GL&V Sells its Process Group to FLSmidth for $950 M and Spins Off to Shareholders its Water Treatment and Pulp and Paper Groups



    MONTREAL, April 20 /CNW Telbec/ -

    
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    - Upon the closing of the transaction, GL&V shareholders will receive,
      for each GL&V share held, a cash consideration of $33 and one share of
      a new corporation ("NewCo") combining the Water Treatment, Pulp and
      Paper and Manufacturing groups.

    - Attractive transaction for shareholders given premium over GL&V's
      current share price and ongoing opportunity to participate in NewCo's
      future growth.

    - GL&V's Board of Directors supports the transaction and recommends that
      shareholders vote in favour of the transaction.

    - Transaction scheduled to close at the end of July 2007; NewCo, which
      will be seeking a listing on the TSX Exchange, will be held by GL&V's
      shareholders and led by the same senior management team.
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    (Note: All amounts are expressed in Canadian dollars unless otherwise
indicated.) GROUPE LAPERRIERE & VERREAULT INC. ("GL&V" or "the Company";
ticker symbols GLV.A, GLV.B/TSX) and the Danish company FLSmidth & Co. ("FLS";
ticker symbol FLS B/CSE) announced today that they have entered into an
agreement whereby, through a court-approved plan of arrangement (the
"Arrangement"), FLS will acquire all the outstanding Class A subordinate
voting shares and Class B multiple voting shares of GL&V. In connection with
the Arrangement, GL&V will transfer its Water Treatment, Pulp and Paper and
Manufacturing groups into a new corporation ("NewCo") which will be seeking a
listing on the TSX Exchange and that will be spun off to shareholders.
Following the Arrangement, FLS will effectively own 100% of GL&V's Process
Group (the "Process Group") in exchange for a consideration of $840 M in cash
(equivalent to $33 per share) and the assumption of net debt of approximately
$110 M.
    Pursuant to the Arrangement, each GL&V shareholder will receive a
per-share consideration consisting of $33 in cash and one share of NewCo.
Holders of Class A subordinate voting shares and Class B multiple voting
shares of GL&V will receive respectively Class A subordinate voting shares and
Class B multiple voting shares of NewCo for each corresponding share held.
According to management, the cash consideration of $33 per GL&V share and the
share of NewCo (the "Consideration") represents an attractive premium over
GL&V's share price.

    Value Maximizing Transaction for GL&V Shareholders
    --------------------------------------------------

    Laurent Verreault, Chairman of the Board and Chief Executive Officer of
GL&V, indicated this transaction is perfectly consistent with GL&V's core
objective of maximizing shareholder value. "The price offered by FLS not only
provides our shareholders with a significant immediate return on the Process
Group's assets, but also offers them the opportunity to continue
participating, as NewCo shareholders, in the growth of the Water Treatment and
Pulp and Paper Groups: two well-established global entities equipped with
solid technologies. Furthermore, the development of these groups will continue
to be driven by the same vision, entrepreneurial culture, rigorous management
and corporate governance upon which GL&V has built its strength and success."
    According to Laurent Verreault, the price offered by FLS for the Process
Group - i.e. approximately $950 M, including the assumption of net debt -
notably reflects the added value recognized by the ore processing industry,
which is undergoing consolidation, in global suppliers capable of offering
comprehensive solutions that complete their customers' process flowsheets.
"Over the past seven years, GL&V has built its Process Group through selective
acquisitions and well performed integrations. In 1999 and 2002, the
acquisitions of Dorr-Oliver and EIMCO spearheaded this group's international
expansion and provided it with complementary liquid/solid separation
technologies. With the acquisition of Krebs International in December 2006, we
completed the Process Group's offering in liquid/solid separation technologies
for the mining industry, which greatly increased its value. For its part, FLS
has, over the years, built a market leadership in technological solutions
targeted to almost all stages of mineral processing (extraction, comminution,
pyroprocessing and handling) except one: liquid/solid separation. At a time
when industry consolidation calls for a transaction of this type and size,
this deal is beneficial to both GL&V and FLS."
    "This timely and opportune transaction is a win-win situation, not only
for GL&V's and FLS's respective shareholders, but also for customers who will
benefit from stronger value-added solutions, as well as for the Process
Group's employees who will pursue their career in a company that will be the
industry leader. GL&V's other employees will continue to exercise their
professional skills in NewCo, through a seamless transition in terms of
structure, management style, leadership and objectives. In addition, NewCo's
officers and managers will be able to focus their efforts and energies on
developing NewCo's business and entrepreneurial culture. In other words, the
transaction provides shareholders with the opportunity to participate in
"another GL&V", whose priority will be to continue creating shareholder
value".

