EAM Solar AS (EAM) Earnings Call Transcript & Summary

Okay. [Foreign Language] Erik, you could do the deliveries on litigation.

Yes. All right. Apologies in advance, everyone. I've been having a bit of a cough the last couple of days, and it's affected my voice as well. So hopefully, everyone can hear me just fine. And we'll go through the deliveries here from the previous 8 months has been a bit of a busy first half of the year on our end. And we'll get to kind of where we are and what we'll be doing for the rest of the year and going into next year a bit later in the presentation. So most of this, everyone already knows or at least those who have been following us know. In late last year, when we were summing the extraordinary general meeting, Mr. [ Akmirov ] came with another claim for compensation. He asked for legal fees based on his -- legal fees incurred in the Italian criminal case that made at this time to the Oslo District Court. There was a hearing. And at the end of that sole hearing, the case was dismissed, and he was ordered to pay our legal costs. The judge also questioned his motivations for bringing that particular claim, suggesting that he had maybe ulterior motives of hindering our extraordinary general meeting rather than actually seeking a bona fide claim for compensation. In any case, it was rejected and tossed out. And hopefully, that is the end of that. Moving on, Viktor already mentioned, we closed the bankruptcies of former SPVs, ESGI, ESGP. Those have yielded a cash to the company of around EUR 1 million. So that's EUR 1 million of the EUR 2.5 million mentioned by Viktor earlier. At this point, there is 1 SPV bankruptcy still outstanding. We'll talk about it in a bit, but we are expecting that to end sometime around October this year. Then we have the 3 arbitrations or 2 and the bonus one. The Court of [ Cassation ] was a nice boost for EAM. We received the decision earlier in the summer, I think at the end of May. And that has allowed us, after winning on all 4 counts, to restrategize about, we'll say, the process forward. Like I said, we'll talk about that in a little -- later on. But that has been a quite good decision for the EAM legal position moving forward. About a month after that, we received the appeal decision in the second arbitration, very little changed in that. They upheld the first instance decision of the arbitration court. That's the one that is granting us the -- as of today, 4.4, EUR 4.5 million claim against Aveleos. So obviously, the next step will be to collect and force that claim. Then as we have mentioned before, there was a request by the counterparty for a third arbitration. We were always a bit uncertain whether that would ever be able to go ahead or if it would go ahead. After the cassation ruling for the first and the appeal ruling for the second, it was decided that, that third one didn't have sufficient chance to succeed, so the counterparty just withdrew it. So that one is off the docket. So what does all that mean for us now? Well, we have now the right to start the collection procedure or the enforcement if needed of the award from the second arbitration. That today is a gross amount of, like I just mentioned, somewhere around EUR 4.4 million, and it's growing every day, running with over 10% interest. We can challenge the validity of the original first arbitration decision. That is quite important for the company because that goes straight to the heart of the share purchase agreement contract from 2014. So we've talked in the past about the desire to overturn that contract. And this is another avenue that we've been giving in order to accomplish that goal. So the short of it is the position we are in today versus where we were a year ago when we had this type of meeting is substantially stronger from a legal standpoint. But we can talk about that a bit further, and we'll ensure to field some questions on it at the end. So then Viktor will go back to you.

Thank you, Erik. Okay. [Foreign Language] Erik give you guys some of the litigation going forward.

Sure, sure. I think we covered part of the status of today already from the previous part. But in short, obviously, it's been quite positive to receive these various decisions in relation to the first and second arbitration. We are down to just 1 outstanding SPV bankruptcy. So I think one of the main, we'll say, highlight points for us has been that the number of ongoing proceedings taking place at the same time is drastically reduced and little by little, getting fewer. So at current, there are 0 hearings scheduled for the remainder of 2026. Now that kind of bridges to the next part here. That's probably not going to stay the case, but just to show kind of the change of how busy it has been over the last couple of years to now, there's not currently any hearings scheduled for the rest of the year. But we have some things to do. One of them is we are owed EUR 4.4 million by Aveleos, and we need to go collect that. So September will be a, let's call it, an action month to that regard. Maybe there's a chance that we can just all be reasonable parties and figure out the amicable way to get that amount in. If not, well, we're going to have to we'll say, do it the legal route and go to courts and demand collections and put attachments on companies, things like that. So it might not end up being a swift and easy practice, but our position on it has been strengthened by the fact that the appeal court upheld it, and so it is valid. And that's not something at this point that any sort of challenges are going to stop. So it is going to happen. How long it takes and what method is going to be decided over the next month or so. And obviously, those are all done in, we'll say, constant communication with the legal teams. So until they give their, we'll say, final feedback, we'll have to, we'll say, keep all options open in that regard. Then we have what is listed here, the appeal. So we talked last year around this time about EAM's desire to start a new civil proceeding based on the feedback from the lawyers. They wrote the legal advice manual to us. Given that the criminal court had ended and the crimes were final and proven, therefore, there was an advice that we could challenge the validity of the share purchase agreement based on that criminal court ruling. That's listed the civil, that's the [ Point 3 ] down there. Since that discussion a year ago, we had the result in the Court of Cassation for the first arbitration. Now in the first arbitration, for those who've been around since 2019 to remember it, we had originally challenged the validity of the share purchase agreement, the original purchase contract, based on more or less, the crimes going on in Italy and [ EV ] documents and statements made by members of the counterparty. At the time, the arbitration separated those who were involved in the criminal from those who weren't. And they said the criminals handling be invited, we'll handle everyone else. We got the results we got, where they said, yes, it was a breach of contract, but the damages would be kept at 10% per the limitation of liability clause. Our -- one of our challenges at least, was to overcome that limitation of liability based on crimes having been committed. The point is we talked a year ago about the civil case. And now the Court of Cassation has very, very directly -- again, apologies -- we'll say, attacked, in a loose term, but directly done so with statements against content of that first arbitration decision. And they have found in no uncertain terms that those two people invited in the criminal case belong within the scope of the arbitration consideration, meaning the appeal court should review the original ruling with that in mind. What does that mean practically? It means practically, we have once again the opportunity to challenge the validity of the share purchase agreement through the, we'll say, decision of the Court of Cassation. And how that works is they've ordered the case to go back to the Court of Appeal. And the Court of Appeal should sit in a new chamber with a new panel of judges, take the instruction from the Court of Cassation and rehear the case with that instruction in the back of their mind within the scope defined by the Court of Cassation. Now the civil case that we had talked about over the previous year relies on the crimes having been proven in the criminal proceedings which ended in 2025. So they are not necessarily the same thing. But there's still an outstanding question about to what extent they can go at the same time. If they should go at the same time, even if you can, and when to start them, how to do it, et cetera. So lawyers are working on that. We'll hopefully have an answer on those things before the end of September. But in any case, as it stands, we have what appears to be two possible routes to accomplish the same goal that we've been talking about over the previous year. And that mainly comes from the win in the Court of Cassation opening up the original challenge to the first arbitration, which was, in a way, dealing with that same, we'll say, end result, even though it's a different cause of action as the civil case we've talked about. Sorry if that wasn't entirely clear. It's a little bit of a convoluted area of law as well because we're bridging arbitration appeal Court of Cassation back to the Court of Appeal on one side with the criminal proceedings going up to the Court of Cassation and a new civil case on the other side. So it does have the lawyers having to check quite a few things. But they're nearly there, and I think we have a good idea, and we hope to have this going within the month.

