Eltek ASA : Claim for damages with respect to the divestment of Nera Networks AS

Eltek has, in the evening on 16 July 2012, received a claim from Ceragon relating to the divestment of Nera Networks, for alleged breaches of representations and warranties under the Share Purchase Agreement. The claim consists of several items that have been aggregated into one claim notice and sets out alleged losses for which damages is sought of approximately USD 18.6 million. In addition, Ceragon has in the claim notice referred to additional exposure related to tax, which allegedly may become a loss for which a claim will be made. Based on the very limited information provided in the claim notice it is difficult to consider whether there is at all any merits in the claims made. Eltek will now review the claims made and consider whether there is any basis for the alleged breaches of representations and warranties pursuant to which a valid claim may be made.

On 19 January 2011, Eltek completed the divestment of Nera Networks AS to Ceragon (UK) Limited, a wholly owned subsidiary of Ceragon Networks Ltd pursuant to a share purchase agreement of same date (the Share Purchase Agreement), for a purchase price of 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 and the Information Memorandum of 15 February 2011 (as announced on 22 February 2011). Pursuant to the terms of the Share Purchase Agreement, Eltek provided certain 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 obligations as mentioned above. The total liability for Eltek under the Share Purchase Agreement is limited to USD 22 million, except for any potential liability relating to title, tax and illegal payments which is limited to the purchase price of USD 48.5 million on a cash and debt free basis.

For further information, please contact:

Eltek ASA
CFO Pål Skistad: +47 908 50 378

About Eltek ASA:

Eltek is a strategic technology partner within power solutions. The Company reported revenue of NOK 3.6 billion in 2011, and has approximately 2,400 employees in close to 40 countries. Following the planned divestment of Nera Telecommunications, Eltek focuses on its core business in telecom power and power electronics solutions for industrial applications and renewable markets such as solar power and electric vehicles. Eltek is listed on Oslo Stock Exchange and headquartered in Drammen, Norway.

 

This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.