Deal would bring significant material cost reductions and expand IP portfolio

TORONTO, May 26, 2011 /CNW/ - Innovative Composites International Inc. (IC:TSX-V) ("ICI" the "Company"), announced today that it has entered into an option agreement to purchase the assets of Eleison Composites LLC ("Eleison"), a current ICI supplier and leading producer of fibre reinforced thermoplastic skin.

The integration of Eleison equipment would result in a significant reduction in the material cost of all ICI products which in turn would enhance margins and allow ICI to compete in lower price segments of certain markets. Eleison holds six patents and is on pace to generate approximately USD $2 million in revenue in 2011, net of sales to ICI. This transaction is the first step in ICI's vertical integration strategy and would only close subject to ICI securing a major housing contract in the near future.

According to the terms of the option agreement ICI has an exclusive right to acquire substantially all of the Eleison assets including inventory, equipment, customer lists and purchase orders, patents and any other intellectual property, for a period of 120 days. The purchase price is USD $2 million payable on closing plus a product royalty of USD $1 million payable over a maximum of three years after the acquisition. The closing of the transaction is subject to due diligence and the execution of an Acquisition Agreement ("AA") containing such representations and warranties as are customary in a transaction of this type. It is anticipated that current staff would continue managing Eleison's day-to-day operations after the acquisition.

This acquisition would allow ICI to control supply of a strategic raw material that is used in all its products and which is currently subject to lengthy lead times. In addition, patents held by Eleison allow for utilization of recycled Polyethylene Terephthalate (commonly known as PET), in the manufacture of thermoplastic skin and core materials. According to the U.S. Government Accountability Office approximately 1 million tons of PET water and soft drink bottles end up in landfills annually, potentially making it a readily accessible, no cost raw material for ICI products.

"Vertical integration is one of the keys to our continued growth because it not only provides cost efficiencies, but also eliminates our dependency on raw material suppliers," said ICI President and CEO Terry Ball. "Eleison is an ideal acquisition target because it has the equipment, intellectual property and expertise that ICI can smoothly integrate into its manufacturing process and achieve significant cost and quality advantages."

ICI agreed to immediately advance Eleison $200,000 to be utilized for the sole purpose of combining two existing thermoplastic skin production lines into one line capable of producing 10' wide skins. If the AA is not signed within 120 days, Eleison will provide ICI a credit equal to the total paid by ICI for the development of the 10' line. Such credit would be applied to 10% of sales from Eleison to ICI for a period of three years. The 10' line would remain an Eleison asset.

About Innovative Composites International Inc.

Headquartered in Toronto, Canada, ICI is a high-tech engineering and manufacturing company established in 2007 by a group of entrepreneurs with a successful track record in commercializing advanced materials.

The Company is currently focused in two areas: Structure LiteTM panels, a unique line of application-ready structural composite panels and Hero 451TM, a line of environmentally friendly fire inhibitors and suppressant. ICI's goal is to deliver products that exceed industry standards with greater durability, strength, flexibility and safety.

ICI is partnering directly with leaders in its target industries as it considers it to be the fastest way to bring products to market. ICI's customized solutions are intended to provide partners with material advantages over their competitors.

To find out more about Innovative Composites International Inc. (IC: TSX-V), please visit our website at

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

"Statements made in this press release include forward-looking statements that involve a number of risks and uncertainties. These statements relate to future events or future performance and reflect management's current expectations and assumptions. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements, such as the economy, generally, competition in its target markets, potential cancellation of existing purchase orders, the demand for ICI's products and the availability of funding. These forward-looking statements are made as of the date hereof and ICI does not assume any obligation to update or revise them to reflect new events or circumstances. Actual events or results could differ materially from ICI's expectations and projections."

SOURCE Innovative Composites International Inc.

For further information:

Contact Information:

Ilja Troitschanski
Chief Financial Officer
(416) 646 0754


Graeme Dick
Brisco Capital Partners
(403) 561-8989

Profil de l'entreprise

Innovative Composites International Inc.

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