EQS Group-Ad-hoc: Leclanché SA / Key word(s): Alliance/Agreement Leclanché announces strategic company reorganization along with an Industrial Partnership Agreement with Eneris Group aiming at creating a leading European battery partnership Eneris Group to make direct investments totaling up to CHF 95 million in two manufacturing JVs and a Technology License Agreement - Eneris to provide up to CHF 42 million in working capital loans and make investments in excess of CHF 53 million in a major capacity expansion programme in newly established Joint Ventures with majority ownership; - Leclanché grants a license to Eneris for further development and access to larger scale industrialization; - Material reduction for Leclanché in cash intensity of the business: reduced Operating and Capital expenses; - Worldwide business wins with combined order book exceeding CHF 90 million for delivery over years 2020 to 2021- excluding the St. Kitts project; - Establishing a Build-Own-Operate (BOO) projects business line for selected stationary projects with a long-term Power Purchase Agreement (PPA) and/or Offtake Agreement with local customers; - Leclanché shall retain all customer contracts unchanged; - New Leclanché pivots to a green tech software and systems integration company using the competitive products manufactured at giga-scale in partnership with Eneris group YVERDON-LES-BAINS, Switzerland, 2nd June 2020 - Leclanché SA (SIX: LECN), one of the world's leading energy storage companies, today announced a strategic reorganization which will convert the company into a market oriented, research-driven, software and systems integration company with expanded production and R&D capabilities based on a partnership agreement with Eneris Group, a leading European cleantech player operating out of Poland, "the factory of Europe" and a key participant in the EU "Important Project for Common European Interest on batteries" programme. Stefan Mueller, Chairman of the Board, said: "We are pleased with the comprehensive Strategic partnership agreements signed with Eneris Group. This can be a truly transformational partnership to create a market leader. We thank all our shareholders for their significant and patient investments since late 2006 in developing our Energy Storage Business based on in-house Lithium Cells and Systems. Our time has now come. On behalf of the Board, I would like to sincerely thank Mr. Artur Dela, Founder and CEO of Eneris Group, for his trust in Leclanché. We are looking forward to his entrepreneurial leadership and drive to support the success of both Companies. I would also like to thank and congratulate Anil Srivastava, CEO of Leclanché, for securing the industrial investment partnership with Eneris Group. We are confident that he and his management team will expeditiously implement the strategic reorganization." Artur Dela, Chairman of Eneris Group, said: "The mission of Eneris is 'clean air, soil and water, innovation protecting the environment.' The challenge of this century is to protect the planet. To protect the environment, we need to change our energy paradigm. The European "Green Deal" confirms this clear direction to our industries, scientists and financiers. Energy transition is our focus and energy storage is key to it, as demonstrated by our participation in EUs ICPEI program and now partnership with Leclanché. The market needs adequate batteries for stationary energy storage to be associated with renewable energy sources and, in association with fuel cells, for eTransportation: buses, trucks, vessels, locomotives, heavy-duty machines, etc. Leclanché has them. A 111-year old start-up, Leclanché is a pioneer in new generation batteries and a visionary focus on cleaner and more performant systems with no harmful liquids, higher energy density and more charging cycles. It has an important growth potential. The market demand for its products far exceeds its current manufacturing capacity, while its current advanced know-how needs to be further financed. I am persuaded that various cooperation models and integration are key to succeeding in any new industry, and in particular, in sectors like energy storage which is highly competitive and capital intensive for R&D, large scale industrialisation and commercialization. Eneris's industrial base and its participation in the IPCEI consortium, together with Leclanché's know-how, will accelerate and reinforce our common development. I am pleased Leclanché has accepted our proposal to join forces and I would like to personally thank the Board for its confidence and the management team led by Anil Srivastava for the hard work in completing a complex and far-reaching transaction in record time during this turbulent period." A Shareholder Letter, dated 2nd of June, 2020, provides additional information from the company and is available here. Anil Srivastava, CEO of Leclanché, said: "The transformational partnership agreement with Eneris will lift a tremendous capital burden off Leclanché's shoulders while guaranteeing production capacity. The JVs to be created will produce Leclanché technologies and Leclanché-branded products. They will be majority owned by Eneris with a minority stake held by Leclanché with key reserve matters and approval rights. The Joint Ventures with Eneris shall manufacture products based on Leclanché technologies with capacity reservation for Leclanché based on mutually agreed-upon business plans with Eneris." Key features of this agreement include: 1) Eneris will provide Leclanché with working capital financing of up to CHF 42 million to fully fund the business plan through June 2021; 2) Licensing of Leclanché's technology to Eneris against payment of a royalty fee of up to CHF 32 million, according to an agreed-upon payment schedule. This licensing is non-exclusive on a right to use basis, with the freedom to carry out future developments. The licensing is applicable worldwide excluding the Republic of India; 3) Creation of two manufacturing Joint Ventures ("JV") in which Eneris will hold the majority of the share capital thanks to an investment in excess of CHF 53 million for a major capacity expansion programme: one in Germany for the production of cells and the other in Switzerland and Poland for the assembly of modules. A third is being considered for France. We expect these JVs to be formed over a period of time, in consultation with the relevant workers council and in accordance with applicable laws. About 135 production employees will be transferred to the JVs; 4) Leclanché will sign a production offtake agreement with Eneris in which Eneris will reserve the required production capacity for Leclanché in the coming years; 5) Leclanché will retain full ownership of its technology and will continue to invest in Research & Development (R&D) activities for cells, modules and Battery Management Systems (BMS).
