Leclanché restructure delayed

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From pv magazine Germany.

Swiss battery manufacturer Leclanche has announced a Covid-19-related delay in implementation of an agreed CHF95 million ($105 million) investment from Polish-Luxembourgois cleantech company Eneris Group.

At the beginning of June, Leclanche announced it had reached agreement with Eneris to establish two, possibly three, manufacturing joint ventures (JVs) with the partner company supplying CHF95 million plus up to CHF32 million in royalty payments for Leclanche technology used outside India, where the Swiss manufacturer has an existing JV.

The plan involved a Leclanche-Eneris battery cell production fab in Germany and module production facilities in Switzerland and Poland, at a cost of CHF53 million, with the possibility of a third JV being set up in France. Under the terms of the industrial co-operation agreement, Leclanche would have been split into two units – eTransport Solutions and Stationary Storage Solutions – in the fourth quarter, and the energy storage business then either sold or transferred to strategic shareholders in a joint venture.

However, Leclanche today announced: “As a result of recent developments due to Covid-19-related delays on certain projects, Leclanché and Eneris Group have elected to reassess their relationship and its timing regarding the new context.

That means suspension of a funding package – “for the time being,” said Leclanche – which would have seen the historic Swiss company receive CHF42 million to keep operations running to the end of June. It was unclear whether Energis had already handed over the first CHF5 million stipulated in June’s arrangement and whether, if so, the money will have to be refunded.

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For now, Leclanche main shareholder Fefam has jumped in with a CHF34 million bridge loan. “After having invested more than CHF240 million in the company over the past few years, we are pleased to see that the company has reached a critical size to create two standalone business entities,” said Marc Lefebvre, president of the Fefam group of four sub investment funds. “It presents a clear investment proposition for new investors to become reference shareholders alongside our very considerable investment so far.

Eneris Group president Artur Dela made soothing noises about the setback, stating: “We strongly believe in cooperation with Leclanché in building European advanced batteries capacity. Our cooperation so far has proven our industrial compatibility and necessity to combine forces to address the challenge of European e-mobility and energy storage. The lending instrument, chosen in a particular time of confinement, has not proven adequate and we are looking forward for direct industrial, technology and R&D investments, while thanking Leclanché’s main shareholder, Fefam, for directly supporting the company and allowing us to focus on implementing our cooperation, and for Leclanche management to grow its market position with outstanding products and solutions.”

Nevertheless, Leclanche is now on the hunt for new investors. The historic company has decided to increase annual production capacity at the planned German cell fab to 2.4 GWh with the main customers reportedly interested in becoming shareholders in the JV. To finance such a move, Leclanche directors are seeking a bank to help with capital fundraising.

“In order to implement this additional, CHF10.71 million debt-to-equity conversion, the board of directors will resolve an increase of share capital, from authorized share capital, at a conversion price of CHF0.5348 per share, and excluding the existing shareholders’ subscription rights on 17 September, 2020, concurrently with the implementation of the CHF50.93 million debt-to-equity conversion,” said the company.

If the plans come to pass, Leclanche’s debt mountain would be reduced considerably to around CHF15 million as the business aims to balance gross earnings by 2022/2023 before moving into profit.

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