    Transaction Structure
    ---------------------

    Plan of Arrangement

    The proposed Arrangement is subject to shareholder approval by resolution
approved by no less than 75% of the votes cast in each class of shares (Class
A Subordinate Voting and Class B Multiple Voting) and GL&V expects to present
the matter to shareholders at a special meeting. The Arrangement is also
subject to a number of conditions including approval by the Superior Court of
Quebec, acceptance by the TSX Exchange and other regulatory approvals.

    Support of Key Shareholders and Board of Directors

    Laurent Verreault and Richard Verreault, representing directly or
indirectly approximately 0.2% of GL&V's Class A subordinate voting shares and
65.1% of GL&V's Class B multiple voting shares, have entered into a soft
lock-up agreement with FLS to vote in favour of the Arrangement.
    The Support Agreement contains customary provisions prohibiting GL&V from
soliciting any other acquisition proposal, but allowing termination in certain
circumstances upon exercise by the Board of Directors of its fiduciary duties,
subject to the payment by GL&V of a termination fee to FLS of $25 M.
    In addition, GL&V's Board of Directors has received a fairness opinion
from CIBC World Markets Inc. to the effect that, as of the date hereof and
based on and subject to the factors, assumptions and limitations described in
the CIBC World Markets opinion, the Consideration offered to GL&V's
shareholders pursuant to the Arrangement is fair, from a financial point of
view, to GL&V's shareholders. Upon the recommendation of a transaction
committee comprised of independent Board members, GL&V's Board has concluded
unanimously (Laurent Verreault and Richard Verreault abstaining) that
shareholders should vote in favour of the Arrangement.

    Tax Considerations

    The transaction will create two taxable events for GL&V shareholders:

    - Subject to tax authorities' confirmation, the distribution of NewCo
      shares will constitute a return of capital of approximately $2.65 per
      class A share and will reduce adjusted cost base (return of capital on
      Class B shares, if any, will be minimal). Difference between NewCo fair
      market value ("FMV") and the return of capital will constitute an
      eligible dividend for tax purposes.

    - The sale of GL&V's shares will constitute proceeds of disposition for
      tax purposes.

    Further details will be contained in an Arrangement Circular that is
expected to be mailed to shareholders on or about June 15, 2007, in connection
with a special meeting that will be held to consider the Arrangement and the
Arrangement Agreement.

    NewCo: POSITIONED TO TAKE ADVANTAGE OF MARKET TRENDS AND ITS RECENT
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    ACQUISITIONS
    ------------

    NewCo will be managed by GL&V's current senior management team (with the
exception of the Process Group's officers and managers), including Laurent
Verreault, who will continue to act as Chairman of the Board and Chief
Executive Officer, Richard Verreault, President and Chief Operating Officer,
Marc Barbeau, Vice-President and Chief Financial Officer, Graham Lawes,
Vice-President and General Manager of the Water Treatment Group, and William
Mahoney, Senior Vice-President of the Pulp and Paper Group. NewCo's Board of
Directors will consist of a majority of independent members, selected with the
view of ensuring continuity between GL&V and NewCo and maintaining the same
quality of governance. The list of senior officers and future directors of
NewCo will be provided in the Arrangement Circular, which is expected to be
mailed to GL&V's shareholders on or about June 15, 2007.
    Richard Verreault, President and Chief Operating Officer, indicated that
NewCo will inherit and operate a solidly established worldwide business with
an excellent product portfolio and a large, diversified customer base,
together with some 1,500 skilled employees and an experienced management team.
NewCo will also benefit from the Water Treatment and Pulp and Paper groups
recent acquisitions and efficient integrations. Indeed, these two groups have
completed eleven acquisitions over the past two years, six since April 2006.
    "NewCo's mission will be to become a world leader in targeted industrial
and municipal solutions, with a strong focus on the fast-growing environmental
technology sector. "We intend to foster NewCo's profitable growth and creation
of long-term shareholder value by replicating the same business model and
strategies that have proven successful for GL&V over the last three decades.
We will continue to concentrate on targeted expansion through the acquisition
and efficient integration of complementary businesses, enhancing our
technology portfolio to provide customers with complete high-performance
solutions, building our aftermarket business and maintaining an optimal cost
structure, through efficient outsourcing."
    "The global water treatment industry holds considerable growth and
consolidation potential for the future. In recent years, GL&V has rolled out
substantial efforts, first to set up its Water Treatment Group, and then to
provide it with the latest technologies to competitively position it in
promising niches within this industry, which is still fragmented and expected
to undergo consolidation in upcoming years. Subsequent to our most recent
acquisitions, we are structuring this group to improve its profitability and
market response. We are confident regarding the future of this group, which
will continue to expand through acquisitions in order to, among others,
complete its technological portfolio. The Pulp and Paper Group has acquired
various technologies over the past two years in response to new trends in the
global marketplace, including certain state-of-the-art pulp process equipment
in December 2006, which recently allowed it to win a contract in Portugal
worth approximately $60 M", added Richard Verreault.

