Day4 Energy Reports Sale of Day4 ecoTec
2012 APR 20 - (VerticalNews.com) -- Day4 Energy Inc. (TSX: DFE), a leading global provider of solar photovoltaic (PV) products and solutions, reported that it has completed its previously announced sale of its subsidiary Day4 ecoTec GmbH.A The sale was completed on March 31, 2012 to a company controlled by a director of Day4.
Under the terms of the transaction the acquirer will acquire 100% of issued and outstanding shares of Day4 ecoTec from Day4 for a total consideration of $100 and will cause Day4 ecoTec to issue a secured debenture to Day4 in the principal amount of a‚¬4.5 million, which represents net amounts advanced by Day4 to Day4 ecoTec and the two parties have agreed is the amount owingon the closing date.A The secured debenture carries an interest coupon equal to the main refinancing operation (fixed rate) of the European Central Bank plus 5% per annum, to a maximum of 7.5% per annum for the first five years and 8% per annum thereafter.A The debenture will be secured against the assets of Day4 ecoTec and the security will rank behind any existing bank security of Day4 ecoTec. The principal portion of the debenture is to be paid to Day4 by quarterly instalments in the amount of a specified percentage of Day4 ecoTec's cash receipts in a quarter, to a maximum of a‚¬200,000 per quarter. Interest will be payable quarterly in arrears.A The secured debenture will mature on March 31, 2022.
The sale is expected to significantly reduce Day4's monthly operating costs as well as its long and short term debt.A As a result of the transaction, Day4's staff will be reduced from 132 employees to 50A employees.
In connection with the sale, certain long-term relationship agreements and non-competition agreements were terminated which agreements were initially entered into at the time when Day4 acquired Day4 ecoTec.A The long term relationship agreement previously included restrictions on the manner and timing of any dispositions of Day4 shares by the previous owners of Day4 ecoTec and provided that Day4 would appoint two nominees of the previous owner to the board of directors of Day4.
This sale transaction is exempt from the shareholder and valuation requirements of "related party" transactions under applicable securities legislation as Day4 is considered to be in financial hardship and the transaction is designed to improve Day4's financial position.A The transaction was unanimously approved by the directors of the Company, excluding the related director.
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This article was prepared by VerticalNews Economics editors from staff and other reports. Copyright 2012, VerticalNews Economics via VerticalNews.com.