Prior to the signing of the agreements with Eneris, the full Board made a determination to ensure that the agreement was in the best interest of the Company and all its shareholders. A Valuation Analysis of the new Leclanché resulting from the transaction with Eneris Group was conducted by an Independent Director of the Board. The full Board reviewed this analysis and arrived at a very clear and unanimous view that the agreement with Eneris is highly value accretive for the Company and is in the best interest of all its shareholders. On this basis, the Board of Directors approved all three agreements underpinning the overall transaction with Eneris Group. The Company has already secured a Construction Loan of CHF 46 million for the St. Kitts project from a large Infrastructure Fund in New York and aims to start the Construction of this project at the earliest possible point after COVID-19 related travel restrictions are eased. The Company plans to create a separate holding company, the "BOO HoldCo," where Leclanché S.A. shall retain a controlling majority stake. The shift to the BOO model underpins long-term profitability for the Company, the shift of the revenue due to technical accounting rules mentioned above shall also move EBITDA positive results to the year 2022. It is important to reiterate that the addition of the BOO model will add profitable growth for 20 years and further strengthen the assets in the balance sheet of the Company and make it less dependent on annual fluctuations of project revenues." Anil Srivastava, CEO of Leclanché, said: "We are excited about the comprehensive Industrial Cooperation Agreement signed with Eneris Group. Though the agreements shall be implemented progressively, upon meeting certain conditions, the Company remains confident to successfully implement all the agreements. Nevertheless, the Company has put in place reasonable safeguards to mitigate the risks resulting from any unlikely event of major variations to the agreement. This can truly be a transformational partnership to create a global market leader. We reiterate that the strategic reorganization underway shall: - Set the Company on course to deliver sustainable and profitable growth for years to come; - The new Leclanché shall pivot increasingly towards more software and systems integration using the competitive products manufactured-at-scale in partnership with Eneris Group; - We have secured substantial fresh capital and access to large production capacity with minimal dilution for all shareholders of Leclanché S.A.; - With all of the above, we have increased our ability to serve all our customers better; and win new ones at an accelerated pace to become a market leader."
About Eneris Group SIX Swiss Exchange: ticker symbol LECN | ISIN CH 011 030 311 9
Disclaimer This press release contains certain forward-looking statements relating to Leclanché's business, which can be identified by terminology such as "strategic", "proposes", "to introduce", "will", "planned", "expected", "commitment", "expects", "set", "preparing", "plans", "estimates", "aims", "would", "potential", "awaiting", "estimated", "proposal", or similar expressions, or by expressed or implied discussions regarding the ramp up of Leclanché's production capacity, potential applications for existing products, or regarding potential future revenues from any such products, or potential future sales or earnings of Leclanché or any of its business units. You should not place undue reliance on these statements. Such forward-looking statements reflect the current views of Leclanché regarding future events, and involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such statements. There can be no guarantee that Leclanché's products will achieve any particular revenue levels. Nor can there be any guarantee that Leclanché, or any of the business units, will achieve any particular financial results.
Additional features: Document: https://eqs-cockpit.com/c/fncls.ssp?u=VGDUIWATFT Document title: Letter to Shareholders, June 2020 End of ad hoc announcement |
Language: | English |
Company: | Leclanché SA |
Av. des Sports 42 | |
1400 Yverdon-les-Bains | |
Switzerland | |
Phone: | +41 (24) 424 65-00 |
Fax: | +41 (24) 424 65-20 |
E-mail: | investors@leclanche.com |
Internet: | www.leclanche.com |
ISIN: | CH0110303119, CH0016271550 |
Valor: | A1CUUB, 812950 |
Listed: | SIX Swiss Exchange |
EQS News ID: | 1060319 |
End of Announcement | EQS Group News Service |
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1060319 02-Jun-2020 CET/CEST