Drammen, 2 April 2014. Eltek and Ceragon have entered into a settlement agreement pursuant to which all claims and disputes between the parties related to the divestment of Nera Networks are finally settled.
References is made to previous announcements regarding the dispute between Eltek ASA and Networks Holding AS (together, "Eltek") and Ceragon (UK) Limited, a wholly owned subsidiary of Ceragon Networks Ltd (together, "Ceragon"), relating to the divestment of Nera Networks.
Eltek completed on 19 January 2011 the divestment of Nera Networks AS pursuant to a share purchase agreement of same date (the "Share Purchase Agreement"). The purchase price was USD 48.5 million on a cash and debt free basis. For further details on the transaction reference is made to the stock exchange announcement made on 19 January 2011. Pursuant to the terms of the Share Purchase Agreement, Eltek provided an extensive set of representations and warranties for a period of 18 months, i.e. up to 19 July 2012, except for representation and warranties relating to title and tax for which the survival period is up to 10 years. USD 10 million of the purchase price was paid in escrow for 18 months to cover potential breaches of the representations and warranties as mentioned above.
On 17 July 2012, Eltek announced that it on 16 July 2012, had received a claim from Ceragon for alleged breaches of representations and warranties under the Share Purchase Agreement, setting out alleged losses for which damages is sought of approximately USD 18.6 million. In addition, Ceragon referred to additional exposure related to tax, which allegedly may become a loss for which a claim will be made. On 24 June 2013 Ceragon filed a writ of summons with the Oslo district court (NO: Oslo tingrett). The claim consisted of several items and sets out alleged losses for which damages were sought of approximately USD 21.5 million.
Eltek and Ceragon have yesterday evening entered into a settlement agreement pursuant to which all claims and disputes between the parties are finally settled. Pursuant to the terms of the settlement agreement the parties are further relieved from all claims, exposures and obligations, whether actual or contingent, whether known or unknown, that arise out of, result from, is based or in any way derived from, connected or related to the Share Purchase Agreement.
Pursuant to the settlement agreement, Eltek shall make payment to Ceragon of USD 17 million. The settlement amount is paid by release of the USD 10.15 million held in escrow and an additional payment of USD 6.85 million. Eltek has previously made a provision of USD 11 million for liability under the Share Purchase Agreement. The net result effect of the settlement will therefore be USD 5.85 million.
For further information, please contact:
Björn Wigström
Chief Financial Officer
+47 32 20 32 34 / +47 90 53 13 04
About Eltek ASA:
Eltek is a strategic technology partner for power solutions. The company reported revenue of NOK 3.7 billion in 2013, and has approximately 2,400 employees and operations in almost 40 countries. The company focuses on power electronics markets, where it is one of the leaders in telecom power and a growing force within industrial applications. Eltek is also pursuing growth opportunities within the datacenter market. Eltek is listed on Oslo Stock (ELT:Oslo) Exchange and headquartered in Drammen, Norway.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Eltek ASA via Globenewswire
