EDMONTON (CP) -- Fiberglass tank manufacturer ZCL Composites Inc. has acquired Montreal-based Dualam Plastics Inc. for $20.5 million, ZCL said Monday.
The purchase price will be paid 50 percent in cash, 25 percent in common shares of ZCL at a price of $3.59 per shares and 25 percent in preferred shares with a term of five years and a dividend rate of 4.4 percent, ZCL said.
To finance the cash portion of the payment, ZCL has increased the amount borrowed under its term credit facility from $5 million to $15 million, increasing its required payments from $500,000 to $1 million per quarter.
"Dualam is a strategic addition that significantly expands ZCL's depth and presence in the corrosion market," said ZCL president and CEO Ven Cote. "As we have commented in the past, we believe there are significant opportunities in the corrosion market and with the addition of the strong team at Dualam we believe we are now in a position to grow our presence in this market."
Dualam provides engineered fiberglass-reinforced plastic and dual-laminate composite products for use in corrosion-resistant applications in the power generation, chemical, chloralkali, pulp and paper and other industrial sectors. For its fiscal year ended Nov. 30, Dualam had revenue of nearly $44 million and earnings before interest, taxes, depreciation and amortization of approximately $4.5 million.
ZCL manufactures fiberglass tank systems for the petroleum industry.
Shares in ZCL, which announced the acquisition after the close of markets, fell one cent to $3.34 in Monday trading on the Toronto Stock Exchange.
