TORONTO, March 19, 2019 /CNW/ - Water Ways Technologies Inc. (TSXV: WWT) ("Water Ways" or the "Company"), is pleased to announce that it entered into a non-binding letter of intent ("LOI") on March 18, 2019 with an arm's length third party to acquire the assets ("Acquisition") of a Canadian distributor of irrigation and agriculture components located near London, Ontario ("Distributor"). The Distributor was established in 2004 and finished the year ended October 2018 with sales of approximately CAD $3.74 million1.
Ohad Haber, CEO of Water Ways commented: "We are pleased to take this first important step in rolling out our international operations. This Acquisition will allow us to secure a foothold in Canada and leverage our expertise in the irrigation sector in the North American market. Our access to the latest Israeli irrigation and ag-tech technologies provides us with a solid competitive advantage in the space. We look forward to working with the Distributor's management team, as we continue to build this important sales channel."
Water Ways intends to establish a wholly owned Canadian subsidiary which will acquire the Distributor's assets and leverage their business relationships with the Canadian farming community to market and sell irrigation projects and components. Water Ways further intends to retain the Distributor's sales force to focus on marketing and selling irrigation projects to the growing needs of Canadian cannabis licensed producers. Water Ways believes that the Distributor's sales force is well positioned to capture a significant share of the Canadian wholesale irrigation market. In addition, Water Ways' extensive offering of Israeli technology based irrigation components and equipment as well as access to the latest industry know-how provides it with an advantage to potentially become a significant vendor to Canadian farmers and cannabis licensed producers in the short to medium term.
Terms of the Acquisition
According to the terms of the LOI, Water Ways will acquire assets of the Distributor which include its customer base, inventory, certain equipment and goodwill for total consideration of CAD $500,000. The consideration will be payable as follows:
CAD $20,000 is payable in cash on the date of signing the LOI;
CAD $455,000 is payable in cash on the closing date ("Closing Date")
CAD $25,000 is payable in common shares in the capital of Water Ways ("Shares"), at a deemed per share issue price equal to the lesser of (i) $0.25 and (ii) the 30-day volume-weighted average price prior to the Closing Date, subject to escrow provisions to be agreed upon.
Upon closing, the Distributor will cease commercial operations and its sole shareholder and managing director (the "Shareholder") will become an employee and manager of the Company's Canadian operations and will enter into an employment agreement with the Company. As noted above the Company also anticipates retaining the Distributor's current sales force. The LOI also provides for certain working capital adjustments, whereby the receivables for orders prior to the Closing Date and inventory relating thereto shall remain the property of the Shareholder. The Acquisition is subject to the Company completing due diligence, entering into definitive agreements, securing a lease to operate the Distributor's business by Water Ways after completing the Acquisition, receipt of applicable regulatory approvals and entering into a non-competition agreement with the Shareholder. Subject to satisfying the above conditions, it is anticipated that closing will take place in the second quarter of 2019.
About Water Ways Technologies
Water Ways is the parent company of Irri-Al-Tal Ltd. ("IAT") which is an Israeli based agriculture technology company that specializes in providing water irrigation solutions to agricultural producers. IAT competes in the global irrigation water systems market with a focus on developing solutions with commercial applications in the micro and precision irrigation segments of the overall market. At present, IAT's main revenue streams are derived from the following business units: (i) Projects Business Unit; and (ii) Component and Equipment Sales Unit. IAT was founded in 2003 by Mr. Ohad Haber with a view of capitalizing on the opportunities presented by micro and smart irrigation, while also making a positive mark on society by making these technologies more widely available, especially in developing markets such as Africa and Latin America. IAT's past projects include vineyards, water reservoirs, fish farms, fresh produce cooling rooms and more, in over 15 countries.
Certain statements contained in this press release constitute "forward-looking information" as such term is defined in applicable Canadian securities legislation. The words "may", "would", "could", "should", "potential", "will", "seek", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions as they relate to Water Ways, including receipt of the Final Exchange Bulletin and the proposed listing date, are intended to identify forward-looking information. All statements other than statements of historical fact may be forward-looking information. Such statements reflect Water Ways' current views and intentions with respect to future events, and current information available to Water Ways, and are subject to certain risks, uncertainties and assumptions. Material factors or assumptions were applied in providing forward-looking information, including:the approval of the Acquisition by the TSX Venture Exchange; entering into the definitive agreements on terms favorable to the Company; completing due diligence on the Acquisition to the Company's satisfaction; and the ability of the Company to successfully integrate the operations of the Distributor if the Transaction is completed. Many factors could cause the actual results, performance or achievements that may be expressed or implied by such forward-looking information to vary from those described herein should one or more of these risks or uncertainties materialize. Should any factor affect Water Ways in an unexpected manner, or should assumptions underlying the forward-looking information prove incorrect, the actual results or events may differ materially from the results or events predicted. Any such forward-looking information is expressly qualified in its entirety by this cautionary statement. Moreover, Water Ways does not assume responsibility for the accuracy or completeness of such forward-looking information. The forward-looking information included in this press release is made as of the date of this press release and Water Ways undertakes no obligation to publicly update or revise any forward-looking information, other than as required by applicable law. Water Ways' results and forward-looking information and calculations may be affected by fluctuations in exchange rates. All figures are in Canadian dollars unless otherwise indicated.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.