Acquisition of Hitco Carbon Composites Business
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DELTA, BC –Â Avcorp Industries Inc. (the "Company" or "Avcorp") (AVP:TSX) is pleased to announce that it has entered into a definitive agreement (the "Agreement") to acquire the US-based composite aerostructures division of a subsidiary of Frankfurt-listed SGL Carbon SE ("SGL"). The transaction will significantly expand the capabilities of Avcorp in composites and offer a strong platform to grow the profitability of the business.
Pursuant to the Agreement, Avcorp will purchase the assets of the division of SGL's subsidiary Hitco Carbon Composites Inc. ("Hitco") which produces composite parts for commercial and military aerostructures. This includes all inventories, equipment, tooling and other fixed assets, intellectual property, contractual rights, good will, accounts receivable, and work in progress. The Corporation is not acquiring any assets of Hitco's materials division. Avcorp will be continuing operations at Hitco's current aerostructures facilities in Gardena, California.
The addition of the Hitco composites division is anticipated to approximately double Avcorp's revenues in the immediate term. While not run as a separate accounting unit, the division has been operating at a loss.
Consideration for the acquisition of the assets is principally the assumption by Avcorp of current trade payables and ongoing contractual obligations of the aerostructures business of Hitco.
Avcorp will receive approximately $42 million in cash and payment commitments. SGL will also provide further in kind supplies or payments of up to $5 million over the period to December 31, 2016. The purchase consideration is subject to customary adjustments based on working capital of Hitco and certain contract pricing adjustments being negotiated by Hitco.
Closing is subject to customary conditions, including finalization of other ancillary agreements, third party and regulatory approvals, and is anticipated to occur in Q3 2015.
Peter George, Avcorp Group CEO commented that "the acquisition of Hitco's composites division offers a unique opportunity to transform our business by broadening our product range and strengthening our composite capabilities. We also anticipate significant operational efficiencies and better utilization of our existing assets. Combining the businesses should accelerate Avcorp's return to profitability. We see many opportunities to enhance the Hitco composites business and provide superior products to Hitco's exceptional aerospace customers."
About Avcorp
Avcorp designs and builds major airframe structures for some of the world's leading aircraft companies, including BAE Systems, Boeing and Bombardier. With more than 50 years of experience, over 380 skilled employees and 340,000 square feet of facilities in Delta BC and Burlington ON, Avcorp offers integrated composite and metallic aircraft structures to aircraft manufacturers, a distinct advantage in the pursuit of contracts for new aircraft designs, which require lower-cost, light weight, strong, reliable structures. Our Burlington location also offers composite repairs for commercial aircraft. Avcorp is a Canadian public company traded on the Toronto Stock Exchange (TSX:AVP).
SOURCE Avcorp Industries Inc.
CONTACT: Sandi DiPrimo, Investor Relations Contact 604-587-4938 or email info@avcorp.com
Web Site: http://www.avcorp.com
