TRIQUANTA UPDATE
ADDITIONAL INFORMATION RE: CELTIC ENGINEERING
February 17
In a February 10 update Triquanta announced that a
Asset Purchase Agreement was signed to acquire
Celtic Engineering, a privately owned telecom company
based in the US.
We feel the Celtic acquisition will enable
Triquanta to show very strong growth in cash flow
and earnings per share over the next 5 years.
We are therefore enclosing additional information on
Celtic Engineering for our present or potential
shareholders.
CELTIC ENGINEERING
Located in Texas, Celtic Engineering (Celtic) is a premier
supplier of services to numerous telecommunications
companies and government agencies. Incorporated in
Austin Texas in 1984 Celtic is still led by its founder
Winston M. Thomas. Over the years Celtic has grown
steadily and has established itself as a reliable, efficient
and professional source of specialized telecom
engineering expertise. As a result of continuing
customer satisfaction Celtic now has an international
reputation for maintaining a high standard of workman-
ship, innovative design and engineering problem solving
skills.
The company is a major supplier of installation,
maintenance, grounding, bonding, shielding, surge
protection and noise mitigation to MCI Telecommunications.
Celtic has also provided engineering services at the
following establishments and sites:
National Test and Development Laboratory, Reston, VA
West Coast Data Processing Center, Rancho
Cordova, CA
Satellite Tracking & Control Center, Miramar, CA
US Marines Corp
Federal Bureau of Investigation
In 1989 Celtic started in-house testing and refurbishing
of Analog and Digital Microwave Radios and associated
switches and modems for shipment to the Peoples
Republic of China. Celtic has a custom built facility to
enable functional operational and simulation tests of
Fiber Optic, Microwave and Satellite communications
equipment.
Installation, deinstallation and refurbishing are also
part of the turnkey services offered. Celtic is the only
Fujitsu Network Transmission Services appointed provider
of warranty and repair services in the US and has
similar experience with Alcatel, DSC, Ericsson, Northern
Telecom and Rockwell equipment.
Celtic is a Certified ISO 9000 facility and in addition meets
several other US Government quality standards including
the defense industry and US Navy.
Celtic is also a Certified installer of Northern Telecom
Central Office switching equipment. Companies must
be Certified to work on these systems.
Winston M. Thomas
President and founder of Celtic. Holder of several patents
in the field of micro electronics/telecommunications.
Over twenty years experience in the design, development
and testing of telecom equipment. Holder of BS degree in
Mechanical Engineering from Swansea University in
Wales; BS degree from Texas Christian University in Fort
Worth TX Mr. Thomas and Celtic have provided consulting
and engineering expertise on a worldwide basis
including the US, China, the Caribbean, Latin America,
the Middle East and Europe. In l981 he began work for
MCI Communications in Richardson, Texas and
continued with them until leaving to start up Celtic in
1985.
Major Contract
In mid 1996 Celtic was approached by the subsidiary
of one of the largest companies in the world with a lease
portfolio of approx $1.1 Billion US (original cost) in
telecom equipment.
They wanted to know if Celtic would be interested in
acting on their behalf to decommission, refurbish, test
and sell this equipment to private and public sector
telecom companies around the world. Most of the
equipment was part of the infrastructure of one of the
world's largest long distance companies and Celtic
had originally installed many of the C.O. switches
and radios for them.
The equipment was originally installed from 1986
to 1990 and amortized over 10 years. The leases
are now expiring and this equipment is being
replaced as the telephone company has upgraded
their infrustructure over the last 10 years. The first
package of equipment represents an original cost of
$69 million US. The lease on this equipment
has now expired. The amount of equipment coming
off lease will exceed $200 million US per year in
original value by the third year of the contract.
The first part of the contract will be to take a physical
inventory of the equipment that has or is coming off
lease in 1996 and 1997. This first phase of the
contract also includes the decommissioning,
refurbishing and testing of this equipment. This part
of the contract will generate in excess of $3 million
US in billable time in the 12 months following
commencement of the contract. (estimated to be
the 2nd quarter of `1997) Margins on this type of
work in the telecom industry commonly exceed
50% and this work will escalate as the size of the
equipment packages increases.
The second part of the contract will be for Celtic to
sell this equipment outside of the US market. It
is expected the majority of sales will be into Asian
countries.
Present value of the first package is estimated by
Celtic to be $25.6 million US in the re-sale
market. Of this amount approx $6.2 million US
would accrue to Celtic as marketing and sales
commissions.
The lease agreements cover $1.1 billion US of
equipment at original cost (estimated market
value in the re-sale market is $375 million US)
all of which is to be decommissioned, refurbished,
tested and sold over the next 5 years.
Celtic has also recently been approached by
SpectraNet International of San Diego, CA to
provide quotations for SpectraNet's fiber optic
projects in the US. SpectraNet with Morgan
Stanley as the financial partner and Northern
Telecom as the equipment supplier is presently
installing fiber optic networks in Lakeland, FL
and Anaheim, CA. The Anaheim installation
is expected to cost $200 million US and take
five years to complete. Mr. Winston Thomas has
had a 15 year working relationship with individuals
now in senior management at SpectraNet.
TRIQUANTA MANAGEMENT PROJECTS IN THE
12 MONTH PERIOD FOLLOWING APRIL 1, 1997
CELTIC WILL CONTRIBUTE $2.75 MILLION US
AFTER TAXES OR ON A FULLY DILLUTED BASIS
THIS REPRESENTS EARNINGS OF 16c PER
SHARE US OR 22c PER SHARE CANADIAN.
A conservative P/E ratio with the above earnings
projections indicates exceptional value of
Triquanta's shares at present prices.
Triquanta is presently selling in the 55 cent
range US or 72 cent range Canadian.
Triquanta Investments Limited trades on the
Alberta Stock Exchange under the symbol: TQT
For further information or the name of a broker
please contact:
Warren Smith
PH: 1 800 719 9960
FAX: 604 988 7447 (Canada)
E-Mail: TQTAlberta@aol.com |
