Cencorp - Company Announcement

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

Cencorp Oyj       Stock Exchange Release 21 August 2012 at 09.25 Finnish time

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 OBJECTIVES FOR MANAGING DIRECTOR, - CENCORP ISSUES A
CONVERTIBLE BOND AND COMMENCES PREPARING A SHARE ISSUE 



1. CENCORP AND AVERY DENNISON CORPORATION HAVE SIGNED A MEMORANDUM OF
UNDERSTANDING ON CONDUCTIVE BACKSHEET BUSINESS ACQUISITION 

Cencorp Corporation (”Cencorp”) and Avery Dennison Corporation (”Avery
Dennison”), a US based company, have signed a Memorandum of Understanding
(“MOU”) according to which Cencorp acquires Avery Dennison's Conductive Back
Sheet business (“CBS”) and related intellectual property rights. The MOU is
non-binding. The purchase price stated in the MOU is USD 500,000 cash and
6,711,409 Cencorp shares at the time of the acquisition, where the number of
shares will be adjusted for the difference in the EU/Dollar exchange rate at
the 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 price
payment within 12 months from the effective date of the definitive purchase
agreement. It is also expected that Cencorp will separately enter into
agreements with the key persons that were involved with the business being
acquired to join Cencorp team. 

“As stated in Cencorp's new strategy published in the spring 2012 one of the
company's core businesses is to develop Cleantech applications in cooperation
with the customers. The acquisition, in accordance with the MOU, will provide
Cencorp with a strong market position as manufacturer of conductor technology
used in new generation photovoltaic (PV) modules”, says Iikka Savisalo,
Cencorp's CEO. 

Since the spring 2011 Cencorp has developed CBS technology used in efficient
new generation PV modules together with Avery Dennison. In January 2012 Cencorp
announced that it has signed a significant frame agreement with Avery Dennison
on delivering CBS technology to Avery Dennison. That time Cencorp announced
that the value of the agreement may exceed EUR 50 million over the course of
three years. 

In the MOU published today Cencorp and Avery Dennison agree on transferring
ownership of certain of the intellectual property rights and technology
platform to Cencorp, and Avery Dennison getting a shareholding at Cencorp. 

The final terms of the transaction are still under negotiations and realization
of the acquisition is not yet certain. Additionally, the transaction is still
subject to several issues such as due diligence and especially to Cencorp's
short and long term financing required to run the business being acquired.
Thus, Cencorp is not yet able to estimate possible realization, effective date,
acquisition's influence in Cencorp nor risks relating to the transaction.
Cencorp will announce further information as soon as the negotiations have been
finished, which is expected to take place before the end of 2012. 



2. CENCORP DECREASES ITS EBITDA ESTIMATE AND ANNOUCES NO LONGER FINANCIAL
GUIDANCE 

Cencorp has emphasized in its strategy that the company's growth drivers will
be new Cleantech solutions and especially applications for new energies.
Provided the transaction will be realized it will change the company's cost
structure and targets for the near future. As Cencorp is now in a strong
breaking point which is essential for following the new strategy, Cencorp
cannot assess how the Avery Dennison transaction and change in company's
business focus will impact the  company, due to which Cencorp has decided it
will not announce financial guidance for the time being. 

Flexible circuit deliveries pursuant to the frame agreement signed with Avery
Dennison in January will be delayed due to the aforesaid transaction with Avery
Dennison and the targets set for the financial year 2012 will not be reached.
Decrease in the the EBITDA results partly from Cencorp redirecting its business
focus and human resources into new targets pursuant to the company's new
strategy and into Cleantech applications development. Cencorp estimates that
this year's net sales of its former continuing businesses i.e. Laser and
Automation Applications segment and Special Components segment will be smaller
than EUR 21.6 million as announced earlier, provided that no essential change
takes place in the operating environment or in the current economic outlook.
However, increased costs will turn EBITDA negative in the financial year 2012. 

Cencorp's previous estimate was as follows: “The company estimates the
full-year net sales of its continuing operations to be smaller than last year's
corresponding sales that were EUR 21.6 million and the full-year EBITDA is
estimated to be positive provided that no essential change takes place in the
operating environment or in the current economic outlook.” 
Cencorp's future outlook will be highly dependent on the company's ability to
reach the targeted market position in the global photovoltaic module market.
However, the company's goal is to to reach strong market position as provider
of locally produced high-quality photovoltaic modules. 



