Leclanché SA

DGAP-Adhoc: Leclanché SA: Leclanché SA secures CHF17 million medium term financing

Leclanché SA  / Key word(s): Miscellaneous

09.07.2013 07:15

Release of an ad hoc announcement pursuant to Art. 53 KR
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Leclanché SA secures CHF17 million medium term financing

Bruellan to convert CHF6.8 million loan into equity

Leclanché SA announces First Half Revenues and provides Guidance and
Business Update

Yverdon-les-Bains, Switzerland, July 9, 2013

Medium Term Financing

Leclanché S.A. (SIX Swiss Exchange : LECN), which specializes in the
production of large-format lithium ion cells and energy storage solutions,
announces today that it has signed a Senior Secured Convertible Loan
Agreement for CHF17 million ('Loan Agreement') maturing in June 2016 from
Precept Fund Management SPC on behalf of Precept Fund Segregated Portfolio
('Precept' or 'Lender'). This financing has been secured after a long and
difficult fund raising effort.

The Loan Agreement carries an interest rate of 2% per annum which will be
capitalized and added to the total loan amount due at maturity together
with a fee of CHF 500,000. The Loan is convertible into ordinary shares of
the Company at the Lender's option at any time during its term at an
effective conversion price of CHF 1.50 per share. If the Loan is not
converted at its maturity date it may be extended at the Lender's option or
otherwise repaid by the Company. The Loan Agreement includes certain
covenants that limit, among other things, the Company's ability to incur
additional debt and enter into certain contractual arrangements without the
Lender's consent. In addition, the Loan is secured by the assets of the
Company and will further benefit from security over the shares and assets
of its subsidiary, Leclanché GmbH, once the Bruellan loan has been
converted. Precept shall also be entitled to nominate two members to the
Board of Directors, who will be Mr. Bryan Urban and Mr. Jim Atack. Mr.
Urban has over 20 years of energy development, finance and operational
experience covering a broad array power generation and energy
infrastructure assets in the Americas and Asia/Pacific, and Mr. Atack
recently retired as Director of Strategic Development at a UK international
oil services company, Petrofac Plc.

The Loan Agreement further provides for certain other super majority
rights, including board representation that constitutes at least one third
of the board at all times, higher thresholds for board approval of certain
corporate actions and first right of refusal to underwrite any equity
issuance (subject to certain rights of shareholders). In addition to
customary events of default, the Loan Agreement also provides that if the
Company is unable to convene an Extraordinary General Meeting that approves
the proposals relating to the refinancing (as described below), or if the
resolutions are challenged, or if the registration of the resolutions in
the commercial register are blocked, then an event of default will be
triggered following a customary cure period. Additionally, an event of
default will be triggered if the Swiss Takeover Board does not provide the
Lender with an exemption from, or alternatively confirm that it is not
subject to, the obligation to submit a public tender offer.

The Company has issued a draw down notice for the first tranche of CHF4.7
million ('First Draw Down') under the Loan Agreement, part of which shall
be used to repay in full the EUR1million amount outstanding under the
additional EUR1.5 million facility provided by Bruellan, which was
announced by the Company on June 28, 2013. This additional facility will
not be fully drawn down.

The original loan made by Bruellan of EUR5 million, which was announced on
November 23, 2012, has been further extended to mature on the earlier of
the date that the resolutions of the Extraordinary General Meeting are
passed or 30 September 2013, provided that if no EGM is held by 31 August
2013 or such later date as may be agreed with Bruellan, the Loan will
become immediately payable.   The balance of the Bruellan loan,
approximately CHF 6.8 million, will be converted into equity at the same
conversion price as that applicable to Precept.

Precept has also elected to convert the First Draw Down into equity,
provided that the Swiss Takeover Board provides the Lender with an
exemption from, or alternatively confirms that it is not subject to, the
obligation to submit a public tender offer.

The Company will invite for an extraordinary general meeting to be held on
or about 26th August 2013. At the extraordinary general meeting
shareholders will be asked to approve (i) a reduction of the share capital
of the company by way of par value reduction to CHF2.11 per share, (ii) the
issuance of 4,602,237 new shares in favor of Bruellan in connection with
the conversion of the Bruellan loan, (iii) the issuance of 3,142,385 new
shares to Precept in connection with the conversion of the First Draw Down,
(iv) the creation of conditional share capital and authorized share capital
in the maximum amount of CHF 12, 457, 433.67 and 14,075,360.57,
respectively, in order to enable the Company to issue new shares if and to
the extent Precept makes further conversions under the Loan Agreement, (v)
the election of Precept's two representatives to the Board of Directors and
(vi) an opting out provision which exempts an acquirer of shares to make a
mandatory public tender offer  pursuant to the Stock Exchange Act. The
invitation with the respective agenda items and proposals will be published
in due course.

