bond by August 31, 2012 to theCompany in accordance with the instructions included in the form. Thesubscription shall take place when the Company receives the above mentionedform by 6:00 p.m. on September 7, 2012.In the event the Convdertible Bond and the related stock options shall be oversubscribed, the Board of Directors of the Company shall resolve on theallocation between the subscribers so that for each subscriber a minimum of apercentual share of the Convertible Bond and related stock options shall beallocated corresponding to the share ownership amount of the subscriber on theRecord Date of the Convertible Bond. 1. Loan Period of the Convertible Bond and RepaymentThe Convertible Bond shall be paid to the Companys bank account Nordea BankFinland Plc IBAN: FI21 2185 1800 1271 11, BIC: NDEAFIHH at the latest onSeptember 7, 2012. The loan period shall commence on the payment date andexpire on September 7, 2014 (hereinafter the Maturity Date) on which date theConvertible Bond shall expire to be repayable in its entirety in accordancewith these terms of the loan.The Company shall be entitled pursuant to the resolution of the Board ofDirectors of the Company to repay the Convertible Loan or a part of it to theholder of the Promissory Note signed in accordance with Section I.6 below alsoany time prior to the Maturity Date.The Company shall inform the holder of the Promissory Note on the repayment 30(thirty) days prior to the contemplated repayment. The holder of the PromissoryNote shall then have the possibility to inform the Board of Directors of theCompany within that 30 (thirty) days time period whether the holder useshis/her/its right to subscribe for the Companys shares in accordance withSection II prior to the repayment provided that the subscription shall takeplace within the subscription period of the shares defined under Section II.2.The repayment of the Convertible Bond shall take place against the assignmentof the Promissory Note and in the event of a partly repayment, against a noteto be entered to the Promissory Note. 1. Interest of the Convertible BondAs of the date of withdrawal an annual interest of eight (8) percent shall bepaid to the capital of the Convertible Bond. The interest shall be paidannually afterwards on June 30.The last interest period shall end on the date on which the Convertible Bondshall be repaid in its entirety. The interest shall be calculated based on thereal interest days divided with 365 days.Upon the due date of the Convertible Bond on September 7, 2014, all the unpaidinterests from the loan period shall also due fall on September 7, 2014.In the event the date of interest payment is not a banking day, the interestshall be paid on the following banking day. 1. Promissory Note of the Convertible BondThe Company shall issue to the subscriber of the Convertible Bond (hereinafterPromissory Note Holder) a promissory note referred to in the Appendix 2,which simultaneously serves as the stock option certificate of the stockoptions referred to in Section I.2. The Promissory Noted shall not, however, beissued prior to the date when the stock options related to the Convertible Bondhave been registered with the Companies Register.The Company commits to notify the Companies Register on the issue of the stockoptions related to the Convertible Bond within one month from the date on whichthe Company has resolved on the issue of the stock options related to theConvertible Bond. 7. Transferability of the Promissory Note and Stock OptionsThe Promissory Note and related stock options and other rights andresponsibilities cannot be transferred without consent of the Company. Thestock options related to the Convertible Bond are not transferable unless theloan based on the Promissory Note is also transferred simultaneously. 1. Right to Participate in the Forthcoming Share Issues by Reduced Subscription PriceA Promissory Note Holder shall be entitled to participate, by at least theamount corresponding the percentual shareholding of the Companys shares atthat time, in potential future share issues arranged by the Company in whichthe subscription period shall terminate at the latest on September 7, 2014 bysubscribing the shares at the subscription price that is 10 per cent lowercompared to the subscription price offered in the respective share issues. 1. OtherFor the delivery of the notifications based on this Convertible Bond, thePromissory Note Holder shall inform the Company his/her/its postal address asfrom time to time.The Promissory Note Holder shall, as per request of the Company, submit to theCompany all necessary information with regard to the Promissory Note and itsadministration.II TERMS FOR SHARE SUBSCRIPTION AND CONVERSION RIGHT 1. Conversion Right and Conversion RatioThe Promissory Note Holder is entitled to convert the Promissory Note into theshares of the Company in accordance with the terms described below. One (1)stock option pursuant to the Promissory Note entitles the Promissory NoteHolder to subscribe for one (1) new share of the Company. Based on thesubscriptions made pursuant to the stock options the Company shall issue amaximum amount of 21.428.571 new Company shares. The Company has one (1) classof shares.The subscription price of one (1) new share of the Company shall be 0,07 europer share.Upon using the conversion right a portion corresponding to the subscriptionprice of a share shall be set off against the unpaid capital of the ConvertibleBond and, subject to the consideration of the Board of Directors, against theunpaid interest of the Convertible Bond. The subscription price of the sharesshall be entered in entirety into the reserve for invested unrestricted equity. 