Incap Oyj : Incap’s prospectus and the previously unpublished information therein

INCAP'S PROSPECTUS AND THE PREVIOUSLY UNPUBLISHED INFORMATION THEREIN                                                 

Incap Corporation has today published a prospectus concerning the directed share issue implemented on 11 April 2012. In the share issue, a total of 2,168,100 new shares were offered to the major shareholders of the company deviating from the pre-emptive right of the current shareholders. Finnish Financial Supervisory Authority has approved the prospectus on 14 September 2012.

Trading in new shares is expected to begin on 19 September 2012, along with the old shares. After this, the total number of Incap's shares at Helsinki Stock Exchanges is 20,848,980. Incap has one series of shares and the new shares of the directed share issue are equal with other shares of the company.

Incap has prepared the prospectus solely in order to enable the company to apply for the admission of the new shares to public trading. The prospectus does not constitute an offer or solicitation to purchase or subscribe for the company's shares.

The prospectus is published in electronic form and in Finnish only on the company's website at www.incap.fi/Investors/Share. A printout of the prospectus may be obtained free of charge from the company's corporate office at the address Incap Corporation, Valuraudankuja 7, 00700 Helsinki. The prospectus can be ordered by e-mail at info@incap.fi or by phone on +358 40 653 3304 or on +358 40 504 8296.   

In the prospectus, Incap gives previously unpublished information on the risks concerning continuity of operations and financing as well as on the sufficiency of working capital as follows:

Most important risks related to the continuity of Incap's operations are the success of the share issue to be implemented in the autumn, the fulfilment of the conditions set by the bank for the second instalment of additional financing, the fulfilment of the covenant levels set for the continuation of the bank financing, the sufficiency of the actions to improve the profitability and inventory turn as well as the development of the customers' market and demand. Incap's management is confident concerning the continuity of operations, because the financiers and biggest shareholders of the company have during the financing negotiations last spring expressed their support to the plans concerning the company's further development and enhancement of capital structure. Further, the company's profitability is estimated to continue improving during the latter half of the year thanks to the structural change and enhanced efficiency.

Loans and factoring credit lines granted by a Finnish bank totalled EUR 13.3 million on 30 June 2012. These loans involve the following covenants:

The covenants related to the loans were not met on 30 June 2012. On this date, the company's equity ratio was 4.3% and net IBD/EBITDA was 16.2. The bank has the right to terminate the agreements to expire after 60 days if any covenant is not met on the testing date. On 23 August 2012, the company was informed by the bank in writing that the bank will not exercise its right to terminate the financing agreements, even though the covenants were not met on 30 June 2012. The covenants will be tested next in December 2012 and after that every six months.

As part of the financing arrangement agreed in May, the company received an additional loan of EUR 2.5 million. The first instalment (EUR 1 million) was withdrawn in July 2012. The covenants for this instalment are the same as above, and the bank further has the right to terminate the loan in case the redemption of the convertible bond 2007 has not taken place by the end of 2012.

Based on the forecast drafted by the company on 16 August 2012, the above covenants will be met on the next testing date 31 December 2012, provided that the company's share issue in the autumn goes as planned.

In the prospectus Incap has corrected the figures concerning the mortgages on 30 June 2012, 31 March 2012, 31 December 2011 and 30 June 2011. According to the bank's confirmation the total amount of mortgages on these dates is EUR 1 million lower than previously reported.

Statement on the sufficiency of the working capital:

Incap's existing working capital will not cover the need for the next 12 months. According to the company's estimate, about EUR 3-5 million of additional working capital is needed.

However, the company's working capital will be sufficient for the next 12 months if the following criteria are met:

• the company's share issue in the autumn succeeds as planned, so that the company obtains funds for the redemption of the convertible bond of 2007; and
• the bank accepts the achieved net IBD/EBITDA level, so that the second instalment of the additional loan can be withdrawn; and
• the goals for the company's result and inventory turnover rate are achieved; and
• the covenants for the company's loans from financial institutions are met, or, should the covenants not be met, the bank will not exercise its right to terminate the loan agreements.

The company's management is confident that the share issue in the autumn will be carried out as planned. The strategic process of change has continued as planned; the company closed down the Helsinki plant in the summer 2012 and transferred its production to other units. This structural change and other efficiency improvement measures are expected to improve profitability during the latter half of 2012. In addition, the company will continue to take measures to ensure that the goals for the company's result and inventory turnover are achieved. Thus, the company estimates that it will be able to cover any possible working capital deficit and ensure that the covenants related to the financing agreements are met.

Should the covenants not be met and the financiers would inform that they will make use of the covenants to terminate the agreements the company should initiate negotiations on the rearrangement of funding and on gaining new equity or debt financing.

INCAP CORPORATION

Sami Mykkänen

President and CEO

Additional information:

Sami Mykkänen, President and CEO, tel. +358 40 559 9047

Kirsti Parvi, CFO, tel. +91 990 204 2813

Hannele Pöllä, Director, Communications and Investor Relations, tel. +358 40 504 8296

DISTRIBUTION

NASDAQ OMX Helsinki Ltd

Principal media

www.incap.fi

INCAP IN BRIEF

Incap Corporation is an internationally operating contract manufacturer whose comprehensive services cover the entire life-cycle of electromechanical products from design and manufacture to maintenance services. Incap's customers include leading equipment suppliers in energy-efficiency and well-being technologies, for which the company produces competitiveness as a strategic partner. Incap has operations in Finland, Estonia, India and China. The Group's revenue in 2011 amounted to around EUR 68.9 million, and the company currently employs approximately 670 people. Incap's share is listed on the NASDAQ OMX Helsinki. Additional information: www.incap.fi.

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Source: Incap Oyj via Thomson Reuters ONE
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