    Financial Overview of NewCo
    ---------------------------

    For the twelve-month period ended December 31, 2006, the operations that
will comprise NewCo generated revenues of $374 M while, on December 31, 2006,
its order backlog totalled $257 M (excluding the close to $60 M contract
recently awarded to the Pulp and Paper Group). Marc Barbeau, Vice-President
and Chief Financial Officer, commented on NewCo's expected financial results.
"Based on a combination of factors including the current order backlog, our
assessment of market conditions, acquisitions made over the past year and the
expected reduction in head office expenses due to the transfer of the Process
Group to FLS, we estimate that NewCo will achieve sales of between $500 M and
$545 M and EBITDA of between $25 M and $30 M within its first full year of
operation following the transaction". NewCo will benefit from a healthy
capital structure that will provide it with the ability to grow. At closing,
NewCo will assume a total net debt of $50 M.
    Pursuant to the Arrangement, the share capital of NewCo will consist of
22,781,521 Class A subordinate voting shares and 2,607,359 Class B multiple
voting shares, which corresponds to the number of such issued and outstanding
shares of GL&V as of the date hereof, assuming the exercise of all the stock
options outstanding. The provisions relating to the two share classes will be
substantially similar to those in GL&V's articles.
    National Bank Financial Inc. acted as financial advisor to GL&V in
connection with the Transaction. Furthermore, NewCo obtained a fully
underwritten and committed loan facility of $175 M from National Bank
Financial Inc.

    Forward-Looking Statements
    --------------------------

    Certain statements set forth in this press release that describe the
objectives, projections, estimates, expectations or forecasts of both GL&V and
NewCo may constitute forward-looking statements within the meaning of
securities legislation. GL&V's management would like to point out that, by
their very nature, forward-looking statements involve a number of risks and
uncertainties such that NewCo's future results could differ materially from
those indicated. Factors of uncertainty and risk that might result in such
differences include trends in the demand for NewCo's products and cost of its
raw materials, fluctuations in the value of various currencies, pressures
exerted on prices by the competition, compliance with environmental
legislation and general changes in economic conditions. There can be no
assurance as to the materialization of the results, performance or
achievements as expressed in or underlying the forward-looking statements.
Unless required to do so pursuant to applicable securities legislation, GL&V's
management assumes no obligation as to the updating or revision of the
forward-looking statements as a result of new information, future events or
other changes.

    About GL&V
    ----------

    Founded in 1975, GL&V is a world leader in liquid/solid separation
technologies used in a large number of industrial, municipal and environmental
processes. The Process Group, which is intended to be transferred to FLS
pursuant to the terms of the Arrangement, offers an extensive selection of
liquid/solid separation solutions intended for metal and minerals processing,
as well as various other industrial markets such as pulp and paper, energy,
chemicals, petrochemicals and food processing. The Pulp and Paper Group, which
will be transferred to NewCo pursuant to the terms of the Arrangement,
specializes in the design and marketing of equipment used in various stages of
pulp and paper production, notably chemical pulping, pulp preparation and
sheet formation, and is a recognized leader in rebuilding, upgrading and
optimization services for existing pulp and paper equipment. The Water
Treatment Group, also to be transferred to NewCo pursuant to the terms of the
Arrangement, specializes in the development and marketing of equipment for the
treatment of municipal and industrial wastewater, drinking water and process
water used in various industrial processes, as well as water intake screening
solutions for power stations and refineries. Finally, an operating unit, GL&V
Manufacturing, which will also be transferred to NewCo pursuant to the terms
of the Arrangement, specializes in the production of large custom-made parts
for external customers involved mainly in the pulp and paper and energy
sectors, as well as GL&V's other units. GL&V is present in 40 countries on six
continents and currently has approximately 2,400 employees.
    Reference is also made to FLSmidth & Co. press release issued today.

