Semcan Inc.
TSX VENTURE : STT

Semcan Inc.

January 30, 2008 13:01 ET

Semcan Inc. Announces That It Has Entered Into a Sales and Purchase Agreement for the Acquisition of a Substantial Portion of the Assets of 600 Group Equipment Limited

TORONTO, ONTARIO--(Marketwire - Jan. 30, 2008) - Semcan Inc. (TSX VENTURE:STT) announced today that it has entered into, through its wholly-owned subsidiary Nucleus Distribution Inc., an agreement for the acquisition of a substantial portion of the assets of 600 Group Equipment Limited, a distributor of a wide range of machine tools based in Mississauga, Ontario. The agreement contemplates the granting of an exclusive distribution agreement regarding certain machine tools and accessories for the provinces of Ontario and Quebec by UK-based The 600 Group PLC, the publicly-traded parent company of 600 Group Equipment Limited.

The purchase price of approximately $2.98 million includes a freehold 18,000 square foot building, plant and equipment, fixtures and fittings, office equipment, customer data bases, inventory and orders in hand. There is no value attributable to goodwill on the transaction. The deal will be financed from working capital, vendor take back and additional debt. After closing the assets will be combined with those of Forward Precision Tools, a division of Nucleus Distribution Inc.

"Today's announcement follows a strategic review of our North American operations," said Martyn Wakeman, Group Finance Director of The 600 Group PLC. "We received strong interest from several suitors but chose the Forward Precision Tools team to represent us in the Canadian market place because of their longevity serving that market and the depth and credibility of their commitment to building aggressively upon the foundation we have established."

"We are very excited with this acquisition and exclusive distribution agreement," said Phil Jamieson, Chairman and CEO of Semcan Inc, and continued, "The Forward Precision Tools Division will change its name to Forward 600 Tools upon integration of the businesses. The joint businesses are expected to generate an additional $0.8million in EBITDA annually."

The deal, subject to fulfillment of the conditions in the purchase and sale agreement, is expected to close on 31st January 2008.

About Semcan Inc

SEMCAN is a growth company expanding through acquisitions within the Industrial and Distribution sectors. SEMCAN seeks out well managed profitable companies that meet certain financial parameters. SEMCAN works with existing management to grow the acquired companies both organically and through further complementary acquisitions. SEMCAN provides the central finance and administrative functions, allowing operational management to remain focused on bottom line profitability thereby increasing shareholder value.

Caution Regarding Forward-Looking Information and Non-GAAP Measures

Forward-Looking Information

This news release contains certain forward-looking statements. These statements relate to future events or future performance and reflect management's current expectations and assumptions regarding the growth, results of operations, performance, and business prospects and opportunities. Such forward-looking statements reflect management's current beliefs and expectations and are based on information currently available to management of Semcan. In particular, statements regarding the future operating results and economic performance are forward-looking statements. Forward-looking statements involve significant risks and uncertainties. A number of factors could cause actual events or results to differ materially from the events and results discussed in the forward-looking statements, including risks outlined under "Risk Factors" in our Annual Information Form, which is posted at www.sedar.com. In evaluating these statements, investors should specifically consider various factors, including such risks as Investment Risk; Business Valuations; Condition of Capital Markets; Dependence on Key Personnel; General Economic Factors; Interest Rate Risk; Competition; and Reliance on Key Suppliers. One or more of these "Risk Factors" could cause actual events or results to differ materially from any forward-looking statement. These factors should not be considered exhaustive. Although the forward-looking statements contained in this press release are based on what management of Semcan considers to be reasonable assumptions based on information currently available to them, there can be no assurance that actual events or results will be consistent with these forward-looking statements, and management's assumptions may prove to be incorrect. These forward-looking statements are made as of the date of this press release, and none of Semcan nor its directors assume any obligation to update or revise them to reflect new events or circumstances. Undue reliance should not be placed on forward-looking statements.

Non-GAAP Measures

The term "EBITDA" is a financial measure used in this document which is not a standard measure under Canadian generally accepted accounting principles. Semcan's method of calculating EBITDA may differ from the methods used by other issuers. Therefore, Semcan's measure of EBITDA, as presented in this press release, may not be comparable to similar measures presented by other issuers. EBITDA refers to net earnings determined in accordance with generally accepted accounting principles, before depreciation and amortization, interest expense, and income tax expense. Management believes that EBITDA is a useful supplemental measure of cash available for debt service, working capital, capital expenditures, income taxes, and distribution. Investors are cautioned that EBITDA, as a non-GAAP measure, is not an alternative to measures under GAAP and should not, on its own, be construed as an indicator of performance or cash flows, a measure of liquidity or as a measure of actual return.

The TSX Venture Exchange has neither approved nor disapproved the contents of this press release.

Contact Information

  • Semcan Inc.
    Phil Jamieson
    Chairman
    (416) 703-1692 x 221