Eltek ASA : ELTEK ASA - LAWSUIT INITIATED WITH CLAIM FOR DAMAGES FOLLOWING THE DIVESTMENT OF NERA NETWORKS AS Eltek completed on 19 January 2011 the divestment of Nera Networks AS to Ceragon (UK) Limited, a wholly owned subsidiary of Ceragon Networks Ltd (together, "Ceragon") 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 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 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. The claim consisted of several items that have been aggregated into one claim notice and set out alleged losses for which damages is sought of approximately USD 18.6 million. In addition, Ceragon 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 and documentation provided in the claim notice, Eltek found it difficult to consider whether there was at all any merits in the claims. Ceragon has on 24 June 2013 filed a writ of summons with the Oslo district court (NO: Oslo tingrett) for alleged breaches of representations and warranties under the Share Purchase Agreement. The claim consists of several items and sets out alleged losses for which damages are sought of approximately USD 21.5 million. Eltek has not yet received the exhibits to the writ of summons. When the exhibits are received Eltek will further review the writ of summons and the documentation provided to Eltek to determine whether there is any basis for any of the alleged breaches of representations and warranties under the Share Purchase Agreement pursuant to which valid claims under the Agreement may be made. Eltek underlines that the total liability for Eltek under the Share Purchase Agreement is limited upwards to USD 22 million, except for the liability relating to title, tax and illegal payments, which is limited to the purchase price, USD 48.5 million. These limitations can only be set aside if there is gross negligence, wilful misrepresentation or wilful misconduct, or fraud on Eltek's side, which Eltek denies is the case. Eltek will also note that according to the Share Purchase Agreement, Ceragon shall not have the right to be compensated unless and until a single loss or the sum of related losses in the aggregate is/are in excess of USD 200,000 (the Mini Basket Amount). Several items of the claim are below the Mini Basket Amount, and consequently not recoverable under the Share Purchase Agreement. Finally, several of the claims apparently relate to contingent claims, i.e., claims where no loss yet have been suffered by Ceragon. Eltek rejects that there is any basis for liability for such claims. For further information, please contact: Erik Thorsen Chairman of the Board of Eltek ASA +47 907 56 685 This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act. ------------------------------------------------------------------------------ This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Eltek ASA via Thomson Reuters ONE HUG#1711714
Eltek ASA : ELTEK ASA - LAWSUIT INITIATED WITH CLAIM FOR DAMAGES FOLLOWING THE DIVESTMENT OF NERA NETWORKS AS
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