Cencorp - Company Announcement

THE SALE OF CENCORP’S ELECTRONICS AUTOMATION BUSINESS HAS BEEN COMPLETED

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

www.cencorp.com





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.