The Company has entered into a definitive Asset Purchase Agreement for the sale of all the operational assets and the assumption of certain liabilities of its wholly owned operating subsidiary CEM Specialties Inc. (CEMSI) (the "CEMSI Sale"). The financial closing date is anticipated to be June 21, 2024. The sale price is $16.25 million minus estimated post-closing adjustments and Kontrol will retain net working capital estimated at $1. 25 million. The total estimated proceeds to Kontrol including retained working capital is approximately $17.3 million.
Consideration at financial closing are cash proceeds of approximately $16 million minus customary adjustment and indemnity holdbacks totaling $1.2 million and closing costs. Kontrol anticipates collecting the retained net working capital over approximately 90 days. The purchaser is a large USA based industrial emissions company with operations in the USA and Canada.
The Company will use the proceeds from the CEMSI Sale to accelerate organic growth in its recurring revenue "sustainable buildings" platform (which includes HVAC services, energy optimization and Greenhouse Gas reduction) and to add accretive acquisitions and for general corporate purposes.
"The Company will have a substantial cash position to grow its sustainable buildings platform and we are well positioned in a rapidly growing market sector," says Paul Ghezzi, CEO of Kontrol Technologies. "Based on the value of this transaction the Kontrol Board is pleased to complete this sale as the value received represents a significant premium to book value."
The Company’s sustainable buildings platform operates with a gross margin of approximately 50% and customers include REITS, municipalities, property managers and industrial buildings. The Company is currently reviewing multiple potential acquisition opportunities but has not entered into any definitive acquisition agreements currently. The Company will target potential business acquisitions with recurring revenues and Gross Margins in the range of 40% to 60%.
The Company will retain its BioCloud technology patents and will seek opportunities to monetize those patents through an independent sale or potential joint venture.
As part of the CEMSI Sale, the Company will amalgamate CEMSI and Kontrol Energy Group, both wholly owned subsidiaries, into Kontrol Technologies Corp. The completion of the CEMSI Sale is conditional on customary approvals.
Kontrol Technologies Corp.
Kontrol Technologies Corp., a Canadian public company, is a leader in smart buildings and cities and provides solutions and services to its customers to improve energy management, monitor continuous emissions and accelerate the sustainability of all buildings.
Additional information about Kontrol Technologies Corp. can be found on its website at www.kontrolcorp.com and by reviewing its profile on SEDAR+ at www.sedarplus.ca.
Neither IIROC nor any stock exchange or other securities regulatory authority accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Statements
This news release contains "forward-looking information" within the meaning of applicable securities laws. All statements contained herein that are not clearly historical in nature may constitute forward-looking information. In some cases, forward-looking information can be identified by words or phrases such as "may", "will", "expect", "likely", "should", "would", "plan", "anticipate", "intend", "potential", "proposed", "estimate", "believe" or the negative of these terms, or other similar words, expressions, and grammatical variations thereof, or statements that certain events or conditions "may" or "will" happen, or by discussions of strategy. Forward-looking information contained in this press releases includes, but is not limited to, the following: the potential benefits of selling its wholly owned subsidiary; the future operations of the Company; the ability to monetize the BioCloud patents and the Company’s ability to make accretive acquisitions.
Where Kontrol expresses or implies an expectation or belief as to future events or results, such expectation or belief is based on assumptions made in good faith and believed to have a reasonable basis. Such assumptions include, without limitation, that the Company will have sufficient financial and other resources to fulfil expectations with respect to future operations and meet contractual payment obligations.
Accordingly, undue reliance should not be placed on forward-looking statements and the forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary statement. The forward-looking statements contained herein are made as at the date hereof and are based on the beliefs, estimates, expectations, and opinions of management on such date. Kontrol does not undertake any obligation to update publicly or revise any such forward-looking statements or any forward-looking statements contained in any other documents whether as a result of new information, future events or otherwise or to explain any material difference between subsequent actual events and such forward-looking information, except as required under applicable securities law. Readers are cautioned to consider these and other factors, uncertainties, and potential events carefully and not to put undue reliance on forward-looking information.