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                       CONFERENCE CALL WITH INVESTORS

             Friday, April 20, 2007 at 9:30 a.m. (Montreal Time)
             ---------------------------------------------------

    To participate in the conference call, please dial 1-800-732-9307 a few
    minutes before the start of the call. For those unable to participate, a
    taped re-broadcast will be available from Friday, April 20, 2007, at
    11:30 AM until midnight Friday, April 27, 2007, by dialing
    1-877-289-8525; access code 21227954 #. THE CONFERENCE CALL
    WILL ALSO BE AVAILABLE AT WWW.GLV.COM.

    A presentation on the transaction will be posted early Friday, April 20,
    2007 in the Investor Relations section of GL&V's website, at www.glv.com.
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              CONFERENCE CALL WITH REPRESENTATIVES OF THE MEDIA

             Friday, April 20, 2007 at 11:00 a.m. (Montreal Time)
             ----------------------------------------------------

    To participate in the conference call, please dial 1-800-732-9303 a few
    minutes before the start of the call.
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    Selected Financial Information Fact Sheet
    (All figures are in thousands of CDN$, except when otherwise indicated)

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    FLS OFFER

     - Approximately $840M in cash ($33 per share)
     - Assumption of GL&V's net debt, except for a net debt of $50M assumed
       by NewCo (approx. $110M as at December 31, 2006)
     - Total acquisition price of approximately $950M
     - EV / PF 2007E EBITDA of Process Group(1): 14.2x
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    NEWCO

    Segmented Information (unaudited)

                                   Water      Pulp &     Other &
                               Treatment       Paper       Elimi-
                                   Group       Group      nation       Total
                              -----------------------------------------------
    LTM Figures as at
     Dec-31-06(2)
      Revenues                   165,118     204,822       3,669     373,609
      EBITDA                       7,453      14,254     -17,040       4,667
      EBITDA with projected
       head office savings         7,453      14,254     -11,250      10,457

    Next 12 months Guidance
      Revenues                   280,000     242,000      -2,000     520,000
      EBITDA                      22,400      19,600     -15,000      27,000

    Sales Backlog as at
     Dec-31-06                    93,934     174,384     -11,759     256,559

    Pro Forma Selected Balance
     Sheet Items as at Dec-31-06
    Net working capital                       82,500
    Net debt                                  50,000
    Shareholders' equity                     125,000
    Fully diluted book value per share        $ 4.92
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    TAX CONSIDERATIONS OF THE TRANSACTION (for illustrative purposes only)(3)

    Adjusted cost base
     calculation for GL&V
     Class A shares
      Adjusted cost base (for
       illustrative purposes)                 $20.00
      Return of capital(4)(5)                 $ 2.65
                                             --------
      Revised adjusted cost base              $17.35

    Capital gain
      Cash consideration                      $33.00
      Revised adjusted cost base              $17.35
                                             --------
      Capital gain                            $15.65

    Eligible dividend
      FMV of NewCo share (for
       illustrative purposes)                 $ 6.00
      Return of capital(4)(5)                 $ 2.65
                                             --------
      Eligible dividend                       $ 3.35
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    (1) Adjusted for the acquisition of Krebs and excluding corporate costs
    (2) Not adjusted to reflect a full year of acquired operations
    (3) For illustrative purposes only and as such, should not be interpreted
        or construed to be tax advice; further details will be disclosed in
        the Arrangement Circular
    (4) Return of capital on Class B shares will be minimal, if any
    (5) Subject to tax authorities' confirmation


    /NOTE TO PHOTO EDITORS: A photo accompanying this release is available on
    the CNW Photo Network and archived at http://photos.newswire.ca.
    Additional archived images are also available on the CNW Photo Archive
    website at http://photos.newswire.ca. Images are free to accredited
    members of the media/
    




For further information:

For further information: Investors: Marc Barbeau, Vice-President and
Chief Financial Officer, (514) 284-2224, www.glv.com; Josée Lefebvre, (514)
845-1224; Media: Amély Tremblay, (514) 289-8688, ext. 226

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