3. LONG-TERM OBJECTIVES FOR MANAGING DIRECTOR

Cencorp's Board of Directors has published long-term financial and other
objectives, relating to the company's new strategy, for Managing Director as
follows: 

In January 2012 Cencorp announced it had signed a remarkable frame agreement on
delivering flexible circuits for renewable energy solutions for Avery Dennison.
At that time the company estimated that the value of the frame agreement may
exceed EUR 50 million in the course of three years. Based on this evaluation,
company's new strategy published in the spring 2012 and on the fact that the
Avery Dennison transaction, if realized, enables Cencorp providing its
customers with wider and multiple times of value offering related to the
photovoltaic modules and other renewable energy solutions, the Board of
Directors has set the following long-term objectives for the company's Managing
Director: 

- Thorough but fast transition from a company manufacturing only production
automation applications and special components into a company that develops and
provides Cleantech applications, with a strong market position as provider of
high-quality photovoltaic modules, with automation and laser technology, that
are locally produced in various market areas. 

- Cencorp's goal is to increase its shareholder value with growth and
profitability. Cencorp aims for growth in Cleantech business where the company
has good opportunity to achieve a strong global position and grow fast. 

- Laser and Automation Applications segment has its main focus on the life
cycle management of systems and equipments with clear growth expectations for
service business. 

- In long-term Cencorp is aiming for remarkable growth in its net sales with
net sales target of more than EUR 200 million for 2016, provided that the
company has required sufficient capital, the growth coming mainly from
Cleantech operations and fuel cell applications. 

The long term objectives set for the Managing Director involves also risks and
the long term objective should not be considered as the company's financial
guidance. Even though the objectives are based on market knowledge and
technical surveys, the risk are significant and it is not certain if the
Managing 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 Cencorp's capital
structure the company issues convertible bond with the maximum amount of EUR
1,500,000 and simultaneously issues stock options with maximum amount of
21,428,571 free of charge. One (1) stock option is issued per each subscribed
loan capital amount of EUR 0.07. The convertible bond is issued in deviation
from the shareholders' pre-emptive subscription rights to those current Cencorp
shareholders who directly on the record day of 31 June 2012 own at least one
million (1,000,000) Cencorp's shares or who otherwise are approved by the Board
of Directors. Convertible bond can also be subscribed against a loan receivable
from Cencorp, undisbuted on the record day, by converting the loan's capital or
interest 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 7
September 2014 when the convertible bond will be due in its entirety pursuant
to the loan terms. The shareholders' 

pre-emptive subscription rights are being deviated from as the stock options
are issued to secure financing required to strengthen Cencorp's capital
structure cost effectively and considering the size of the financing. Thus,
there is, from the company's point of view, a weighty financial reason to issue
the stock options. 

An annual interest of eight (8) % will be paid on the convertible bond from the
withdrawal of the bond. A holder of the bond has a right to subscribe an amount
of shares, equivalent to the bondholders shareholding percentage at the time,
in Cencorp's possible future share issues with subscription period ending
latest by 7 September 2014, at a subscription price that is 10 % lower than the
subscription price in the share issue in question. 

The holder of the bond is entitled to converse the promissory note into the
shares of the Company. One (1) stock option pursuant to the promissory note
entitles the bond holder to subscribe for one (1) new share of the company.
Based on the subscriptions made pursuant to the stock options, the Company
shall 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 to
collect capital to realize the photovoltaic business plan. The share issue is
expected to be carried out by the end of this year. Cencorp will inform
separately on the terms and schedule of the share issue. 

Realization of a convertible bond and a share issue involve risks. It is not
secured that the company will be able to collect EUR 1.5 million with the
convertible bond to strengthen its capital structure or with the share issue to
finance the establishing of photovoltaic module business plan. 



