NANAIMO, BC , Aug. 23,
2023 /CNW/ - Atlas Engineered Products ("AEP" or the
"Company") (TSXV: AEP) (OTC Markets: APEUF) announced today that
the Company has completed the acquisition of Léon Chouinard et Fils
Co. Ltd./Ltée. ("LCF") located in New
Brunswick, Canada. LCF is a manufacturer of roof
trusses, floor systems, and wall panels and a supplier of
engineered wood products ("EWP").
"We are excited to announce the acquisition of our
8th manufacturing facility. Now is the time to move
forward with a strategic acquisition that expands our reach into a
new location as we continue to grow our national footprint," said
Hadi Abassi, CEO, President and Founder of the Company. "LCF fits
nicely into our overall, long term strategic plan and we are
excited they have joined the AEP group of companies. The Company is
currently reviewing a number of additional acquisition targets and
will maintain a disciplined approach to acquiring new manufacturing
facilities that fit our long-term goals."
This transaction is aligned with the Company's strategic
acquisition plan and expands the Company's geographical reach, as
well as growing its wall panel manufacturing expertise and
capacity. In 2022, LCF generated over $25.7
million in revenues, net income of over $6.3 million and non-IFRS measure normalized
EBITDA of approximately $9.47 million
(see "Non-GAAP/Non-IFRS Financial Measures"). Moving forward, AEP
anticipates being able to bring its considerable operating
synergies and material buying power to LCF's operations as it
integrates LCF into the AEP group of companies.
The acquisition of LCF was completed effective August 23, 2023. To acquire all the issued and
outstanding shares of LCF, the Company paid a purchase price
of $26 million plus $2,884,737 ($28,884,737 total) in net closing adjustments for
LCF's cash, income taxes receivable and payable and working capital
excluding inventory as at June 30,
2023. The purchase price includes the land and buildings on
which LCF's facilities are located which have been appraised
at $2.792 million. The purchase price
was paid by:
(a)
|
The issuance of
1,739,129 common shares in the capital of the Company (the
"Consideration Shares") having a value of $2,000,000 at a price of
$1.14 per share to certain shareholders of LCF; and
|
(b)
|
Payment of $26,884,737
in cash (the "Cash Payment"), financed using a combination of the
Company's existing cash and bank financing through the Company's
existing banking relationships with a major Canadian chartered
bank. The bank financing consists of a term loan and mortgage for
$22.4 million, having a term of 5 years with an amortization period
of 10 years for the term loan and 25 years for the mortgage. Both
the term loan and the mortgage will bear interest at the bank's
prime rate of interest plus an additional amount determined based
on the Company's quarterly debt to EBITDA ratio. At closing, the
interest rate applicable is expected to be prime plus 25 bps. The
amounts advanced are secured by the Company's assets as well as
mortgages over the facilities in Lantzville, BC and Eel River
Crossing, NB. The Company opted to fund this acquisition mainly
with debt to preserve majority of its cash for future strategic
plans.
|
The purchase price for LCF is subject to additional
post-closing adjustments based on LCF's working capital, inventory,
cash and income taxes payable/receivable at closing. The
Consideration Shares issued to former shareholders of LCF are
subject to a hold period of four months plus one day from the
closing date of the acquisition.
Non-GAAP / Non-IFRS Financial
Measures
Certain financial measures in this news release do not have any
standardized meaning under IFRS and, therefore are considered
non-IFRS or non-GAAP measures. These non-IFRS measures are used by
management to facilitate the analysis and comparison of
period-to-period operating results for AEP and to assess whether
AEP's operations are generating sufficient operating cash flow to
fund working capital needs and to fund capital expenditures. As
these non-IFRS measures do not have any standardized meaning under
IFRS, these measures may not be comparable to similar measures
presented by other issuers. The non-IFRS measures used in this news
release may include "EBITDA", "EBITDA margin", "adjusted EBITDA",
"adjusted EBITDA margin", "normalized EBITDA" and "normalized
EBITDA margin". The description of the composition of these
measures is incorporated by reference from AEP's Management's
Discussion and Analysis for the period ended March 31, 2023 under "Non-IFRS / Non-GAAP
Financial Measures", available on AEP's website
at www.atlasengineeredproducts.com or on SEDAR
at www.sedar.com.
About Atlas Engineered Products
Ltd.
AEP is a growth company that is acquiring and operating
profitable, well-established operations in Canada's truss and engineered products
industry. We have a well-defined and disciplined acquisition and
operating growth strategy enabling us to scale aggressively and
apply new technologies, giving us a unique opportunity to
consolidate a fragmented industry of independent operators.
FORWARD LOOKING INFORMATION
Information set
forth in this news release contains forward-looking statements.
These statements reflect management's current estimates, beliefs,
intentions and expectations; they are not guarantees of future
performance. Although AEP believes that the expectations reflected
in the forward looking statements are reasonable, there is no
assurance that such expectations will prove to be correct, or that
such future events will occur in the disclosed time frames or at
all. AEP cautions that all forward looking statements are
inherently uncertain and that actual performance may be affected by
a number of material factors, many of which are beyond AEP's
control. Such factors include, among other things: Risks and
uncertainties relating to AEP, including those to be described
in the Management's Discussion and Analysis ("MD&A") for AEP's
three months ended March 31, 2023. In
addition, completion of the Transaction remains subject to a number
of conditions precedent and there is no assurance that the
Transaction will complete as contemplated or at all. Accordingly,
actual and future events, conditions and results may differ
materially from the estimates, beliefs, intentions and expectations
expressed or implied in the forward-looking information. Except as
required under applicable securities legislation, AEP
undertakes no obligation to publicly update or revise
forward-looking information.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES
PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX
VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR
ACCURACY OF THIS RELEASE.
SOURCE Atlas Engineered Products Ltd.