|
01/26/2006 Clearford Industries Inc. Completes Financing and Acquisition of Brooklin Concrete Inc. Ottawa, Ontario – (January 26, 2006) – Clearford Industries Inc., (Clearford, or the Company) (TSX-V: CLI), announced today that it has completed the purchase of all of the issued and outstanding shares (the "Shares") of Brooklin Concrete Inc. ("Brooklin") pursuant to a Share Purchase Agreement dated the 30th day of December, 2005 (the "Agreement"). This completed the transactions first described on August 17, 2005 and last updated on January 3, 2006. Clearford purchased the Shares from Return on Innovation Fund Inc. (the "Fund") and Nalin Limited. Details of the transactions described herein are contained in Clearford's filing statement dated January 16, 2006, a copy of which is available on SEDAR at www.sedar.com. The purchase of Brooklin was based on an enterprise value of $31.25 million less working capital adjustments. Clearford purchased all the issued and outstanding shares of Brooklin for approximately $7.15 million in cash less working capital adjustments. In addition, all the senior and subordinated debt owed by Brooklin to its senior lender and the Fund, including any accruals thereon, was extinguished for a total purchase price of approximately $24.1 million (the price paid for the shares and to extinguish the subordinated debt shall be collectively referred to as the "Purchase Price"). Financing of the Purchase Price and
additional capital for expansion was financed by a private placement
by Clearford of convertible subordinate debentures (the "Debentures")
in the amount of $25 million, initially convertible into Clearford
common shares at a price of $0.80 per share. The Debentures have
a term of five years and accrue interest at the rate of 9% per
annum. After the first three years following closing, the conversion
price will increase by 10% per year. Lytton Financial Inc. was
the exclusive agent to Clearford on these transactions and was
paid a total fee which approximates five percent of the amount
raised from the Debenture financing. Concurrent with the closing of the transaction the following additional items were completed: (a) Clearford obtained bank financing from HSBC Bank Canada in an amount up to $20 million (the "Bank Financing"). The proceeds of the Bank Financing were used, in part, to replace the Canadian Imperial Bank of Commerce loan to Brooklin. Security over all of the assets of Clearford, Brooklin and Innovative Sewage Systems Inc. ("ISSI"), a subsidiary of Clearford, was granted to HSBC Bank Canada; (b) Mr. Glenn Gold and Mr. Samuel Reisman were appointed as directors of Clearford. Mr. Gerald Leahy resigned his position as director, but will continue serving Clearford in the capacity of Chief Financial Officer; (c) VentureLink Brighter Futures (Equity) Fund Inc. ("VentureLink") exchanged its 2,400,000 Series 1 Preferred Shares of R.W. Connelly Associates Inc. ("RWACI"), a subsidiary of Clearford, (the "VentureLink Shares") for 2,400,000 common shares of Clearford pursuant to an exchange agreement entered into on December 18th, 2002. In consideration for this exchange, Clearford issued to Roytor a/c 278750, as nominee of VentureLink, a warrant with the right to purchase up to 240,000 common shares of Clearford at a price of $1.00 per share. This warrant will expire on January 26, 2009. As a result of the exchange of the VentureLink Shares, Clearford owned 100% of the issued and outstanding shares of RWCAI; and (d) Subsequent to the transaction described in paragraph (c) above, RWCAI distributed its assets and liabilities to Clearford and will be subsequently dissolved. Brooklin and ISSI, both subsidiaries of Clearford, were amalgamated with Clearford. As a result of this amalgamation, Clearford now operates with a small corporate team and two operating divisions - Brooklin Concrete Division and the Small Bore Sewer (SBS™) Division. Upon closing of the acquisition, Clearford amended its Strategic Leadership Agreement with SC Stormont Inc. ("Stormont"), whereby Stormont has been retained to provide similar strategic leadership to Brooklin as it currently provides to Clearford. As consideration for these services, the compensation paid to Stormont was increased. Clearford also agreed to grant SC Stormont Holdings Inc. ("Holdings") three (3) year options to acquire 1,242,808 Clearford common shares at an exercise price of $0.60 per share. Holdings is an Ontario corporation with offices in Ottawa, Ontario. Mr. Roderick M. Bryden is Chair and President of Holdings, the 100% owner of Stormont. Stormont is a related party to Clearford as Mr. Bryden is also a Director and the Chairman of Clearford. Brooklin is a supplier of pre-cast concrete products from four locations in Ontario, with its primary facility located in Brooklin, on the northeastern fringe of the Greater Toronto Area. Operations typically generate reduced production and limited sales during the first quarter, ending March 31st, as winter conditions limit demand for its products and inventory is built in advance of spring demand. The Company anticipates that the Brooklin Division will follow its usual pattern, and record a loss for the first quarter of 2006, followed by profits for the remaining three quarters and for the year ending December 31st, 2006. Cash flow from operations from the Brooklin Division is expected to be positive for the year. Clearford's SBS™ Division will increase marketing and sales activities during the first half of 2006. The current backlog of contracts is expected to produce revenues during the second half of this year. Bruce Linton, President and Chief Executive Officer of Clearford, commented on the acquisition of Brooklin Concrete and the strengthened financial position of the Company: "This is a dramatic development in our company", Mr. Linton said. "Our SBS™ Division has a highly competitive wastewater collection system, delivering superior environmental impact with capital and operating costs significantly below the costs of historic piping based systems. We expect to close several sales from our bid backlog over the coming months and to see expanding sales through this year and beyond. The concrete clarifier that is part of our system can be supplied by Brooklin, improving overall margins while reducing costs to our customers. In addition, the strong income and cash flow from Brooklin will allow investments in marketing and sales of SBS™ to be made in the context of a strong and sustainable financial position. Each division has the opportunity for improved performance arising from the strengths of the other". About Clearford Industries Inc. For more information contact: |
| |||
TOLL FREE 1-866-231-1104 |
||||