In Mikkeli, 21 August 2012

CENCORP OYJ

BOARD OF DIRECTORS



For more information, please contact:

Cencorp: Iikka Savisalo, President and CEO, tel. +358 40 521 6082,
iikka.savisalo@savcor.com 



Distribution:
NASDAQ OMX, Helsinki
Main media
www.cencorp.com


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
substantiallyimproves the efficiency of customers' production. The product
range alsoincludes EMI shielding solutions, flexible circuits and RFID
antennas. Cencorp's customers are automotive electronics manufacturers
andmanufacturers operating in telecommunications, industrial automation and
EMS.Cencorp's head office is located in Mikkeli, Finland. The company is part
of 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 take
loan from its certain current shareholders (Convertible Bond I/2012) so that
the Company issues stock options to the lenders of the loan so that the lenders
shall have the right to subscribe for the Company's shares based on the
respective stock options and that the lenders shall have the right to pay the
subscription price of the shares by setting it off against the loan receivable
referred to in this document (hereinafter ”Convertible Bond”) in accordance
with the following terms: 



I TERMS OF THE CONVERTIBLE BOND

  1. Principal of the Convertible Bond

The total principal amount of the Convertible Bond is one million five hundred
thousand euro (EUR 1,500,000.00) (the “Convertible Bond”). 

  1. Subscription Right for the Convertible Bond and Stock Options

The Company shall take the loan referred to in this Convertible Bond and shall
issue simultaneously against the loan with maximum amount of 21.428.571 stock
options 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 the
shareholders' pre-emptive subscription rights, to such shareholders who on July
31, 2102 (hereinafter the “Record Date of the Convertible Bond”) own directly
at least one million (1.000.000) Company shares or to other parties separately
approved by the Board of Directors. The Convertible Bond can also be subscribed
against the undisbuted loan receivable from the Company as per the Record Date
of the Convertible Bond by converting the loan capital or interest receivable
into the Convertible Bond in accordance with the terms of this Convertible
Bond. 

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 the
stock options are issued to secure financing required to strengthen the capital
structure of the Company cost effectively and considering the size of the
financing. Thus, there is from the Company's point of view a weighty financial
reason to issue the stock options. 

  1. Subscription Period and Venue for Subscription of the Convertible Bond

Such shareholders who are interested in to subscribe for the Convertible Bond
and who meet the conditions mentioned above in Section I.2 on the Record Date
of the Convertible Bond are asked to sign and submit the subscription form
attached as Appendix 1 to this Convertible Bond by August 31, 2012 to the
Company in accordance with the instructions included in the form. The
subscription shall take place when the Company receives the above mentioned
form by 6:00 p.m. on September 7, 2012. 

In the event the Convdertible Bond and the related stock options shall be over
subscribed, the Board of Directors of the Company shall resolve on the
allocation between the subscribers so that for each subscriber a minimum of a
percentual share of the Convertible Bond and related stock options shall be
allocated corresponding to the share ownership amount of the subscriber on the
Record Date of the Convertible Bond. 

  1. Loan Period of the Convertible Bond and Repayment

The Convertible Bond shall be paid to the Company's bank account Nordea Bank
Finland Plc IBAN: FI21 2185 1800 1271 11, BIC: NDEAFIHH at the latest on
September 7, 2012. The loan period shall commence on the payment date and
expire on September 7, 2014 (hereinafter the “Maturity Date”) on which date the
Convertible Bond shall expire to be repayable in its entirety in accordance
with these terms of the loan. 

The Company shall be entitled pursuant to the resolution of the Board of
Directors of the Company to repay the Convertible Loan or a part of it to the
holder of the Promissory Note signed in accordance with Section I.6 below also
any 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 Promissory
Note shall then have the possibility to inform the Board of Directors of the
Company within that 30 (thirty) days time period whether the holder uses
his/her/its right to subscribe for the Company's shares in accordance with
Section II prior to the repayment provided that the subscription shall take
place within the subscription period of the shares defined under Section II.2. 

The repayment of the Convertible Bond shall take place against the assignment
of the Promissory Note and in the event of a partly repayment, against a note
to be entered to the Promissory Note. 

  1. Interest of the Convertible Bond 

As of the date of withdrawal an annual interest of eight (8) percent shall be
paid to the capital of the Convertible Bond. The interest shall be paid
annually afterwards on June 30. 

