Progressive Planet Solutions Inc (TSX-V:PLAN) revealed that it has signed a binding share purchase agreement to acquire Absorbent Products Ltd., which produces industrial minerals from two mines in British Columbia, in a $16.3 million deal, made up of $13.3 million in cash and assumption of debt, and $3 million in equity.
Vancouver, British-Columbia-based Progressive Planet, which creates supplementary cementing materials, said the cash component would consist of bank financing and proceeds of a concurrent private placement.
It added that the equity portion would be paid by issuing $1.2 million in shares at the time of closing, at a price of $0.35 per share, with $900,000 in equity being issued one year from the date of closing, and $900,000 in equity being issued a year later.
“The number of shares to be issued after the closing will be determined using the per-share price of the company's shares which is the greater of $0.35 per share, or the 50-day volume-weighted average trading price of shares in the days immediately preceding each issuance of shares,” said the company.
With $20 million in revenue in its latest fiscal year, Absorbent Products, which has been operating since 1989, is a dominant manufacturer of mineral-based products derived from diatomaceous earth, zeolite, and bentonite. Absorbent Products operates its own diatomaceous earth and bentonite mines in British Columbia and is also the operator of the Bromley Creek Zeolite Mine.
Under the terms of the deal, PLAN will continue to maintain and support Absorbent’s existing business operations, while also gaining access to supplies of natural pozzolans to develop incremental lines of business in sustainable cement and additional agricultural powders.
“Business assets and interests purchased from Absorbent, or related companies, including mineral and mining operations, owned and long-lease industrial properties, manufacturing/sales/distribution infrastructure and its portfolio of eco-conscious product lines, patents, and intellectual property will be retained by Progressive Planet,” said the company.
"The deal synergies are strong. We look forward to increased opportunities to provide earth-conscious pathways and products that radically decarbonize concrete production, naturally enhance industry, and re-mineralize agricultural operations," Progressive Planet CEO Steve Harpur said in a statement.
"Our shared portfolio of natural pozzolans represents a new era of environmental science where natural raw materials are introduced to minimize carbon footprints, sequester greenhouse gasses and provide a safer and superior alternative to synthetic products," he added.
PLAN said it would like to acknowledge the Tk'emlúps te Secwepemc First Nation for “approving the proposed change of control of APL with respect to its leases in advance of the share purchase agreement.”
The company said the planned acquisition will bring “two complementary companies together” bringing the following synergies:
- Access to three additional sources of natural pozzolans from permitted mines in British Columbia for use in the PozGlass group of supplementary cementing materials, while maintaining legacy operations of APL's existing, long-standing business;
- Ownership of APL's extensive product line and IP portfolio including APL's top-selling US patented, Activated Barn Fresh Natural Ammonia Control;
- Cross-selling complimentary products to each company's clients;
- Four long-term industrial leases in the Mount Paul Industrial Park owned by the Tk'emlúps te Secwepemc (Kamloops Indian Band);
- Industrial space to grow PLAN's previously seasonal comminution business and build a new PozGlass Manufacturing Plant; and
- A new head office close to the Z1 Natural Pozzolan Quarry, the Z2 Natural Pozzolan Mineral Property, the Heffley Creek Metals and Natural Pozzolan Property and APL's flagship Red Lake Diatomaceous Earth Mine.
"The cross-selling opportunities to build on solid customer relationships are significant, as PLAN is already selling zeolite processed by APL and sourced from the Bromley Mine to our largest customer," said Ian Grant, VP of Business Development for PLAN. "The potential to unify great teams and talent with a shared vision to strengthen and supply customers with innovative and sustainable products is exciting, on trend, and economically advantageous."
Meanwhile, Peter Aylen, founder and President of APL, said that after “starting this business from scratch in 1989,” he is “proud to see this deal come together.”
“APL has created over 55 full-time jobs in Kamloops while manufacturing world class products that are sold throughout North America and beyond. I leave knowing that it remains business as usual, and that our current management team will stay on to continue to develop additional classes of products using our foundational base of natural pozzolans," said Aylen.
PLAN also announced a non-brokered private placement to be completed concurrently with the acquisition. It will offer a minimum of 9 million units and a maximum of 13.50 million units at a price of $0.35 per unit, for gross proceeds of $3.15 million.
Each unit will comprise of one common share and one share purchase warrant, with each warrant exercisable at $0.60 per share for a two-year period, subject to acceleration if PLAN's common shares trade at over $0.75 per share for a period of ten trading days or more after the first year.
Agents of the company will have an option to increase the size of the offering by up to 50% at any time prior to the closing. PLAN said it anticipates that company director Peter Lacey will subscribe for $525,000 in the offering.
Completion of the acquisition is subject to standard closing conditions, including approval from the TSX Venture Exchange.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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