Intertape Polymer Group (IPG®) Enters Strategic Partnership Through Capstone®
IPG® announces investment intended to enhance its global market- competitiveness in woven products
MONTREAL, QUEBEC; SARASOTA, FLORIDA and DELHI, INDIA, June 15, 2017 - Intertape Polymer Group Inc. (TSX:ITP) ("IPG" or "the Company"), today announced an agreement to acquire a majority stake in Capstone Polyweave Private Limited (d/b/a "Capstone"), a newly-formed enterprise in India, which is expected to lead to a greenfield investment by Capstone. The principal purpose of the Capstone partnership will be to provide IPG with a globally-competitive supply of certain woven products in order to better service and grow IPG's woven products business. IPG will be partnering with the current shareholders of Capstone, who are also the shareholders and operators of Airtrax Polymers Private Limited (d/b/a "Airtrax"). Airtrax manufactures and sells woven products that are used in various applications, including in the building and construction industry. All amounts in this press release are denominated in US dollars unless otherwise indicated.
IPG has agreed to ultimately acquire a minimum of a 55% interest in Capstone for a cash consideration of approximately $13 million, which will be financed with funds from IPG's revolving credit facility. In order to ultimately acquire a maximum of a 45% interest in Capstone, the current shareholders of both Airtrax and Capstone have agreed to arrange a contribution in kind of the net assets attributed to Airtrax's existing woven product manufacturing operations, which are estimated to have a value of approximately $12 million. The payments from IPG will be made in several tranches over a period of approximately six to twelve months, with the net asset contribution to be made at the end of that same period. Airtrax's unaudited revenues for the twelve months ended March 31, 2017 were approximately $11 million. The completion of this transaction is subject to certain customary conditions for transactions of this nature.
The majority of the cash consideration of approximately $13 million is intended to be used by Capstone to partially finance the construction of a greenfield manufacturing facility which is expected to cost approximately $30 million. The remaining balance is expected to be financed utilizing debt. The purpose of this greenfield manufacturing facility will be to create new capacity in Capstone in order to produce woven products primarily for IPG's global distribution. The construction of the greenfield facility is planned to begin in 2017 with commercial operations expected to commence in the first half of 2019. IPG expects an after-tax internal rate of return in excess of IPG's after-tax hurdle rate of 15% on this greenfield project.
"IPG's investment in Capstone and the greenfield project should reinforce our strategic position in woven products through vertical integration. We expect to achieve attractive synergies both in terms of higher profitability on our current woven products sales volume as well as additional revenue opportunities as a result of our improved position in the woven products market," said Greg Yull, IPG's President and CEO. "This investment should also further IPG's continued progress toward becoming a globally-competitive manufacturer of woven products through developing and leveraging high-quality technologies and processes," concluded Mr. Yull.
About Capstone
Capstone Polyweave Private Limited was incorporated in 2017 as a private limited company under the provisions of the 2013 Companies Act in India. The Capstone greenfield manufacturing facility is expected to be located in Karoli, India.
About Airtrax
Airtrax Polymers Private Limited is a private limited company under the provisions of the 2013 Companies Act in India and was incorporated in Delhi in 1999. Airtrax has a single manufacturing facility with approximately 200 employees, and manufactures and sells woven products primarily to the domestic market in India that are used in various applications, including in the building and construction industry.
About IPG
Intertape Polymer Group Inc. is a recognized leader in the development, manufacture and sale of a variety of paper and film based pressure-sensitive and water-activated tapes, polyethylene and specialized polyolefin films, woven coated fabrics and complementary packaging systems for industrial and retail use. Headquartered in Montreal, Quebec and Sarasota, Florida, the Company employs approximately 2,200 employees with operations in 17 locations, including 11 manufacturing facilities in North America and one in each of Europe and Asia. For more information about IPG, visit www.itape.com.
IPG - Intertape Polymer Group
100 Paramount Drive Suite 300
Sarasota, FL 34232
Phone: 888-898-7834
Contact:
Pierre Boucher
514-731-0000
email: info@itape.com
