NANAIMO, BC, July 21, 2020 /CNW/ - Atlas Engineered Products ("AEP" or the "Company") (TSX-V: AEP) (OTC Markets: APEUF) announced today that, further to is news release dated July 14, 2020, the Company has now completed the acquisition of selected assets (the "Asset Acquisition") of Trusstem Industries Inc. (the "Trusstem"), marking a major milestone in AEP's plans for expansion into the Lower Mainland region of British Columbia.
"We have been evaluating several opportunities in Western Canada for quite some time now. There is significant market demand for AEP's products and services, and our Vancouver Island location is performing at record levels. COVID-19 has highlighted AEP's organizational and geographical strengths. With the minimal impacts experienced in the BC building environment during the pandemic, we have made expanding our footprint in British Columbia a priority," says Dirk Maritz, AEP's CEO & President. "With this acquisition we not only expand our overall geographic footprint, but we enter into the thriving Lower Mainland BC market. AEP can serve this market with pre-manufactured wall-panels, manufactured floor trusses, I-joists, LVL options, open web floors, roof trusses and other engineered wood products."
The Asset Acquisition was completed through AEP's newest company, Novum Building Components Ltd. ("Novum"). The Asset Acquisition was purchased for $350,000 in cash, with 50% of the purchase price paid on closing, and the remaining 50% payable equal monthly installments over 3 years. Novum will be located in Abbotsford, British Columbia and is expected to begin operations immediately. The new operations will be rebranded under the Novum name, meaning 'new and innovative'.
AEP has identified under-utilized manufacturing assets across the group and will be refurbishing and upgrading them for installation at Novum in addition to the assets acquired from Trusstem. Once completed, the revamped factory with its upgraded equipment will be able to supply similar volumes to AEP's flagship Nanaimo operations. The first phase of upgrades is scheduled to start in a few weeks and is expected to be completed over the coming months.
All loyal customers of Trusstem will continue to be taken care of, with all current work-on-hand to be completed. In addition, AEP will be adding a number of its own customers based in the Lower Mainland. These include new customers, as well as customers that already have deep relationships with AEP and do business with AEP's Atlas Building Systems Ltd. operation on Vancouver Island.
AEP has assigned industry veteran Doug Paterson, ex-Director, Sales & Branch Operations British Columbia at Ply Gem Canada Inc., to oversee business development for the Lower Mainland BC market. Mr. Paterson has deep roots in the building and construction industry across Canada and North America. With Mr. Paterson's industry contacts, combined with AEP's deep and respected relationships, AEP believes Novum will transform into a significant market player.
"We believe that our expansion into the Lower Mainland market through Novum is a smart acquisition," commented AEP's Executive Vice President Operations, Brittany Ray-Wilks. "Unlike other acquisitions we have done to date, this is an asset purchase that adds significant value to AEP. The low-cost structure with which we have entered Lower Mainland BC, combined with the strategic location and robust market makes sense as a next step in the AEP growth story. Not only are we taking over existing work-on-hand, but we are also adding our own customer base. With our focus on efficiencies, productivity, economies-of-scale and buying power optimization, we are confident we can deliver on our growth and profitability targets with Novum. This deal checks every box to deliver shareholder value."
About Atlas Engineered Products Ltd.
AEP is a growth company that is acquiring and operating profitable, well-established operations in Canada's truss and engineered products industry. We have a well-defined and disciplined acquisition and operating growth strategy enabling us to scale aggressively, giving us a unique opportunity to consolidate a fragmented industry of independent operators.
Forward Looking Information
Information set forth in this news release contains "forward-looking statements" within the meaning of applicable securities legislation. The forward-looking statements herein include, but are not limited, statements regarding the Company's plans for expansion into the Lower Mainland of British Columbia; the anticipated timing of completion of facility and equipment upgrades; the expected capacity and volume of the new operations; the manner in which customers will be served; the transformation of Novum into a significant market player and the anticipated benefits of the foregoing. These statements reflect management's current estimates, beliefs, intentions and expectations; they are not guarantees of future performance. In making the forward-looking statements included in this news release, AEP has applied several material assumptions, including, but not limited to, the assumption that all facility and equipment upgrades will be completed in a timely manner, on budget and as expected; the existing customers of Trusstem will continue their business relationship through Novum; that business development activities and initiatives will have their intended effect; that the activities proposed to be taken to expand the Company's business into the Lower Mainland will proceed as planned, and that market fundamentals will result in sustained demand for the Company's product and services. Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements. Although AEP believes that the expectations reflected in the forward looking statements in this news release are reasonable, there is no assurance that such expectations will prove to be correct, or that such future events will occur in the disclosed time frames or at all. AEP cautions that all forward looking statements are inherently uncertain and that actual performance may be affected by a number of risks and factors, many of which are beyond AEP's control. Such risks and factors include, among other things: the risk that the conditions precedent to the closing of the Acquisition will not be satisfied in a timely manner or at all; risks related to dependence on key personnel; delays related to COVID-19 and other risks and uncertainties relating to AEP, including those to be described in the Management's Discussion and Analysis for AEP's year ended December 31, 2019 and the three months ended March 31, 2020. Accordingly, readers should not place undue reliance on forward-looking statements. Except as required under applicable securities legislation, AEP undertakes no obligation to publicly update or revise any forward-looking statements.
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SOURCE Atlas Engineered Products Ltd.
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