Pure closes acquisition of Pressure Pipe Inspection Company
13 August 2010 - 8:00PM
PR Newswire (Canada)
CALGARY, Aug. 13 /CNW/ -- CALGARY, Aug. 13 /CNW/ - Pure
Technologies Ltd. ("Pure") (TSX-V:PUR) announced today that it has
concluded the purchase of The Pressure Pipe Inspection Company
("PPIC") for up to CAD$34.9 million in cash and common stock of
Pure. PPIC, a privately-held company with headquarters in
Mississauga, Ontario, is a leader in large-diameter water and
wastewater pipeline condition assessment. PPIC is currently active
in North America (including Mexico), South America, the Philippines
and Hong Kong. For the fiscal year ended September 30, 2009, PPIC
had revenues of $14.6 million. The base purchase price is
$30,000,000 with provision for a maximum additional payment of
$4,900,000 should PPIC generate revenues of $24,900,000 for the
fiscal year ended September 30, 2010. The amount of the additional
payment will be reduced on a dollar-for-dollar basis for every
dollar that fiscal 2010 revenues fall short of $24,900,000. The
purchase price is based on a PPIC working capital balance of
$800,000 at closing and will be adjusted up or down on a
dollar-for-dollar basis depending on the actual working capital at
closing. Consideration paid at closing was $8,955,776 in cash and
Pure issued 3,782,476 shares valued at $4.44 per share which was
negotiated as part of the transaction. This consideration is net of
a holdback amount, which when released, would be paid in cash in
the amount of $800,551 and a further 776,903 shares. Any additional
payments will be paid approximately 29% in cash and 71% in Pure
common stock with an attributed value of $4.44. Following closing,
Emerald Technology Ventures, PPIC's largest shareholder, has the
right to nominate one director to Pure's Board of Directors.
Subject to TSX Venture Exchange approval, Scott MacDonald, Partner
with Emerald Technology Ventures, will join Pure's Board of
Directors. Dr. Brian Mergelas, formerly the Chief Executive Officer
of PPIC, is now Pure's Senior Vice-President, Corporate Strategy
& Development. Dr. Mergelas has published over fifty papers in
academic and industry journals, and is a recognized expert in the
field of pipeline condition assessment. He will be a key
contributor to shaping Pure's strategic direction and in
identifying future opportunities to grow Pure's business. He will
also continue to play a leading role in the promotion of proactive
asset management as a cost-effective strategy for bridging the
infrastructure funding gap. "Today is a very exciting day for our
clients and employees as we bring together our two companies to
create a world-class solutions provider," said Dr. Brian Mergelas.
"Both Pure and PPIC have always strived to provide the best
possible condition assessment and monitoring solutions, and
together we will be able to offer a greater knowledge base and a
stronger portfolio to help our clients. As always, our success will
continue to be anchored around building long-term relationships
that provide exceptional value and build trust." Commenting on the
transaction, Pure's Chief Executive Officer, Mr. Peter Paulson,
said: "This is a significant milestone for Pure and for the
international water technology sector. The combined Pure/PPIC
entity will be a world leader in the field of condition assessment
and asset management for water and wastewater pipelines. We are
excited about the opportunity to work with Dr. Mergelas and his
team as we continue to build awareness of the need for
cost-effective strategies and solutions for the enormous challenges
facing pipeline operators around the world. Working together, we
will be able to deliver a cohesive and powerful message to the
industry about the value of technology-driven proactive asset
management. We are also looking forward to working with PPIC's
research and development team to accelerate the introduction of new
condition assessment tools for pipelines." Pure expects that the
highly complementary expertise and technologies resulting from the
acquisition of PPIC will allow it to offer one of the most
comprehensive suites of proprietary solutions to water and
wastewater agencies around the world. PPIC's leadership position in
condition assessment fits well with Pure's position as the primary
provider of long-term monitoring solutions for pre-stressed
pipelines. The recent introduction by PPIC of the PipeDiver(R)
autonomous electromagnetic inspection technology, which allows
unmanned inspection of prestressed concrete pipelines while in
service, is a major advancement in the field and is complementary
to Pure's SoundPrint(R) AFO fibre-optic acoustic monitoring system.
The combination of PPIC's Sahara(R) with Pure's SmartBall(R) means
that operators of large-diameter pipelines will now be able to
access a "one-stop shop" for leak detection solutions. Over the
past year or so, Pure has invested heavily in expanding its
international presence with the establishment of a branch office in
Abu Dhabi and a joint venture company in Hong Kong. Pure intends to
use this network to disseminate both Pure's and PPIC's technologies
and services cost-effectively and efficiently. Canaccord Genuity
acted as financial advisor to Pure on this transaction and Kirchner
Private Capital Group acted as financial advisor to PPIC. Bennett
Jones LLP acted as legal counsel to Pure and Heenan Blaikie LLP as
legal counsel to PPIC and its shareholders. About Pure Technologies
Ltd. Pure Technologies Ltd. is an international asset management
technology and services company which has developed patented
technologies for inspection, monitoring and management of critical
infrastructure around the world. Pure's business model incorporates
four distinct but complementary business streams: - Sales of
proprietary monitoring technologies for pipelines, bridges and
structures (SoundPrint(R), SoundPrint(R) AFO); - Recurring revenue
from data analysis and site maintenance for these technologies, and
from technology licensing. - Premium technical services including
inspection, leak detection and condition assessment (P-Wave(R),
SmartBall(R), Sahara(R), PipeDiver(R), PureRobotics(TM)). -
Specialized engineering services in areas related to asset
management, primarily in the area of pipeline condition assessment
for water and wastewater infrastructure (Openaka Corp., Price
Brothers UK Ltd, and Jason Consultants). About Pressure Pipe
Inspection Company PPIC, a privately-held company with headquarters
in Mississauga, Ontario, is a world leader in large-diameter water
and wastewater pipeline condition assessment. PPIC was founded in
1997 to commercialize RFEC/TC, an electromagnetic inspection
technology for prestressed concrete pipes developed by David
Atherton, Professor of Physics at Queen's University, Kingston,
Ontario. In 2008, PPIC purchased the worldwide rights (excluding
the United Kingdom and Ireland) to Sahara(R), a leak detection
system for large-diameter pipelines developed by WRc plc.
Forward-Looking Statements This release contains forward-looking
statements. Forward-looking statements, without limitation, may
contain the words believes, expects, anticipates, estimates,
intends, plans, or similar expressions. Forward-looking statements
are not guarantees of future performance. They involve risks,
uncertainties and assumptions and Pure's actual results could
differ materially from those anticipated. Forward looking
statements are based on the opinions and estimates of Management at
the date the statements are made, and are subject to a variety of
risks and uncertainties and other factors that could cause actual
events or results to differ materially from those projected in the
forward-looking statements. In the context of any forward-looking
information please refer to risk factors detailed in, as well as
other information contained in, Pure's filings with Securities
Regulators (www.sedar.com). "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." (R) Registered
Trademarks, property of Pure Technologies Ltd. %SEDAR: 00006060E To
find out more about Pure Technologies Ltd. (TSX-V: PUR), visit our
website at www.puretechnologiesltd.com; contact James E. Paulson,
Chairman or Karen Keebler, Chief Financial Officer at (403)
266-6794; or e-mail to: info@puretechnologiesltd.com
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