SOURCE: Lectra

March 22, 2007 13:40 ET

LECTRA : Proposed Public Stock Buyback Tender Offer for 20% (Maximum) of the Company's Capital Stock

PARIS -- (MARKET WIRE) -- March 22, 2007 --The Board of Directors of Lectra, chaired by André Harari, resolvedon March 16, 2007 to submit to the Extraordinary Meeting of Shareholdersscheduled to take place after the General Meeting of Shareholders on April 30,2007, a proposal to reduce the share capital of the company by means of apublic stock buyback tender offer (OffrePublique de Rachat d'Actions).

Lectra enters the period 2007-2009 ina position of strength

Thanks to its business model and intensivedrive to reduce its working capital requirement, now close to zero, the companyhas generated free cash flow (excluding non-recurring items) of EUR 73.5 millionover the past five years.

During the same period, it has stepped upits investment in research and development, rising to nearly EUR 80 million, andmade three acquisitions in 2004. In 2006, it accelerated its capital expenditures in manyessential areas in response to the new challenges it faces.

Lectra thus enters the period 2007-2009 ina position of strength: it has bolstered its teams significantly, now ready foraction; it has a highly competitive product offering enriched with many newproducts; its financial fundamentals have improved in recent years and are veryrobust; it is stepping up its investment in R&D and is pursuing anambitious plan, guaranteeing the broadening of its product offering; finally, itshould benefit from the expected rebound in technology investment in its majorgeographic and sector markets.

To achieve its targeted revenues of EUR 300million for 2009, the company is giving full priority to organic growth and isnot currently considering making acquisitions.

Principles and terms and conditions of the planned transaction

As provided under articles L. 225-204and L. 225-207 of the French Commercial Code, the Board of Directors wouldbe given authority for a period of six months to reduce the share capital by amaximum nominal amount of EUR 10,597,188, by means of the purchase of a maximum of7,064,792 shares (representing 20% of the outstanding shares) at a price of EUR 6.75per share. This price represents a premium of 25% over the closing price onMarch 21, 2007, and of 22%, 20% and 28%, respectively, relative to the compoundaverage prices for the last month, and for the last 3 and 12 months.

The proposed price will be submitted forappraisal to the Independent Expert designated by the company, namely AAFineval, represented by Ms. Marie-Ange Farthouat, who will express an opinionon its fairness and whose final report will be included in the prospectus whichwill be submitted to the Authorité desMarchés Financiers (the French Financial Markets Authority) on March 30,2007.

The repurchased shares will subsequently becanceled.

Financing of the transaction

The stock buyback will be financed by meansof a EUR 50 million medium-term bank loan granted by Société Générale and Natixis, enabling Lectra to alterthe structure of its balance sheet by introducing a financial leverage. Thecompany will therefore retain its available treasury (EUR 10 million in cash andcash equivalents at December 31, 2006). Thecurrent cash facilities with these banks of EUR 26 million will be brought to EUR 13million once the medium-term loan to finance the stock buyback is funded.

An opportunity for all shareholders

This transaction would represent anopportunity for all shareholders to realize all or part of their investment,depending on their strategy vis-à-vis the company, the prevailing market priceand its short and medium-term outlook. It would increase earnings per share forthose shareholders that continue to support the company in its new growthphase.

Company intentions − Undertakings by the main shareholders

The company will not contribute treasurystock, representing 2.3% of the share capital at February 9, 2007, to thetransaction.

It plans to maintain its dividend policydepending on the amounts available for distribution after replenishment of itsreserves, and has no plans for any substantive amendment to its by-laws.

Indicating their confidence in thecompany's future, André and Daniel Harari—who together hold 31.8% of the share capitaland 32.1% of the voting rights—have pledged not to sell their shares inresponse to the share buyback tender offer, thereby enabling the other minorityshareholders to sell a greater number of shares in response to the tenderoffer. If the tender offer is successful, their combined shareholdings willrise above the one-third threshold of capital stock or voting rights (39.8% ofcapital stock and 40.2% of voting rights, assuming the transaction is 100%successful). In this respect, they have been granted a waiver by the Autorité des Marchés Financiersregarding the mandatory filing requirement for public tender offers, and havecommitted to refrain from exercising their voting rights for purposes otherthan to ensure that the quorum is met at the time of voting on the sharebuyback tender offer resolution, and to ensure the neutrality of their votesregarding the adoption of the resolution.

Timetable

The Board of Directors will meet again onMarch 30, 2007 to issue its opinion on the share buyback tender offer, after havingstudied the banks' report on the factors contributing to the evaluation of theoffer price, the Independent Expert report, and the prospectus to be filed withthe Autorité des Marchés Financiers inview of its decision regarding the transaction. The stock buyback tender offerwill be submitted to the Extraordinary Meeting of Shareholders on April 30,2007. The agenda and proposed resolutions of this meeting are published in the Bulletindes Annonces Légales Obligatoires (BALO) on March 23, 2007.

The stock buyback tender offer should be launchedin the days following the Extraordinary Meeting of Shareholders.

The Management Discussion and Analysis ofFinancial Condition and Results of Operations for 2006 are available at www.lectra.com. Q1 2007 results will be published on April 27, 2007, after the close ofEuronext Paris.

With 1,500 worldwideemployees, Lectra is the world leader in software, CAD/CAM equipment andrelated services dedicated to large-scale users of textiles, leather andindustrial fabrics. Lectra addresses a broad array of major global markets,including fashion (apparel, accessories, footwear), automotive, aeronauticaland furniture.

Lectra (code ISIN FR0000065484) is listed on the Eurolist (compartment B) ofEuronext Paris.

www.lectra.com

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Contact Information

  • Contact:
    Sylvie de Toni
    email: s.detoni@lectra.com
    Phone:+33 (0)1 53 64 42 22
    Fax: +33 (0)1 53 64 43 12