The last interest period shall end on the date on which the Convertible Bond
shall be repaid in its entirety. The interest shall be calculated based on the
real interest days divided with 365 days. 

Upon the due date of the Convertible Bond on September 7, 2014, all the unpaid
interests 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 interest
shall be paid on the following banking day. 

  1. Promissory Note of the Convertible Bond

The Company shall issue to the subscriber of the Convertible Bond (hereinafter
“Promissory Note Holder”) a promissory note referred to in the Appendix 2,
which simultaneously serves as the stock option certificate of the stock
options referred to in Section I.2. The Promissory Noted shall not, however, be
issued prior to the date when the stock options related to the Convertible Bond
have been registered with the Companies Register. 

The Company commits to notify the Companies Register on the issue of the stock
options related to the Convertible Bond within one month from the date on which
the Company has resolved on the issue of the stock options related to the
Convertible Bond. 

     7. Transferability of the Promissory Note and Stock Options

The Promissory Note and related stock options and other rights and
responsibilities cannot be transferred without consent of the Company. The
stock options related to the Convertible Bond are not transferable unless the
loan based on the Promissory Note is also transferred simultaneously. 

  1. Right to Participate in the Forthcoming Share Issues by Reduced
     Subscription Price

A Promissory Note Holder shall be entitled to participate, by at least the
amount corresponding the percentual shareholding of the Company's shares at
that time, in potential future share issues arranged by the Company in which
the subscription period shall terminate at the latest on September 7, 2014 by
subscribing the shares at the subscription price that is 10 per cent lower
compared to the subscription price offered in the respective share issues. 

  1. Other

For the delivery of the notifications based on this Convertible Bond, the
Promissory Note Holder shall inform the Company his/her/its postal address as
from time to time. 

The Promissory Note Holder shall, as per request of the Company, submit to the
Company all necessary information with regard to the Promissory Note and its
administration. 



II TERMS FOR SHARE SUBSCRIPTION AND CONVERSION RIGHT

  1. Conversion Right and Conversion Ratio

The Promissory Note Holder is entitled to convert the Promissory Note into the
shares of the Company in accordance with the terms described below. One (1)
stock option pursuant to the Promissory Note entitles the Promissory Note
Holder to subscribe for one (1) new share of the Company. Based on the
subscriptions made pursuant to the stock options the Company shall issue a
maximum amount of 21.428.571 new Company shares. The Company has one (1) class
of shares. 

The subscription price of one (1) new share of the Company shall be 0,07 euro
per share. 

Upon using the conversion right a portion corresponding to the subscription
price of a share shall be set off against the unpaid capital of the Convertible
Bond and, subject to the consideration of the Board of Directors, against the
unpaid interest of the Convertible Bond. The subscription price of the shares
shall be entered in entirety into the reserve for invested unrestricted equity. 

  1. Conversion Period and Process Regarding Use of the Conversion Right

The Promissory Note Holder shall have the right to converse the Promissory Note
into the Company's shares during the conversion period (subscription period of
the shares) which commences on January 1, 2013 and which terminates on
September 7, 2014. 

The conversion of the Promissory Note into the shares shall take place pursuant
to the subscription rules in accordance with the Finnish Companies Act. The
Promissory Note Holder shall present to the Board of Directors of the Company
the written conversion request as attached in the Appendix 3 which shall
constitute the subscription of new shares. The Convertible Bond may be
converted into shares only in its entirety. 

When the Board of Directors has received the conversion request and the
Promissory Note Holder has assigned the Promissory Note to the Company, the
Board of Directors shall approve the subscription of new shares in accordance
with the Convertible Bond. Within 30 (thirty) days from the presentation of the
conversion request the Company shall file the Companies Register notification
with 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 Companies
Register shall be entered into public trading within 30 (thirty) days from
entering them to the Companies Register. 

  1. Shareholder Rights

The new shares of the Company, which have been subscribed for by using the
conversion right of the Convertible Bond, shall have the similar rights with
the Company's shares issued previously from the moment the new shares have been
entered into the Companies Register. 