Commenting on the successful closing of this medium term financing, Mr.
Rolf Eckrodt, Chairman of Leclanché said: 'We are delighted that the
Company has secured this CHF17million medium term financing which provides
it with sufficient liquidity to pursue its product development and reach
commercial deployment of its exciting lithium-ion titanate product range
for the home and industrial markets. We warmly welcome Precept as a
financial partner and are grateful to Talisman Infrastructure Ventures LLP,
who are leading our turnaround and who facilitated the introduction of
Precept. It has been a long and difficult process to secure financing for
our Company at this stage of development, and I wish to personally thank
our senior management and all our staff for their perseverance and
dedication in seeing the Company through this difficult period. We can now
look forward to an exciting road ahead to make Leclanché one of the leading
technology players in the energy storage market'

Mr. Steve Barber, Chairman of Precept Investment Management Limited, the
investment manager of Precept Fund Management SPC said: 'I am delighted and
excited that we were able to conclude this financing program with
Leclanché, which will allow the Company to finance its turnaround plan and
create a solid platform for future growth in all business sectors of the
company at a time when the market for energy storage technologies is poised
for dramatic expansion. We are long-term, active participation, value
investors and look forward to not only actively assisting in its turnaround
and future growth plans, but also to a long and rewarding relationship with
Leclanché which has such an august history in the battery storage industry.
Most importantly, this financing program is very synergistic for our fund,
and marks our second investment in the energy storage sector globally,
which is projected to be a $60 billion market by 2020.

Half Year Results

The Company also announces today that its unaudited revenues for the six
months ended 30 June 2013 were CHF7.30 million as compared to CHF8.43
million for the same period last year, down by 13.5%.

Guidance

The Company expects that operating losses for the first six months will not
exceed CHF5.5 million, compared to CHF4.45 million in the same period last
year, before the deduction of interest, tax, depreciation and amortization.
Overall for 2013, and subject to the continued execution of its turnaround
plan, the Company expects that operating losses before interest, tax,
depreciation and amortization deductions will be below CHF10 million
compared to CHF12.9 million in 2012. With the funding secured from Precept,
and subject to the receipt of the relevant shareholder approvals and Swiss
Take Over Board exemption, the Company will be able to proceed with the
execution of its turnaround plan and expects to  break-even during 2015
(before interest, tax, depreciation and amortization deductions). However,
these projections remain heavily dependent on a successful launch of the
Company's stationary product range and the continued execution of the
turnaround plan.

Business Update

The Company expects to launch its storage module HS3200 destined for the
residential market in Quarter 1, 2014 and its industrial storage systems in
the first half 2014.

Leclanché's large-format lithium-ion cells, the 17300 format cells which
are manufactured on its new production line in Willstätt, have fulfilled a
number of validation tests and have met expectations in terms of safety,
cycle count and electric performance. At the same time, the company has
assembled the first home storage modules (HS3200 modules), which are now in
the test phase. These are expected to be available for commercial launch in
Quarter 1, 2014. The industrial storage systems using the large-format
lithium-ion cells will be developed in conjunction with a third party
partner and is expected to be available for commercial launch in the first
half of 2014.

The Company further announces that progress has been made in resolving the
speed issue on its new production line. The problem affecting one specific
production step has been identified and was due to a crucial machine
component that was out of specification. This issue has now been corrected
and successfully tested. The solution is currently in validation phase and
the issue is expected to be resolved in Quarter 3, 2013.

In addition, the Company has made progress in the development of electrodes
using high voltage cathode materials. The development of this next
generation product range follows the Company's product development road map
objectives. However, the ongoing development of this product and its
commercial availability remain uncertain, and the Company makes no
commitment as to if and when this product will be incorporated into
commercial production.

About Leclanché

Leclanché's strategy is to become one of the leading lithium-ion cell
producers and solution providers for renewable energy storage systems in
Europe. Its strategic priorities are stationary home electrical energy
storage applications and expansion into the stationary industrial and grid
electricity storage markets. Through participation in research consortia
focusing on hybrid and E-mobility applications, Leclanché is positioned to
take advantage of new market opportunities.

Through a unique, patented ceramic separator technology and focus on
lithium-titanate technology, Leclanché manufactures large-format
lithium-ion cells, optimized for safety and cycle-life, in a fully
automated production process. The newly installed production line will have
an annual capacity of one million cells or 76 MWh.

Leclanché was founded in 1909 in Yverdon-les-Bains. Through the integration
of a spin-off from the Fraunhofer-Gesellschaft in 2006, the company evolved
from a traditional battery manufacturer to become a leading developer and
manufacturer of lithium-ion cells in Europe. Leclanché currently employs
120 staff and is listed on the SIX Swiss Exchange (LECN). The company has
its headquarters in Yverdon-les-Bains (Switzerland) and production
facilities in Willstätt (Germany).

www.leclanche.eu

Media contact:

Christophe Lamps, Dynamics Group S.A.: Telephone: +41 79 476 26 87,
cla@dynamicsgroup.ch

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.


09.07.2013 News transmitted by EQS Group AG.
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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

End of Announcement                             EquityStory News-Service

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