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Gold/Mining/Energy : PATHEON INC. (PTI - TORONTO) -- Ignore unavailable to you. Want to Upgrade?

To: John Sladek who wrote (92)	7/15/1998 8:28:00 AM
From: Technopeasant	Read Replies (1) \| Respond to of 147

Patheon Inc PTI Shares issued 34,301,564 1998-07-14 close $2.75 Wednesday Jul 15 1998 Mr. Robert Tedford reports Patheon has signed a letter of intent to purchase its first international facility. The plant, presently owned by the Roche Group, covers 300,000 square feet and is near Milan, Italy. It employs 234 people in the fully integrated manufacture of sterile/injectable dosage forms, along with solid, semi-solid, and powder forms. In addition, the plant offers pharmaceutical development capabilities for both sterile/injectable and solid dosage forms. The sterile/injectable capability of the Milan facility is an important new addition to Patheon's service offerings. Currently, the company's five Canadian plants provide pharmaceutical manufacturing and formulation development services in solid, semi-solid and powder dosage forms alone. The acquisition of this European manufacturing site is fundamental to Patheon's growth strategy. It complements the company's solid and semi-solid dosage capacity, and it brings the new sterile/injectable capabilities that will allow the company to offer a broader range of manufacturing and formulation development services to the pharmaceutical industry worldwide. Patheon currently serves 15 of the world's 25 largest pharmaceutical companies from its North American plants. Securing a European facility positions the company to take even greater advantage of the global outsourcing trend in the industry. As part of the purchase agreement, management and staff will remain with the facility, which was built in 1976. Due diligence will be completed by mid-August with an anticipated closing by late October. Terms of the transaction include long term manufacturing contracts with approximate revenues of $40-million in the first year and $185-million over the next five years. These contracts represent virtually all the production in the facility, which is presently operating in the 40 per cent capacity range. This offers the company significant growth potential. The acquisition is expected to be accretive to earnings in year one and cash flow positive in year two. Most of the financing will be derived through bankers and the vendor. This is the second facility the company has purchased from the Roche Group and it is a major step forward toward achieving the company's vision of becoming a leader in the pharmaceutical manufacturing services sector. When the company acquired the state of the art Syntex Court site in Mississauga from Roche in 1997 it was operating at 5 per cent capacity. In just two years the company has taken it to 40 per cent capacity and it is optimistic about adding further volume.