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Leclanché shrugs off insolvency ‘blip’, targets US stock listing and software acquisition

Leclanché battery storage system at a large remote microgrid project. image: Younicos.

Swiss battery maker Leclanché could apply for listing on a US stock exchange and is targeting the acquisition of an “energy management storage software company”, despite emerging from a recent period of “technical insolvency”.

Leclanché held its annual general meeting yesterday to cover developments in 2016, where it presented a number of resolutions from directors to shareholders, including moves to create more share capital.

Energy-Storage.News reported in April that the company had claimed 2016, when it had EBITDA losses of CHF27.5 million (US$28.7 million), had seen it make the “first steps” towards breaking even. Revenues were up 56% from 2015 and the company had an order pipeline of 450MW, a claim it reiterated in discussing yesterday’s meeting – although this time it gave the same figure, but in megawatt-hours.

However, the company admitted that it had suffered what it called a “very short-term balance sheet-based technical insolvency”, made known to the board as of 31 March 2017. This was under the Swiss corporate law Code of Obligations 725 paragraph 2, which states that if a genuine concern of indebtedness exists, interim balance sheets must be presented to auditors.

Leclanché dismissed the situation as a “blip” and said it renegotiated terms of a convertible loan from existing creditors, ACE and Jade Group in late June. Consequently, the company said, these issues were resolved and Leclanché’s “trajectory to profitable growth remains unaffected”, with the company also receiving CHF18.5 million in additional investment from two shareholders, Golden Partner and Bruellan.

Company to raise capital, possible listing and software company acquisition

Also announced at the meeting was the appointment of two Golden Partner executives, Cathy Wang and Tianyi Fan to the Leclanché board of directors, along with the addition of Pierre-Alain Graf, described as a “well-known industry leader in Switzerland and Europe”, as an independent director.

Further announcements included the company signalling its intention to raise CHF30 million more capital in October, with Leclanché pondering a rights issue, private placement with institutional shareholders and the sale of some assets. Currently listed on the Swiss Stock Exchange, Leclanché said it is also now considering applying for a second listing on an unspecified North American stock exchange.

On the announcement that the company is considering acquiring a “target energy management software company”, a Leclanché representative told Energy-Storage.News this morning that there was “nothing more to add at this time”. Energy-Storage.News had asked whether there was a specific company in mind, and also what extra capabilities and strengths Leclanché felt the acquisition could add.

In simple terms it can be assumed the acquisition would allow Leclanché to add further capabilities to its existing system manufacturing, although the company already makes whole energy storage systems, in addition to producing two types of lithium-ion battery. The company did say in its release regarding the meeting that the acquisition would “generate an additional 3.5% margin”. Several big players have swooped to take over at software providers for energy management and energy storage systems, with recent examples including the acquisiton of Greensmith - which develops whole systems but focuses strongly on software - by Nasdaq Helsinki-listed power company Wärtsilä and the purchase of Demand Energy by Italian major utility Enel.

Looking ahead

Leclanché claims to have a “fast-track growth strategy” for the second half of this year, on which it says it has resumed its course in the wake of the technical insolvency “blip”. This will include the execution and completion of two large-scale energy storage projects, including the 20MW / 10MWh Marengo project in Chicago for the PJM frequency regulation market and a 53MWh project in Ontario, Canada for the province’s Independent Electricity System Operator (IESO).

The company has also got contracts for work in e-mobility, including orders for 34 EV charging stations, batteries for electric buses - a topic on which CEO Anil Srivastava has recently blogged for Energy-Storage.News - and in the marine sector.

 Leclanché said its order book has 95MWh of confirmed deals through 2018, which will be worth US$50 million in revenue, while it reiterated the 450MWh pipeline figure, although it was not clear what stage projects and potential orders in this pipeline are at. Meanwhile the company expects to net US$45 million in annual revenues from e-transport, hoping to generate orders in excess of 150MWh per year, beginning in 2019.

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