Carmanah is acquiring Soltek...
CARMANAH TECHNOLOGIES CORPORATION TO ACQUIRE SOLTEK POWERSOURCE LTD.
Becoming Canada's Largest Solar Product Company
Victoria, British Columbia, Canada - May 25, 2005 - Carmanah
Technologies Corporation (TSX Venture: CMH) is pleased to announce
that the Company and Soltek Powersource Ltd. ("SPS") have entered
into a definitive agreement whereby Carmanah will acquire all the
issued and outstanding shares of SPS, a leading privately-held
manufacturer/supplier of solar power systems for industrial,
government, residential and retail applications.
With approximately 60% market share, SPS is the largest Canadian
supplier of solar systems and solar-related equipment. In its most
recently completed fiscal year ended August 31, 2004, the company
achieved revenues of approximately $17.5 million and EBITDA of
approximately $1.2 million. SPS has maintained strong gross margins
throughout its market expansion and has been profitable since
inception in 1988. SPS currently employs 65 people and is
headquartered in Victoria, British Columbia, with additional offices
in Alberta, Ontario and California.
Carmanah has agreed to acquire SPS for $10 million. $6 million will
be paid in cash from existing funds and $4 million equivalent in
common shares (based on the 30 day weighted average trading share
price for the 30 trading days immediately preceding the date of this
announcement). An additional contingent payment of up to $2 million
in common shares (priced as above) may also be payable if SPS reaches
specified revenue (pro-rated between $9 million and $12 million) and
an EBITDA minimum of 5.5% of revenue for the six month period ending
December 31st, 2005. The transaction is scheduled to close June 30,
2005, subject to completion of due diligence and the approval of
Carmanah's Board of Directors. The purchase price is subject to an
adjustment based on SPS's net working capital meeting a $3 million
target at closing. Most of the shares issued in respect of this
acquisition will be subject to an escrow agreement allowing for the
pro-rated release of shares over a two year period from the date of
closing. The transaction is expected to be accretive to the company
immediately.
"With this acquisition, Carmanah will become the largest solar
company in Canada", states CEO, Mr. Art Aylesworth. "The synergies
we see from this purchase are extensive. We anticipate a new range of
co-developed solar/LED general illumination products, including
security lighting, street lighting and sign lighting, for
applications in all of the markets we currently serve. We also
foresee an entirely new product line of standardized 'plug-and-play'
solar power sources that would take advantage of SPS's existing range
of 'solar engines' and Carmanah's world-leading energy management
technology."
In addition, Carmanah and SPS will share marketing and sales
infrastructure to further broaden their combined sales reach. "Our
two companies have complementary expertise - Carmanah with its
self-contained packages and proprietary LED technology, and SPS with
its larger solar power systems", states Aylesworth. "We also have
overlapping customer bases, including government agencies, traffic
OEMs, and resellers. Our combined sales staff will have a
significant range of products to offer customers across many
geographic and vertical markets."
"At a time when the demand for solar solutions in North America is
rising at an unprecedented rate, the opportunities in front of SPS
are many. None, however, are greater than our wish to continue to
expand on the operations we have in the United States where our
business is growing rapidly", states SPS CEO, Mr. David Egles. "We
feel like the timing is right for a deal such as this and we look
forward to the possibilities that will arise from the combined entity
and its considerable market strength." From an operational
standpoint, SPS will gain access to capital, enabling it to expand to
meet growing demand. Carmanah will also be applying its engineering
and design experience to enhance margins on proprietary SPS
technologies.
Finally, the combined purchasing power and market share will make
Carmanah a formidable player in solar power markets both domestically
and internationally. This energy sector is growing rapidly; in fact,
the solar photovoltaic industry worldwide grew by an unprecedented
62% in 2004 to $6.5 billion, and it is predicted to grow 300% to
$18.5 billion by 2010. "With the expansion of renewable energy and
sustainability mandates worldwide, as well as the obligations
associated with international pollution reduction agreements such as
the Kyoto Accord, the timing for our acquisition couldn't be better",
states Aylesworth.
Upon completion of the purchase, SPS founders Mr. David Egles and Mr.
Michael Cannon will join Carmanah's executive, bringing with them
more than 20 years of experience in the solar industry.
AUDIO CONFERENCE CALL
Mr. Art Aylesworth, CEO of Carmanah, will be hosting a teleconference
call on Thursday May 26, 2005 at 8:00am Pacific Time (11:00am Eastern
Time) to discuss the details of the acquisition. To participate,
North American callers can dial toll-free 1-877-793-3791.
International callers from overseas will need to dial the
International Access Code normally used to reach North America and
then dial the global toll-free number 800-7701-8885 (do not add a "1"
in front of the global toll-free number, unless it is part of the
International Access Code). All callers must dial in no later than 5
minutes prior to the start time. Technical assistance is available at
(416) 470-1140.
ABOUT CARMANAH TECHNOLOGIES CORPORATION
Carmanah is an award-winning manufacturer of proprietary LED-based
lighting and illumination products for the public transit, marine,
aviation, roadway, and industrial worksite and illuminated signage
markets. The Company has more than 100,000 solar-powered LED
lighting installations and 50,000 LED illuminated sign installations
in 110 countries. The shares of Carmanah Technologies Corporation
are publicly traded on the TSX Venture Exchange under the symbol
"CMH" and on the Berlin and Frankfurt Stock Exchanges under the
symbol "QCX". For more information, please visit www.carmanah.com.
ABOUT SOLTEK POWERSOURCE LTD.
SPS is a leading designer, manufacturer and supplier of renewable
energy solutions. In addition to acting as a master reseller for a
number of world leading equipment suppliers, SPS offers a range of
proprietary solar power and alternative energy systems used by
commercial, government and private customers worldwide. SPS is
headquartered in Victoria, British Columbia with branch offices in
Alberta, Ontario and California. For more information, please visit
www.spsenergy.com. |
