TSX Venture Exchange
Symbol "BRY"
EDMONTON, July 24 /CNW/ - Bri-Chem Corp. ("Bri-Chem") (TSX Venture Exchange: BRY) a leading Canadian wholesale distributor of industrial drilling fluids, products and services, is pleased to announce that it has entered into a letter of intent (the "Letter of Intent") to acquire Weifang Steel Canada Ltd. ("Weifang"), a Western Canadian-based master wholesale distributor of steel products to the oil and gas and construction industries. Under the terms of the Letter of Intent, Bri-Chem has agreed to make an offer to purchase (the "Proposed Acquisition") all of the issued and outstanding shares of Weifang in consideration for the purchase price of $8,470,000 and the repayment of related party loans in the approximate amount of $2,754,000.
The total aggregate purchase price of $11,224,000 consists of $8,224,000 cash payable as to $5,224,000 on closing and $3,000,000 payable as to $1,000,000 60 days after the first anniversary of the close of the Proposed Acquisition (the "Closing Date"), $1,000,000 60 days after the second anniversary of the Closing Date, and $1,000,000 60 days after the third anniversary of the Closing Date and $3,000,000 by way of the issuance of 1,304,348 common shares at a price of $2.30 per share. The Proposed Acquisition of Weifang will expand and diversify Bri-Chem's wholesale distribution business and will be immediately synergistic by providing Weifang broader territorial coverage for its products, specifically in Saskatchewan and Northern USA.
Weifang, a private corporation duly incorporated and validly existing under the laws of the Province of Alberta, is a growing metal wholesale distributor in Western Canada and the USA. Weifang's corporate headquarters is located in Nisku, Alberta and it has two operating divisions: Steel Pipe and Products Division and a Manufactures Direct Sales Trading Division. Weifang specializes in the distribution of metal products through its warehouse facility in Nisku, Alberta, Canada and 3 distribution sales offices in the U.S.A. Weifang distributes drill pipe, carbon steel welded pipe, carbon steel seamless pipe, stainless steel welded pipe, stainless steel seamless pipe, tubing & casing, sucker rods, galvanized steel products as well as fittings and flanges. Its customers operate in a wide range of industries, including oil & gas, manufacturing, forestry, agriculture, construction, and mining. Weifang's business strategy is to enhance operating results through the expansion of existing operations by increasing inventory on hand to satisfy the growing demand in North America for its steel products. Preliminary unaudited figures from Weifang's operations for the 11 months ended May 31, 2008 were total assets of $13,845,217, sales of $25,935,214 and pretax earnings of $1,400,429.
About Bri-Chem
Bri-Chem operates out of its head office located in Acheson, Alberta and its principal activity is the wholesale/distribution blending and packaging of industrial drilling fluid supplies for the oil and gas industry. Bri-Chem provides over 100 domestic and foreign products to customers throughout Alberta, British Columbia and Saskatchewan.
Forward-Looking Statements
Certain statements contained in this press release, including statements which may contain words such as "could", "should", "expect", "anticipate", "believe", "will", and similar expressions and statements relating to matters that are not historical facts are forward looking statements. Such forward looking statements involve known and unknown risks and uncertainties which may cause the actual results, performances or achievements of Bri-Chem to be materially different from any future results, performances or achievements expressed or implied by such forward looking statements. Such factors include, but are not limited to, fluctuations in oil and gas activity levels, political and economic conditions, and the demand for products provided by Bri-Chem.
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