Private Placement of New Shares by Tender Offer

 

 

Private Placement of New Shares by Tender Offer

 

Following the announcement in January regarding Intel's decision to scale back its operations in polymer memory and in the absence of likely revenues in this area in the near-term, the Management of Opticom and the subsidiary Thin Film Electronics (TFE) have taken immediate action to scale back activities at its Linköping research facility. The management also conducted an exhaustive review of the activities of TFE including operations and a full technology overview.

 

What is clear from the review is that TFE remains a leader in the field of polymer electronics. The Company has pioneered polymer memory technology and TFE has a comprehensive patent portfolio. To prematurely close the research facilities at Linköping and Patent Department in Oslo would severely jeopardise TFE's ability to ever realize the value this represents.

 

In order to reach a more detailed and definitive understanding of the technical and commercial prospects of the TFE technology the Board of Directors have approved a plan whereby technical facilities are maintained at current levels for at least a further six months with targeted objectives.

 

Recognizing that the original targeted field of use of the productisation project with Intel was not attained, TFE will continue its evaluation of alternative fields of use and production methods for the hybrid polymer memory technology where the performance and robustness requirements are less comprehensive. TFE will also pursue basic research in the field of all polymer memory, particularly related to next-generation materials, designs and processes. This is considered vital in order for TFE to maintain its position in polymer memory technology.

 

Whilst technical work is conducted TFE management will engage in the exploring various technical and commercial options for TFE's technology, both hybrid and all-polymer, seeking to identify viable business opportunities other than those pursued in the project with Intel. Several other application areas and products/solutions with less comprehensive performance and robustness requirements will be studied, as well as alternative production methods.

 

The Board will use the results of this programme as the basis for decisions on whether to continue to fund individual projects. In turn this will determine the level of activities in Linköping and Oslo.

 

In practical terms four members of staff have already left or are working notice, including two senior managers who have had direct management of the Intel programme. Staffing overall has been reduced to 17 in Linköping and five in Oslo. On an ongoing basis this has reduced our quarterly running cash costs to NOK 17 million against NOK 27 million in Q1 2004. At the end of Q1 the Company had a cash balance of less than NOK 20, therefore there is a cash requirement of at least NOK 50 million in order to fully fund the Company through the end of this financial year. It should also be clear that whatever the results of the technical and commercial review Opticom will require further funding for ongoing operations before the end of 2005 and that it is likely that this will be realised through a further issue of shares.

 

The Board of Directors has reviewed its options to secure this round of funding.

 

The Board believe that the share price of Fast Search & Transfer ASA (Fast) does not reflect the true value of the Company let alone its future potential. The Board further believe that Opticom's shareholding in Fast represents a strategic stake which could command a premium price from an interested buyer.

 

The Board has received unsolicited approaches from investors and noted comment to the effect that Opticom should sell or distribute its shareholding in Fast to Opticom shareholders. The Board has taken legal and financial advice on this and it is clear that the Company and/or individual shareholders would suffer adverse tax consequences from such distribution. The Board also believes that to sell and/or distribute the block of shares will dissipate any strategic premium attaching to the block and act to depress the FAST share price. The pressure to act on this matter comes from market-driven investors whose motivation is to make short-term trading gains on the Opticom and FAST share price. The Board believes their strategy is flawed and that the long-term Opticom shareholders, who have contributed to creating the Company and its current worth, are less likely to be able to take advantage of any short term trading profits available to market traders. Therefore the Board believes that it is not in the best interests of the shareholders to sell any shares in Fast now or in the foreseeable future.

 

The Board has therefore decided to undertake a placing of between 1.0 and 1.3 million shares, as authorised by shareholders. In view of our experience in past share issues and in order to get the best possible price, minimise fees and commissions and avoid un-necessary disruption in the after-market the Board have decided to invite tender proposals from the public for the shares in the private placing. The tenders will be considered on the basis of the number of shares, the highest price paid and the length of time the placee is willing to accept a restriction on the sale of shares. No commissions or fees will be paid by Opticom. A copy of the Invitation to Tender is attached. Announcements regarding the outcome of the Tender process will be made in due course. The Board of Directors wish to make it clear that this round of funding does not secure the long-term financing of the Company and it is likely that whatever the result of the technical and commercial review Opticom will require a further round of financing before the end of the financial year.

 

4 May 2005

Opticom ASA

 

Thomas Fussell, Chairman                   tel: +44 1491 412 522 e-mail: tf@opticomasa.com

Opticom ASA website: www.opticomasa.com, Thin Film Electronics website: www.thinfilm.se
Fast Search & Transfer ASA website: www.fastsearch.com

 

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