ComWest Enterprise Announces Acquisition
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Jun 25, 2014) -
ComWest Enterprise Corp.
(TSX-VENTURE:CWP)(TSX-VENTURE:CWP.A) (the "Company") is
pleased to announce that it has entered into a definitive agreement
to acquire a 100% equity interest in Unisync Group Limited
("Unisync"), Canada's leading designer, manufacturer and
distributor of direct sale uniforms, workwear, image apparel and
related solutions.
The transaction is
valued at approximately $13,000,000, including debt, with existing
shareholders of Unisync having the capability to receive a future
contingent payment of up to $2,000,000 subject to the award of
specific business which Unisync expects to bid on in 2015. The
acquisition will be financed by $1,755,000 of the private equity
placement set out below, a $6,000,000 term loan facility provided
by a Canadian chartered bank and the balance from surplus working
capital of the combined company. The Board of Directors of ComWest
has unanimously approved the transaction, which is anticipated to
close on or before July 11, 2014.
About ComWest
ComWest's principal
business is currently its 90% partnership interest in Peerless
Garments LP which was acquired in August 2010. Concurrent with the
acquisition of Unisync, we have reached preliminary agreement with
our 10% minority limited partner in Peerless to an exercise of the
put/call agreement forming part of the Peerless partnership
agreement. Under the terms of the agreement, ComWest would acquire
the 10% minority partnership interest at the previously agreed
exercise price of $1,500,000, on the understanding that the
proceeds will be used by the minority partner to purchase 800,000
Class A restricted common shares and 200,000 Class B common shares
in the capital of ComWest forming part of the $3,255,000 private
placement set out below. Completion of the transaction is subject
to our minority partner being satisfied with a review of the
resulting tax implications of the exercise of the put/call
agreement.
On the successful
completion of these transactions, ComWest would own 100% of both
Unisync and Peerless.
The Private
Placement
ComWest is
proceeding with a non-brokered private placement of up to 1,970,000
Class A restricted common shares and 200,000 Class B common shares
at a price of $1.50 per share for gross proceeds of $3,255,000
which is expected to complete in a series of tranches. The proceeds
are being used to finance the acquisition of Unisync and the
exercise of the put/call agreement between ComWest and its minority
partner in Peerless. All shares issued under the private placement
are subject to a restricted period that will expire four months
after the issuance date. Insiders will be participating in the
private placement.
The above
transactions are subject to acceptance by the TSX Venture
Exchange.
About Peerless
Garments
Founded in 1941 as a
supplier of basic parkas, Peerless has evolved over the years to a
garment manufacturer and importer specializing in the production
and distribution of highly technical protective garments designed
to provide water- resistance, wind proofing and warmth. Peerless is
licensed to use Gore-Tex ® fabrics including Wind-Stopper® and
other work wear materials and has been a supplier to the Canadian
Forces since the early 1950s. Its' line of military operational
clothing aims to reduce detection through camouflage and
concealment while ensuring that soldiers are kept warm, dry and
comfortable when exposed to extreme weather conditions. Peerless
also produces tactical garments made of fire-resistant, anti-static
and chemical warfare protective materials. Government business
represents over 80% of Peerless' revenue with the remaining revenue
coming from sales to other Canadian government agencies, retailers,
and other smaller customers including customers in the oil &
gas industry.
About Unisync
Unisync is a
privately held Canadian company majority-owned by Kilmer Capital
Fund L.P., a private equity fund sponsored by well-known Canadian
entrepreneur Larry Tanenbaum. Unisync has a highly attractive
customer base of leading corporations and is an 11-time winner of
the North American Association of Uniform Manufacturers and
Distributers ("NAUMD") "Image of the Year" award for leadership in
product design. The award is the industry's highest achievement and
is selected by an independent panel of judges representing the
fashion industry's most celebrated designers, journalists and
fashion authorities.
Unisync's head
office is located in Mississauga, Ontario, with a 100,000 square
foot world-class distribution centre located in Guelph, Ontario and
a satellite distribution facility and sales office in Calgary. Its
unique multi-station "pick-to-light" carousel system efficiently
handles large distribution volumes in a cost effective manner.
Unisync also provides a state-of-the-art B2B ordering system with
maximum flexibility for ordering processes including employee
"kitting" and a "Best Fit" technology ensuring garments fit right
the first time thus minimizing returns and exchanges.
These core
capabilities combined with extensive reporting capabilities for
corporate clients, have been a major contributor in securing
multi-year agreements with many major Canadian corporations.
Unisync operates
under three distinct brands: Hammill Workwear is the company's
leading, consumer recognized, Canadian workwear and servicewear
brand with an 80 year heritage; the YORK brand has a 30+ year
heritage as a leading designer, manufacturer and distributor of
Canadian corporate uniforms; and Showroom One which sources and
develops customized promotional apparel and corporate-branded
retail items that support brand integrity and corporate marketing
initiatives.
The Unisync/Peerless
Combination
ComWest's board and
management believe that with the acquisition of Unisync, it has
established a vertically integrated and unique Canadian enterprise
with exceptional capabilities in domestic manufacturing and
off-shore outsourcing, combined with state-of-the-art web based
B2B/C ordering and distribution systems capable of adding scale at
reasonable marginal costs. The combined client base stretches
across a broad spectrum of Federal, Provincial and Municipal
government departments and agencies such as the Armed Forces, RCMP,
Canadian Border Services, as well as a list of leading Canadian
corporations in a variety of industries. In addition, Unisync's web
based On Line Store capability provides an opportunity to market
standard branded products directly to employees of smaller
businesses and other retail customers in a cost efficient manner in
the future.
The Unisync
acquisition brings a strong complimentary management team with
industry depth and demonstrated capability to develop and improve
shareholder value. "This is truly an exciting opportunity for an
industry leading management team and devoted employees to leverage
complementary capabilities and drive growth and market
diversification. The coming together of these two deep rooted
uniform providers further strengthens the organizations leadership
position in the direct uniform industry in Canada" said William
"Fitz" Blackburn, Unisync's chief executive officer and partner at
Kilmer Capital Partners. We are also pleased that Kilmer Capital
and the balance of existing Unisync shareholders will continue to
have a vested interest in the ongoing success of the combined
business.
ON BEHALF OF THE
BOARD
Douglas F. Good,
President
Forward Looking
Statements
This news
release contains forward-looking statements regarding the future
success of the business of the Company that is subject to risk and
uncertainties. Examples of such forward-looking statements
including, but are not limited to, statements concerning the
Corporation's acquisition of Unisync and the Corporation's
intention to raise additional capital and financing. These
forward-looking statements involve known and unknown risk and
uncertainties that may cause the Company's actual results,
performance or achievements to be materially different from any
future results, performance or achievements expressed or implied in
these forward-looking statements. These risks include risks related
to the closing of the acquisition, risks related to newly acquired
businesses, uncertainty and dilution of additional
financing and ability to service debt, as well as the risk factors
described in the Corporation's Management Discussion and Analysis
filed on SEDAR at www.sedar.com, and the risks to be described in
any Management Information Circular and/or Filing Statement to be
prepared in connection with the transaction. The forward-looking
statements contained herein are made as of the date of this news
release and are expressly qualified in their entirety by this
cautionary statement. Except as required by law, the Company
undertakes no obligation to publicly update or revise any such
forward-looking statements to reflect any change in its
expectations or in events, conditions or circumstances on which any
such forward-looking statements may be based, or that may affect
the likelihood that actual results will differ from those set forth
in the forward-looking statements.
Neither the 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.
ComWest Enterprise Corp.Investor relations
contact:778-370-1725dgood@comwestenterprise.ca
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