Ieper, Belgium – 15 January 2010 – Punch International nv ('Punch'), the diversified industrial holding company with headquarters in Ieper, today announced that it has finalised a call option agreement with the investment company LRM. The agreement concerns 69.57% of the shares in Punch Powertrain nv (‘Punch Powertrain’), OEM developer and manufacturer of continuously variable transmissions (CVTs) for passenger cars, presently held by Punch Motive nv (‘Punch Motive’), a 100% subsidiary of Punch.
LRM has a call option on the Punch Powertrain shares so that a clear framework is created in which LRM can also attract other investors to finance the further growth of the company and various projects that are already in the pipeline.
LRM has been a Punch Powertrain shareholder since 6 May 2009, with 29.66% of the fixed assets. The call option shares represent 69.57% of the fixed assets of Punch Powertrain, the remaining 0.77% is held by members of the Punch Powertrain management.
Call option agreement conditions
The exercise price of the option amounts to 5 million euros (1.01 euros per share) in total, of which 250,000 euros is paid upon the signing of the call option agreement. The exercise period runs up to and including 31 March 2010. Upon exercising the call option, Punch Powertrain will also pay its shareholder loan from Punch Motive (a 100% subsidiary of Punch), amounting to 3.6 million euros plus interest during the 2010 financial year.
The call option agreement also provides an earn-out for a possible exit for LRM within 10 years after the exercising of the call option.
Punch consolidated balance and profit-and-loss account
Punch will propose its current participation in Punch Powertrain as of 31 December 2009 as assets intended for sale. In accordance with IFRS, these assets must be taken at market value, in this case approximately 9 million euros. A one-off loss of a maximum of 18 million euros will therefore be posted. Furthermore, at balance level the financial debt will fall by approximately 19 million euros and the balance total by approximately 40 million euros.
The agreed earn-out regulation is not included in the balance and the profit-and-loss account because its realisation is not certain and fixed.
Focus on Graphix and Telematix
Various issues mean that the group is withdrawing fully from the automobile industry. In the future, Punch will concentrate fully on activities in the Graphix and Telematix sectors which are most closely connected to the group strategy of aiming for a leading market position – top 3 in every market sector or every niche in which the group is active, a maximisation of the recurrent incomes and global presence as a niche player. The seasoned equity offering completed at the end of December 2009 guarantees the continuity of the Punch Graphix and Punch Telematix activities and creates the necessary room for its further development.
Wim Deblauwe, CEO of Punch: “The current economic situation is forcing us to make choices. Punch Powertrain has considerable potential for growth. With the call option we are creating a framework in which strong partners such as LRM can take over so that Punch Powertrain can expand as much as possible. We are proud that we were the initiator of this course of action under Guido Dumarey’s incentive. We are however now going to focus on Punch Graphix and Punch Telematix, which are more closely connected to our strategy”.
Further information
Investor Relations – Punch International – Ter Waarde 64 – 8900 Ieper – Belgium – Tel.: +32 (0)57 221 280 – Fax: +32 (0)57 222 281 – E-mail: investor.relations@punchinternational.com
About Punch International
Since its establishment in 1982, Punch has grown into being a diversified industrial holding company. Punch aims for capital growth in the long term by means of majority participations in a varied portfolio of companies for which it wants to unlock the implicit value. As a technology catalyst, Punch finances the commercial breakthrough of proven and promising technologies. As a consolidator Punch wants to create a critical mass so that it can take up a leading market position in those sectors in which it is active. Punch always plays an active role in the management of its participations to positively influence their operational, commercial and financial performance and so maximise value for shareholders.
In 2008 Punch achieved a turnover of 341.5 million euros with a net profit of 43.3 million euros. Punch has been listed on Euronext Brussels since 1999.
All press announcements and other information are available at www.punchinternational.com and www.euronext.com.
About LRM
LRM is a profit-oriented investor, offering entrepreneurs a unique combination of venture capital and real estate. Oxygen for growth! LRM is a generalist, but has developed specific competencies in ICT, Life Sciences and Cleantech. LRM's activities contribute to the economic development and general employment in the province of Limburg. It targets all sectors and companies, from starting companies to growing SMEs and larger businesses. Access to LRM runs via five domains: ICT & Media, Life Sciences, Cleantech & Energy, SMEs and Large Businesses. www.lrm.be
Forward-looking statements disclaimer
Certain statements in this announcement are forward-looking statements. Each forward-looking statement is only applicable on the date of this announcement. Such statements are based on current expectations and convictions and include, because of the nature of things, a number of known and unknown risks and uncertainties so that the actual results and performances can differ significantly from expected future results or performances expressed or implied in the forward-looking statements. The information and opinions contained in this announcement can change without prior notice, and Punch International nv does not have the intention, nor the obligation, to update the forward-looking statements in this communication, except where this is required by any applicable law or by rules governing any stock exchange on which its shares are possibly traded.