DRUMMONDVILLE, QC, March 26, 2012 /CNW Telbec/ - CVTech Group Inc. ("CVTech" or "the Corporation") (TSX: CVT) today announced it has accepted a non-binding letter of intent with regards to the sale of its operations in the CVT systems and related products segment. The letter of intent contains certain conditions, including financing, a due diligence, as well as entering into a definitive purchase agreement. If all conditions are met, the transaction could close around July 31, 2012.
The buying group includes two current managers of the said operations. The proposed purchase price amounts to $18.0 million, including a cash payment of $16.0 million and $2.0 million in preferred shares of the new entity. The preferred shares would be non-voting, non-participating and redeemable between the end of the sixth and tenth fiscal year following the conclusion of the transaction. An annual dividend rate of 2.0% would be payable on their outstanding balance.
"This transaction, if completed, will benefit all parties involved," declared André Laramée, President and Chief Executive Officer of CVTech. "On the one hand, the potential acquisition by local interests should favour workforce stability at the divested operations. On the other hand, CVTech will be able to better focus its efforts on its Energy segment operations and concentrate its strategic plan on the main growth vectors identified. Furthermore, our future focus on a single business should lead to improved stock market valuation."
Overview of the Corporation
CVTech is a management company operating in two major sectors. Through Thirau ltée and its subsidiaries, Riggs Distler Inc. and Thirau LLC, the Corporation provides services to the electric power industry for the maintenance of transmission and distribution lines, primarily in Quebec, Ontario and the eastern United States. Another Thirau ltée subsidiary, J.J.L. Déboisement inc., specializes in control of vegetation surrounding power lines and in clearing rights of way. Thirau LLC's wholly owned subsidiary Riggs Distler & Company, Inc. is a leading provider of maintenance and construction services to the utility and heavy industrial markets. In the CVT systems and related products segment, the Corporation, through CVTech-IBC Inc., designs, manufactures and sells continuously variable power transmission systems, or CVT systems. CVTech-AAB inc. specializes in rebuilding crankshafts and cylinders and in distributing engine parts.
This document may contain forward-looking statements that reflect management's current expectations regarding future events. Forward-looking statements are based on a number of factors and include risks and uncertainties. Actual results may differ from forecast results. Management has no obligation beyond what is required under the law to update or revise forward-looking statements pursuant to new information or future events.
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Source: CVTech Group inc.
André Laramée, MBA
President and Chief Executive Officer
Mario Trahan, CMA
Chief Financial Officer
Martin Goulet, CFA