ATF Artaflex

Artaflex Inc. (TSX VENTURE:ATF) ("Artaflex"), a specialist at delivering
integrated product solutions and support to the global technology and
electronics industry, announced today that it entered into a definitive
agreement (the "Acquisition Agreement") to acquire MTI International, Inc.
("MTI") pursuant to a plan of merger under Delaware laws with an indirect
wholly-owned subsidiary of Artaflex (the "Acquisition"). 


Located in Milwaukee, Wisconsin and founded in 1975, MTI, much like Artaflex,
operates in the electronics manufacturing services (EMS) industry and
specializes as a full service provider of high value, complex, low to medium
volume assemblies including printed circuit boards, final box build and system
integration and to a lesser extent thick film hybrid circuits manufacturing. MTI
focuses on delivering these services to four under penetrated markets: defense /
aerospace, industrial, medical and automotive which are characterized by having
high barriers to entry. 


Pursuant to the terms of the Acquisition Agreement, Artaflex has agreed to pay
the shareholders and other security holders of MTI a cash purchase price of up
to US $12,750,000 plus cash held by MTI as of the closing date less excluded
liabilities and subject to certain closing working capital adjustments.   


"We are extremely pleased to begin our expansion into the US with the
acquisition of MTI. Their focus on manufacturing high mix, high reliability
products in segments such as defence, aerospace and medical, as well as being
centrally located in Milwaukee were key factors in our decision making process"
says Paul Walker, CEO of Artaflex. "Our management team at Artaflex has had
significant experience acquiring and growing operations in the US over the past
20 years, and with MTI as a base, we will be able to leverage that combined
knowledge again".


Greg Martinek, President of MTI said "We are thrilled to join forces with
Artaflex and serve as their gateway to the US marketplace. I've known Paul for
several years and have been very impressed with what he has accomplished in the
EMS industry". He added, "the similarities between our two organizations are
amazing from our customer-centric cultures to business doctrines to our focus on
high reliability products. Artaflex is an excellent fit for MTI". Southwest
Securities Inc. of Dallas, Texas, acted as financial advisors to MTI in
connection with the acquisition.


Artaflex also announced that it has entered into letters of intent with Kilmer
Capital Partners Limited in respect of the proposed issuance to Kilmer Capital
Fund II L.P. (together with its affiliates, "Kilmer") of a Cdn. $10,300,000
secured convertible debenture (the "Debenture") as well as the proposed issuance
of a Cdn. $5,000,000 secured promissory note (the "Promissory Note"). The net
proceeds of the Debenture and the Promissory Note will be used to fund the
Acquisition and related expenses. 


Anthony Sigel, President and Managing Partner of Kilmer Capital Partners Limited
comments: "This is a particularly exciting new opportunity for us. Not only do
we see this as a great starting point for Artaflex in executing its US
expansion, but on an overall level this gives us the chance to partner with Paul
Walker and Phil Woodard for a second time. During the 1990's we worked side by
side with Paul and Phil building SMTC into an internationally recognized EMS
Player. We're really looking forward to this opportunity to support them once
again in their efforts to build a successful Canadian electronics company".


Pursuant to the letter of intent, the Debenture is to mature on the date that is
four (4) years from the date of issue and is to bear interest of 12% per annum,
calculated and compounded annually. Interest is to accrue during the two (2)
years following the date of issue and is to be paid in cash monthly in arrears
thereafter. All accrued and unpaid interest would be fully due and payable in
cash upon the earlier of (i) maturity, (ii) date of conversion, (iii) event of
default or (iv) a liquidity event. 


The Debenture is to be convertible at the option of the holder into common
shares of Artaflex at any time after July 31, 2014 but earlier in the event of
default or upon a liquidity event. Furthermore, the Debenture is to provide
Artaflex with the ability to force conversion if the company surpasses certain
financial targets in respect of the 12-month period ended January 31, 2015. Upon
conversion of the Debenture, the initial principal amount of $10,300,000 would
be convertible into common shares of Artaflex and all accrued and unpaid
interest would become payable. The final conversion ratio will be determined at
the time of conversion and based upon Artaflex achieving certain financial
milestones. The final conversion price will not be less than the Market Price
(as defined under the policies of the TSX Venture Exchange) being $0.35, subject
to adjustment in certain events. Following a conversion, Kilmer could own
between 20% and 45% of the issued and outstanding shares of Artaflex on a fully
diluted basis which would make it a "control person" of Artaflex pursuant to the
policies of the TSX Venture Exchange. Kilmer currently does not own any
securities of either Artaflex or MTI. The Debenture and any common shares issued
on conversion of the Debenture within four months from the date of issue of the
Debenture are subject to a four month hold period.


