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good natured Products (formerly Solegear Bioplastic Technologies) Announces $6.2 Million Acquisition of Houston-based FormTex Plastics
Friday, May 13, 2022Company Profile | Follow Company
Vancouver, BC, May 13, 2022--(T-Net)--good natured Products Inc. (TSXV: GDNP ), a North American leader in plant-based products (formerly known in BC as Solegear Bioplastic Technologies), has announced that, through a wholly owned subsidiary, it has entered into a definitive asset purchase agreement to acquire all of the business and operating assets of FormTex Plastics Corporation, a manufacturer of high quality custom plastic packaging headquartered in Houston, Texas, for cash consideration of $4.8 million USD.
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Editor's Note: The acquisition is subject to customary closing adjustments,and the company has subsequently announced (on Thursday May 12th) that it has mutually agreed to terminate an associated $8 million bought deal financing with Beacon Securities Limited and National Bank Financial Inc.
The company said in a release that "the Company remains in discussions with its primary lender regarding a plan to resolve an apparent breach of its fixed charge coverage ratio (FCCR) covenant for the period ended December 31, 2021".
There has been no announcement to date on whether the above will affect the closing of the intended acquisition.
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Founded in 1989, FormTex produces custom plastic packaging for the medical, food, electronic, industrial, and retail end markets. FormTex is ISO 9001:2015 certified in the design and manufacture of thermoplastic molded components and operates seven different thermoforming machines in a leased 51,000 square foot facility on 1.9 acres of land in Houston, Texas.
Paul Antoniadis, CEO, Good Natured Products Inc.
"We believe FormTex represents a very attractive acquisition for good natured®, building on the strong foundation in our packaging business and expanding our geographic reach to highly strategic and synergistic markets," said Paul Antoniadis, CEO of good natured®. "We expect to access cost synergies by directing internally-produced extruded rollstock sheet for use in FormTex's operations, expanded capacity to handle the Company's growth trajectory, and through logistic and operational efficiencies."
Key Highlights of the Acquisition:
- FormTex generated revenue of approximately $4.9 million USD and adjusted EBITDA1 of approximately $0.6 million USD in the calendar year ended December 2021 (or "FY2021")
- FormTex generated revenue of $5.1 million USD for the trailing twelve months ended February 28, 2022
- FormTex generated an unaudited gross margin rate of approximately 42% in FY2021
- The Acquisition includes a minimum of $650,000 USD of net working capital as part of the purchase price
- The Acquisition adds 30 business-to-business ("B2B") accounts to the Company's active B2B customer base
- The current management team operating FormTex will be joining the good natured® team
- Highly strategic and synergistic acquisition that is expected to be immediately accretive to shareholders on an adjusted EBITD1 basis
- Expected to provide cost synergies of approximately $0.2 to $0.3 million USD in the twelve months following the close of the Acquisition
- The Company will begin accounting for 100% of the revenue and financial results from the acquired FormTex business concurrent with the closing of the Acquisition, which is scheduled for May 31, 2022.
Key Strategic Highlights:
- Strategic access to Texas, the world's 9th largest and the United States' 2nd largest economy by GDP.2
- good natured® is expected to supply FormTex's extruded rollstock sheet requirements from its Ex-Tech facility, which is expected to result in material positive financial synergies.
- Significant potential to increase FormTex's current capacity utilization rate of 40% through higher production uptime, additional thermoforming machines in the current facility footprint, and utilization of additional warehousing space.
- FormTex's proximity to one of the 10 largest outbound shipping destinations in North America will significantly reduce shipping costs to the Company's customers in the southern United States.
- FormTex's location provides direct access to the 6th largest U.S. container port, creating a highly efficient port of entry for raw materials coming from Europe and South America.
- good natured® will be able to leverage Houston-based manufacturing, importing, warehousing, and logistics to service the southeastern U.S. market, which includes Florida (the 4th largest state by GDP), Georgia (the 9th largest state by GDP), and North Carolina (the 11th largest state by GDP).
- All FormTex customers are net new customers not currently being serviced by the Company, creating cross-selling opportunities for other good natured® products and services.
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1 Adjusted EBITDA is a non-GAAP measure. 1 Adjusted EBITDA is a non-GAAP measure. 
About good natured Products Inc.
good natured® offers over 400 products and services through wholesale, direct to business, and retail channels. From plant-based home organization products to certified compostable food containers, bio-based industrial supplies and medical packaging, the Company is focused on making plant-based products more readily accessible to people as a means to create meaningful environmental and social impact. |
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Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibilities for the adequacy or accuracy of this release. Cautionary Statement Regarding Forward-Looking Information
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