Kontrol Technologies Corp (OTCQB:KNRLF, NEO:KNR) announced that it has entered into a non-binding Letter of Intent (LOI) to acquire a building service and solutions company in Alberta.
Kontrol said that based on its unaudited fiscal 2022 financial statements, the target company generated C$5.4 million in revenue with a 73% gross margin and a normalized earnings before interest, taxes, depreciation and amortization (EBITDA) margin of 20%.
“We remain focused on national expansion as well as adding recurring revenues to our existing platform,” Kontrol Technologies CEO Paul Ghezzi said in a statement.
Shares of Kontrol Technologies rose as much as 9% to $0.87 in Friday's trading session.
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“In addition to an attractive customer base, in Western Canada, the repeat nature of the Target’s revenues provides a high-value platform that we will seek to leverage with our proprietary technology,” Ghezzi added.
Kontrol noted the total consideration for the acquisition is C$3.5 million to be paid in cash on closing plus C$500,000 worth of Kontrol Technologies common shares.
The company added that there are also potential earn-out payments of up to C$750,000 over a three-year period, which is subject to the target company achieving certain earnings targets.
As well, Kontrol said the acquisition could be financed, at least in part, by the company’s previously-announced C$50 million credit agreement with a Schedule 1 Bank.
The target company, which provides commercial and multi-residential services to about 700 different locations annually with strong repeat business, has a wide range of blue-chip customers including municipalities, property managers, developers, and real estate investment trusts, according to Kontrol.
The acquisition is expected to close on December 15, 2022, and is subject to a number of conditions including the finalization of a definitive share purchase agreement and all required approvals.
Kontrol Technologies provides solutions and services to its customers to improve energy management, monitor continuous emissions and accelerate the sustainability of buildings.
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