ZCL Announces Redemption of Preferred Shares
EDMONTON, June 15, 2012 /CNW/ - ZCL Composites Inc. (TSX: ZCL) is pleased to announce an agreement between ZCL Composites Inc ("ZCL") and the former owner of Dualam Plastics Inc. ("DPI"), now ZCL-Dualam Inc., dealing with matters that had arisen subsequent to the purchase of DPI.
Pursuant to this agreement, the preferred shares held by the former owner of DPI, which were convertible into 1,078,947 common shares and paid a dividend of 4.4% annually, are being redeemed prior to maturity at the face value of $5,125,000. The preferred share redemption will be used as consideration for the sale back of two DPI properties, including non-core land and building held for sale, for proceeds of $1,750,000, as well as to fund the settlement of claims for $1,300,000. The balance remaining from the redemption of the preferred shares of $2,075,000 will be paid through ZCL's operating line.
In addition to reducing ZCL's debt load, the conversion from preferred shares to operating line results in interest payments now being deductible for tax purposes.
ZCL is pleased with the outcome of this agreement as it aligns with the "simplify to grow" strategy. The agreement has eliminated the long term liability associated with the preferred shares and improved the tax structure as a result, reduced management distraction and enabled ZCL to continue to focus on its core competencies as North America's largest supplier and manufacturer of environmentally friendly underground and aboveground fluid containment products.
About ZCL Composites Inc.
Our vision is to be the leading global provider of environmentally friendly liquid storage, fluid handling and corrosion resistant industrial products. More information about ZCL is available on its website at www.zcl.com.For further information:
President & CEO
ZCL Composites Inc.
Chief Financial Officer
ZCL Composites Inc.