1. Conversion Period and Process Regarding Use of the Conversion RightThe Promissory Note Holder shall have the right to converse the Promissory Noteinto the Companys shares during the conversion period (subscription period ofthe shares) which commences on January 1, 2013 and which terminates onSeptember 7, 2014.The conversion of the Promissory Note into the shares shall take place pursuantto the subscription rules in accordance with the Finnish Companies Act. ThePromissory Note Holder shall present to the Board of Directors of the Companythe written conversion request as attached in the Appendix 3 which shallconstitute the subscription of new shares. The Convertible Bond may beconverted into shares only in its entirety.When the Board of Directors has received the conversion request and thePromissory Note Holder has assigned the Promissory Note to the Company, theBoard of Directors shall approve the subscription of new shares in accordancewith the Convertible Bond. Within 30 (thirty) days from the presentation of theconversion request the Company shall file the Companies Register notificationwith regard to entering the new shares to the Companies Register. In addition,the Company commits to take care that the new shares entered into the CompaniesRegister shall be entered into public trading within 30 (thirty) days fromentering them to the Companies Register. 1. Shareholder RightsThe new shares of the Company, which have been subscribed for by using theconversion right of the Convertible Bond, shall have the similar rights withthe Companys shares issued previously from the moment the new shares have beenentered into the Companies Register. 1. The Rights of the Promissory Note Holder in Certain Special CasesIf the Company during the loan period issues new shares in the share issueagainst the payment or issues new stock options or other special rightsentitling to the shares referred to in Chapter 10 of the Finnish Companies Actso that the shareholders shall have the pre-emptive subscription right, thePromissory Note Holder shall have the same or equal right as a shareholder.Equality is reached by the mean resolved by the Board of Directors of theCompany by giving to the Promissory Note Holder the same priority for thesubscription of share and/or convertible bond and/or stock option, and/or theexchange ratio of the Convertible Bond will be adjusted and/or the PromissoryNote Holder is given right to convert the Promissory Note to the shares duringthe other time period than referred to in Section II.2 or by combining mannersof proceeding referred to above.If the Company during the loan period issues new shares free of charge, theexchange ratio of the Convertible Bond shall be adjusted so that the percentualshare of the shares to be converted by the Convertible Bond compared to allshares shall remain unaltered except for the part that the new number of sharesto be converted by the Promissory Note would be a fraction. In the event thatthe above mentioned division would not be even, the highest round figure thatwill fulfill the division to the whole shares will be applied.If the Company during the loan period resolves to acquire or redeem its ownshares or stock options or other special rights entitling to the sharespursuant to the Chapter 10 of the Finnish Companies Act through an offerdirected to all shareholders or holders of the above mentioned rights, an equaloffer shall be made to the holder of the Promissory Note. The redemption oracquisition of the shares and stock options or other special rights entitlingto the shares referred to in Chapter 10 of the Finnish Companies Act shall thusbe directed to the conversion rights of the Promissory Note pursuant to theresolution of the Board of Directors. Otherwise acquisition or redemption ofown shares and stock options and other special rights entitling to the sharesreferred to under Chapter 10 of the Finnish Companies Act shall not require anyactions from the Company with regard to the Promissory Note.If the Company during the loan period distributes its funds in other means thanwhat has been referred to in the previous section, the Promissory Note Holdershall not be entitled to participate in the distribution of the funds and thedistribution of the funds shall not require any actions from the Company withregard to the Promissory Note.If the Company is placed into liquidation during the loan period, theConvertible Bond shall fall due for payment at the moment when placing theliquidation has been entered into the Companies Register.If the Company during the loan period resolves on the merger or division, thePromissory Note Holders shall be reserved a right, during the time period setby the Board of Directors of the Company prior to resolution on the merger ordivision, to convert the Promissory Note into shares. Alternatively thePromissory Note Holders shall be given the right to subscribe for theconvertible bond issued by similar terms by the receiving company so that thesubscription can be made on equal rights compared to the shares of thereceiving company which have been issued to the shareholders pursuant to whathas been resolved on the matter in the merger plan or division plan. After theabove-mentioned time period reserved for the use of the conversion right orafter the end of the subscription period of the new convertible bond, noconversion right shall exist anymore.If a redemption right or redemption obligation of the minority shareholdersreferred to under Chapter 18 of the Finnish Companies Act arises, after Companyhas received notification on the origin of the redemption right or redemptionobligation, the right to convert the Promissory Note into shares during thetime period resolved by the Board of Directors shall without undue delay bereserved for the Promissory Note Holders. After the above-mentioned time periodreserved for the use of the conversion right, no conversion right shall existanymore. 1. DisputesDisputes arising out of this Convertible Bond shall be settled by arbitrationconsisting of one arbitrator in accordance with the Rules of the ArbitrationInstitute of the Finland Chamber of Commerce. In the event the parties to thedispute cannot agree on the arbitrator, the Finland Chamber of Commerce shallappoint the arbitrator. The place of the arbitration shall be Helsinki,Finland. 1. Other IssuesThe Board of Directors shall be entitled to resolve on any other matter relatedto the Convertible Bond and the use of the conversion right. Notifications tothe Promissory Note Holders shall be submitted by letters to the postaladdresses notified to the Company by each of the Promissory Note Holder. Anotification is deemed to have been delivered on the working day following thedate of sending the notification.III OTHER MATTERS 1. Other IssuesThese terms and conditions have been drafted in Finnish and in English. In thecase of any discrepancy between the Finnish and English terms and conditions,the Finnish terms and conditions shall prevail.Copyright 2012 OMX AB (publ).