Trading Symbol: MCV
TORONTO, Aug. 2, 2012 /CNW/ - McVicar Industries Inc. ("McVicar" or the "Company") is pleased to announce that the Company has won an open bid auction to acquire Anhui Linghua Co. Ltd. ("Anhui Linghua"), a chemical company located in the Xiangyu Chemical Industrial Park, Dongzhi County, Chizhou City, Anhui province, for 37,500,000 yuan (~CDN $6 million). Anhui Linghua was established by a chemical company, Zhejiang Huzhou Linghua Co. Ltd. in 2007 ("Zhejiang Linghua") in order to move its production from Huzhou, Zhejiang province, to a chemical park. Anhui Linghua has 200 mu ("~130,000 square meters") land and complete infrastructure for a chemical operation. Zhejiang Linghua has invested over 60 million RMB during the last five years to build up facilities and equipment in the new land. However, Zhejiang Linghua encountered financial problems due to a dramatic price drop in its main products. It failed to complete further investment to start any operation in Anhui Linghua. Both Zhejiang Linghua and Anhui Linghua have to liquidate themselves to meet loan requirements and settle employees.
McVicar has three chemical subsidiaries, Hongbo Chemical Co. Ltd. ("Hongbo"), Changlong Chemcal Co. Ltd. ("Changlong") and Luyuan Chemical Co. Ltd. ("Luyuan") through acquisitions in the past. However, Both Hongbo and Changlong were located in non-Chemical Industrial Parks, which became a compulsory requirement for chemical companies in China. Changlong was forced to stop production in its Hangzhou plant and could only move a small part of its products to the current Luyuan facility. Hongbo is encountering great pressure to relocate to a Chemical Industrial Park.
The acquisition of Anhui Linghua provides sufficient land for concentrating all the three subsidiaries and for further expansion of McVicar's Chemical business as Anhui Linghua has about half of the unused land for building production plants. The acquisition is a great step in integrating the past acquisitions and building operational and financial competitiveness for McVicar's chemical business. A finder's fee of ~5% will be paid to an agent for past work on the opportunity.
McVicar will need to apply for permissions from authorities in Anhui province in order to move the Company's products to the Chemical Industrial Park.
About McVicar
McVicar Industries Inc., headquartered in Toronto, Canada, is focused on investments and acquisitions of businesses in China. At present, McVicar has operations in both electronic components and specialty chemicals in four operations in China.
SOURCE: McVicar Industries Inc.