  1. The Rights of the Promissory Note Holder in Certain Special Cases

If the Company during the loan period issues new shares in the share issue
against the payment or issues new stock options or other special rights
entitling to the shares referred to in Chapter 10 of the Finnish Companies Act
so that the shareholders shall have the pre-emptive subscription right, the
Promissory 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 the
Company by giving to the Promissory Note Holder the same priority for the
subscription of share and/or convertible bond and/or stock option, and/or the
exchange ratio of the Convertible Bond will be adjusted and/or the Promissory
Note Holder is given right to convert the Promissory Note to the shares during
the other time period than referred to in Section II.2 or by combining manners
of proceeding referred to above. 

If the Company during the loan period issues new shares free of charge, the
exchange ratio of the Convertible Bond shall be adjusted so that the percentual
share of the shares to be converted by the Convertible Bond compared to all
shares shall remain unaltered except for the part that the new number of shares
to be converted by the Promissory Note would be a fraction. In the event that
the above mentioned division would not be even, the highest round figure that
will fulfill the division to the whole shares will be applied. 

If the Company during the loan period resolves to acquire or redeem its own
shares or stock options or other special rights entitling to the shares
pursuant to the Chapter 10 of the Finnish Companies Act through an offer
directed to all shareholders or holders of the above mentioned rights, an equal
offer shall be made to the holder of the Promissory Note. The redemption or
acquisition of the shares and stock options or other special rights entitling
to the shares referred to in Chapter 10 of the Finnish Companies Act shall thus
be directed to the conversion rights of the Promissory Note pursuant to the
resolution of the Board of Directors. Otherwise acquisition or redemption of
own shares and stock options and other special rights entitling to the shares
referred to under Chapter 10 of the Finnish Companies Act shall not require any
actions from the Company with regard to the Promissory Note. 

If the Company during the loan period distributes its funds in other means than
what has been referred to in the previous section, the Promissory Note Holder
shall not be entitled to participate in the distribution of the funds and the
distribution of the funds shall not require any actions from the Company with
regard to the Promissory Note. 

If the Company is placed into liquidation during the loan period, the
Convertible Bond shall fall due for payment at the moment when placing the
liquidation has been entered into the Companies Register. 

If the Company during the loan period resolves on the merger or division, the
Promissory Note Holders shall be reserved a right, during the time period set
by the Board of Directors of the Company prior to resolution on the merger or
division, to convert the Promissory Note into shares. Alternatively the
Promissory Note Holders shall be given the right to subscribe for the
convertible bond issued by similar terms by the receiving company so that the
subscription can be made on equal rights compared to the shares of the
receiving company which have been issued to the shareholders pursuant to what
has been resolved on the matter in the merger plan or division plan. After the
above-mentioned time period reserved for the use of the conversion right or
after the end of the subscription period of the new convertible bond, no
conversion right shall exist anymore. 

If a redemption right or redemption obligation of the minority shareholders
referred to under Chapter 18 of the Finnish Companies Act arises, after Company
has received notification on the origin of the redemption right or redemption
obligation, the right to convert the Promissory Note into shares during the
time period resolved by the Board of Directors shall without undue delay be
reserved for the Promissory Note Holders. After the above-mentioned time period
reserved for the use of the conversion right, no conversion right shall exist
anymore. 

  1. Disputes

Disputes arising out of this Convertible Bond shall be settled by arbitration
consisting of one arbitrator in accordance with the Rules of the Arbitration
Institute of the Finland Chamber of Commerce. In the event the parties to the
dispute cannot agree on the arbitrator, the Finland Chamber of Commerce shall
appoint the arbitrator. The place of the arbitration shall be Helsinki,
Finland. 

  1. Other Issues

The Board of Directors shall be entitled to resolve on any other matter related
to the Convertible Bond and the use of the conversion right. Notifications to
the Promissory Note Holders shall be submitted by letters to the postal
addresses notified to the Company by each of the Promissory Note Holder. A
notification is deemed to have been delivered on the working day following the
date of sending the notification. 



III OTHER MATTERS

  1. Other Issues

These terms and conditions have been drafted in Finnish and in English. In the
case of any discrepancy between the Finnish and English terms and conditions,
the Finnish terms and conditions shall prevail.