TORONTO, Dec. 19, 2013 /PRNewswire/ - Exco Technologies Limited (TSX: XTC) today announced that it has signed a definitive agreement with Automotive Leather Company Group (PTY) Limited ('ALC'), a private company organized under the laws of South Africa, whereby a wholly-owned subsidiary of Exco would acquire all of the shares of ALC.
Pursuant to the terms of the definitive agreement, subject to receipt of applicable regulatory approvals and other customary closing conditions, the shareholders of ALC will receive approximately $17.2 million in cash and the issue from treasury of 973,895 Exco shares. Exco's cash contribution will be funded primarily through the use of its operating credit facility which will be increased to accommodate the cash payment amount.
The closing is expected to occur in the second quarter of fiscal 2014. In 2011 and 2012 ALC had revenue of approximately $78 million and $86 million respectively. In 2013, ALC sales will be approximately $100 million and is expected to grow over the next several years to approximately $140 million as a new seat cover program for the family of Mini models launch over the next 16 months. The transaction is expected to be immediately accretive although rates of return will be impacted by expensing due diligence and closing costs and will also be impacted as ALC is integrated and the Mini business is launched.
ALC specializes in the manufacture and export of luxury leather interior trim components to the middle and luxury automotive sector. The primary customer is BMW and its tiers although other German OEMs and their tiers are also customers.
ALC's current business dates back to 1990. In 2002 it acquired a large portion of the South African trim business of BMW. Since then it has supplied quality leather seat covers and other interior trim components to BMW and other German OEMs and their tiers. After closing, several shareholders will continue to manage the ALC business and their significant shareholdings in Exco will ensure that their interests are aligned with those of Exco.
In addition to ALC's traditional production site in the Rosslyn Automotive Supply Park in South Africa, it has in 2011 established a state-of-the-art production site near Sofia, Bulgaria and is currently establishing another production site in the Kingdom of Lesotho. Taken together these production sites employ approximately 2,000 employees. ALC also has a customer service and technical centre in Germany with approximately 25 staff enabling it to better service its German OEM customer base.
Exco has had extensive leather and seat trim experience over the years which has enabled it to develop its Automotive Solutions Group into a globally competitive supplier of all manner of fabric, vinyl and leather cut and sewn products. Exco believes that this experience, combined with the specialized capabilities of ALC in making high quality leather seat covers, will enable it to supply the German OEMs in Europe and other parts of the world while also giving Exco a state-of-the-art production facility in Eastern Europe from which to supply the European automotive market with its other interior trim products.
A conference call to discuss the transaction will be held on December 20, 2013 at 10:00 am (Toronto time) and can be accessed by dialing (647) 427-7450 for local (Toronto) calls or toll free 1-888-231-8191. To access the live audio webcast, please log on to www.excocorp.com, or http://www.newswire.ca/en/webcast/detail/1282811/1415287 a few minutes before the event.
Exco Technologies Limited is a global supplier of innovative technologies servicing the die-cast, extrusion and automotive industries. Through our 13 strategic locations, we employ 2,316 people and service a diverse and broad customer base. Upon completion of the transaction Exco will have 18 locations and employ approximately 5,000 people in 12 countries.
This news release contains forward-looking information and forward-looking statements within the meaning of applicable securities laws. We use words such as "anticipate", "plan", "may", "will", "should", "expect", "believe", "estimate" and similar expressions to identify forward-looking information and statements especially with respect to the likelihood that the announced acquisition will close,that it will be accretive and that its sales and other financial performance will be as announced. Such forward-looking information and statements are based on assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments with respect to securing business and pricing thereof, as well as other factors we believe to be relevant and appropriate in the circumstances. Readers are cautioned not to place undue reliance on forward-looking information and statements, as there can be no assurance that the assumptions, plans, intentions, transactions or expectations upon which such statements are based will occur. Forward-looking information and statements are subject to known and unknown risks, uncertainties, assumptions and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed, implied or anticipated by such information and statements. These risks, uncertainties and assumptions are generally described in the Company's Management's Discussion and Analysis included in our 2013 Annual Report, in our 2013 Annual Information Form and, from time to time, in other reports and filings made by the Company with securities regulatory authorities. Furthermore, in this case there is the additional risk that the regulatory authorities do not approve the purchase of ALC or that the conditions contained in the Share Purchase Agreement will not be met and that the transaction will not close as described above or will close at a different purchase price or on different terms.
While the Company believes that the expectations expressed by such forward-looking information and statements are reasonable, there can be no assurance that such expectations and assumptions will prove to be correct. In evaluating forward-looking information and statements, readers should carefully consider the various factors which could cause actual results or events to differ materially from those indicated in the forward-looking information and statements. Readers are cautioned that the foregoing list of important factors is not exhaustive. Furthermore, the Company disclaims any obligations to update publicly or otherwise revise any such factors or any of the forward-looking information or statements contained herein to reflect subsequent information, events or developments, changes in risk factors or otherwise.
SOURCE Exco Technologies Limited