Spectra Premium Industries Inc. has agreed to acquire a 90% interest in Trimag, L.P., a supplier of magnesium alloy parts to the automotive industry.
Trimag’s head office is located in Boisbriand, Quebec. Investissement Qubec will own the other 10% of interest in Trimag.
Created in 1995, Trimag was acquired in 2001 by “la Socit de Dveloppement du Magnsium”, a limited partnership held by three institutional investors, namely “la Socit Gnrale de Financement”, “Sofinov”, a subsidiary of “la Caisse de dpt et placement du Qubec” and “Solidarity Fund QFL”.
“We are very pleased with this agreement and our association with Investissement Qubec, considering that we will acquire a leader in a promising sector. This acquisition will increase our business volume with original equipment manufacturers, a market that we have been focusing on developing over the past two years. The current contracts of Trimag are expected to generate more than $50 million in annual revenues as of fiscal 2005-2006,” says Jacques Mombleau, president and chief executive officer of SPI. Trimag has two plants, one in Boisbriand, Quebec, which began operations in 2002, and the other in Haley, Ontario. These plants cover a surface of 140,000 sq. ft. with approximately 150 employees.
At present, nearly all of Trimag’s revenues are generated as a Tier 2 supplier in reference to vehicles manufactured by General Motors.
Following this transaction, SPI’s total consolidated assets will increase by approximately $30 million. Consolidated long-term debt will increase by $14 million and short-term bank indebtedness and accounts payable will increase by approximately $16 million. The effective closing date of the transaction has been scheduled for August 1st, 2004 and is subject to certain standard conditions and to the approval from secured creditors of Trimag.
“Considering that automobile manufacturers are faced with significant pressure to reduce the weight of vehicles to make them more energy-efficient and to conform to new environmental standards, magnesium has potential for growth in the automobile parts industry. We are convinced that Trimag is well positioned to benefit from this solid growth forecasted for complex high pressure die cast magnesium alloy parts,” added Mombleau. Magnesium alloys are expected to gain more use in automobile parts such as valve covers, radiator supports, crankcase transfer boxes, steering wheels, and more.
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