Pursuant to the letter of intent, the Promissory Note is to mature on the date
that is ten (10) months from the date of issue and bear interest at the rate of:
(i) 12% during the first four (4) month period following the date of issue; (ii)
18% during the subsequent five (5) month period; and (iii) 22% plus the
applicable default rate premium (2% per annum) during any period thereafter.
Interest is to be calculated and compounded annually and paid in cash monthly in
arrears. 


Both the Debenture and the Promissory Note are to be secured against all current
and after-acquired property and assets of Artaflex and its material subsidiaries
(including MTI).


As a condition to the issuance of the Debenture and the Promissory Note to
Kilmer, Artaflex and shareholders of Artaflex holding not less than 75% of the
outstanding voting securities of Artaflex (being Artaflex Holdings Inc.) propose
to enter into a stakeholders agreement with Kilmer containing, among other
things, customary restrictions on transfer, restrictive covenants as well as
pre-emptive and liquidity rights. Furthermore, the stakeholders agreement is to
provide that one or more nominees of Kilmer shall be appointed to the board of
directors of Artaflex. 


The Acquisition and the issuance of the Debenture and Promissory Note is
expected to close on or about August 1, 2012. The Acquisition is subject to TSX
Venture Exchange acceptance and receipt of certain third party consents,
including from the senior lender of Artaflex. The issuance of the Debenture and
the Promissory Note is subject to TSX Venture Exchange acceptance, shareholder
approval, the entering into of definitive documentation and the receipt of third
party consents, including from the senior lender of Artaflex, among other
conditions. 


About Artaflex: 

Artaflex is a specialist at delivering integrated product solutions and support
to the global technology and electronics industry. As a leading global provider
of complete Electronics Manufacturing Services (EMS), Artaflex offers world
class manufacturing facilities and global partners throughout Canada, the United
States, Israel and China, allowing Artaflex to provide its customers the
flexibility and scalability to competitively achieve total solutions to their
present and future electronics outsourcing needs. Visit Artaflex at:
www.artaflex.com.


About MTI: 

MTI International, Inc. is a leading provider of electronic manufacturing
services to aerospace, defense, medical, industrial, and automotive companies.
It provides end-to-end manufacturing solutions from new product introduction
through box-build product manufacturing while providing flexibility and support
to its customers' operations.


About Kilmer: 

Kilmer Capital Partners is a leader in making private equity investments in
small to mid-sized Canadian businesses undergoing periods of rapid growth,
significant change or ownership transition. Our team has a long history of
partnering with entrepreneurs and executives with vision. We have built a
successful track record backing Canada's strongest business leaders to effect
plans that transform their businesses from entrepreneurially-run, small to
mid-sized Canadian companies, to professionally run national and international
success stories. Our capital is provided by both leading Canadian institutional
investors and Kilmer Van Nostrand Co. Limited, the sponsor of our Fund, with
management of over $1 billion in assets with a focus on private equity,
infrastructure, brownfield, sports and media.


THIS NEWS RELEASE MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION
RELATING TO SUCH MATTERS AS EXPECTED FINANCIAL PERFORMANCE, BUSINESS PROSPECTS,
TECHNOLOGICAL DEVELOPMENTS, DEVELOPMENT ACTIVITIES AND LIKE MATTERS. THESE
STATEMENTS INVOLVE RISK AND UNCERTAINTIES, INCLUDING BUT NOT LIMITED TO RISK
FACTORS DESCRIBED IN DOCUMENTS FILED WITH REGULATORY AUTHORITIES. ACTUAL RESULTS
COULD DIFFER MATERIALLY FROM THOSE PROJECTED AS A RESULT OF THESE RISKS AND
SHOULD NOT BE RELIED UPON AS A PREDICTION OF FUTURE EVENTS. THE CORPORATION
UNDERTAKES NO OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENTS TO REFLECT
EVENTS OR CIRCUMSTANCES AFTER THE DATE ON WHICH SUCH STATEMENT IS MADE, OR TO
REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

Artaflex (TSXV:ATF)
Historical Stock Chart
Von Mai 2024 bis Jun 2024

Artaflex (TSXV:ATF)
Historical Stock Chart
Von Jun 2023 bis Jun 2024