Thank you, Erik.

And I think it's as much as I should say for now.

Just for everyone to understand, Court of Cassation [indiscernible] covered by the Court of Cassation [indiscernible] Supreme Court. [Foreign Language] Q&A.

Right. [Operator Instructions] So Jarl Tollefsen, you are very quick to get the hand up. So just feel free.

Good. I have two questions, please. How are we planning to reduce the amount of thefts going forward?

Viktor, shall I take that? Or do you want to?

You can have the first try, and I'll give additional.

Okay. There are a couple of elements which kind of work together. One is, Viktor mentioned, we're upgrading the security system in fences on the plants, which has brought the cost up a little bit from the original amount, but we think that, that's, we'll say, a wise thing to do. And it's -- honestly, it should be quite good. From the feedback we've got, these are relatively lower cost upgrades that have a big result. Two other elements contribute, one being thefts happen still solar modules, let's say, for example, and sell them off to third countries, some out of Europe to places where things are cheaper. The cost of solar panels over the last 5 years, we'll say, since the COVID shutdown era has dropped quite massively. This has made the profitability of stealing and reselling go down a bit as well. And so when we talk about the thefts, we have not personally witnessed or experienced thefts, I want to say, since the last 3, almost 4 years. That's part of the reason why. Now as far as the rebuilding of the plants, they are also -- sorry, one of the other common theft targets is the copper in the wiring of electrical components. The newer technologies using substantially less copper, and therefore, there's substantially less, I will say, value to be had by stealing anything. And Viktor can get into specifics on the technical design of it. But I think these are the things. So you have new fence, new security system, lower panel prices and less copper. So you're taking away the valuable theft targets...

[indiscernible] aluminum cables in order to avoid this copper thing. The other thing is that we are rebuilding these power plants not on a fixed [ sale ] structure, but on a single access tracking structure. And this means that the fixture of the solar panels are -- it's a bit harder to do. And finally, we have the security companies. We -- the security companies we're using now, we have a fairly good experience with those security companies. And finally, BFP is a local operator company located in [ body ]. During the 10 years we have sort of followed BFP, they have grown. They are well known in the area. And power plants where they are all involved in the operation seems to be less likely to be exposed for theft or vandalism. That was the first question. Jarl, what's the second?

Thank you very much. That's reassuring. Secondly, I'm appreciating the turn in solar from litigation to value creation through new solar production because I think we will be stronger facing the legal system with a base of value creation so that we can argue we are a presence in Italy. So I just encourage you to market that further and please present numbers and projections going forward. If you'd like to add anything to that?

We are not -- we want to have our money back. So there's no letup on the pursuit of justice and cash. The important turn this summer is that by the rebuilding and by derisking by settling with Intesa, we are in position -- I'll do it in Norwegian -- [Foreign Language]

I do have quite a few raising their hands in a row here. So we'll go with Jan-Martin Holmen first.

[Foreign Language]

[Foreign Language]

Okay. Then we'll take Mr. Sandquist, John Andre.

[Foreign Language]

[Foreign Language] So do you have add anything to add, Erik?

Sorry. I clicked on the camera instead of the mic. No, just I hope for the best and prepare for the worst. In this case, I hope for the easy route prepare for the hard route. I think we're about a month or so too early to get into any sort of concrete information on that regard. So -- but we should have hopefully, an update on that process. I would say I would be unhappy if we weren't making progress before October. I think that's about as much as I would add. Okay. So if you're happy, then we'll go Mr. Larsen, I know you've had your hand up for a while there. So you just go ahead and unmute yourself, Kjell Larsen.