ComWest agrees to buy PE-owned Unisync for about $13 mln

ComWest Enterprise Corp., owner of parkas supplier Peerless Garments, has agreed to acquire Unisync for approximately $13 million. The transaction is expected to close on or before July 11. Headquartered in Mississauga, Ontario, Unisync, which was owned by Kilmer Capital Fund, is a maker of uniforms and workwear.

PRESS RELEASE

VANCOUVER, BRITISH COLUMBIA–(Marketwired – June 25, 2014) – ComWest Enterprise Corp. (TSX VENTURE:CWP)(TSX VENTURE:CWP.A) (the “Company”) is pleased to announce that it has entered into a definitive agreement to acquire a 100% equity interest in Unisync Group Limited (“Unisync”), Canada’s leading designer, manufacturer and distributor of direct sale uniforms, workwear, image apparel and related solutions.

The transaction is valued at approximately $13,000,000, including debt, with existing shareholders of Unisync having the capability to receive a future contingent payment of up to $2,000,000 subject to the award of specific business which Unisync expects to bid on in 2015. The acquisition will be financed by $1,755,000 of the private equity placement set out below, a $6,000,000 term loan facility provided by a Canadian chartered bank and the balance from surplus working capital of the combined company. The Board of Directors of ComWest has unanimously approved the transaction, which is anticipated to close on or before July 11, 2014.

About ComWest
ComWest’s principal business is currently its 90% partnership interest in Peerless Garments LP which was acquired in August 2010. Concurrent with the acquisition of Unisync, we have reached preliminary agreement with our 10% minority limited partner in Peerless to an exercise of the put/call agreement forming part of the Peerless partnership agreement. Under the terms of the agreement, ComWest would acquire the 10% minority partnership interest at the previously agreed exercise price of $1,500,000, on the understanding that the proceeds will be used by the minority partner to purchase 800,000 Class A restricted common shares and 200,000 Class B common shares in the capital of ComWest forming part of the $3,255,000 private placement set out below. Completion of the transaction is subject to our minority partner being satisfied with a review of the resulting tax implications of the exercise of the put/call agreement.

On the successful completion of these transactions, ComWest would own 100% of both Unisync and Peerless.

The Private Placement
ComWest is proceeding with a non-brokered private placement of up to 1,970,000 Class A restricted common shares and 200,000 Class B common shares at a price of $1.50 per share for gross proceeds of $3,255,000 which is expected to complete in a series of tranches. The proceeds are being used to finance the acquisition of Unisync and the exercise of the put/call agreement between ComWest and its minority partner in Peerless. All shares issued under the private placement are subject to a restricted period that will expire four months after the issuance date. Insiders will be participating in the private placement.
The above transactions are subject to acceptance by the TSX Venture Exchange.

About Peerless Garments
Founded in 1941 as a supplier of basic parkas, Peerless has evolved over the years to a garment manufacturer and importer specializing in the production and distribution of highly technical protective garments designed to provide water- resistance, wind proofing and warmth. Peerless is licensed to use Gore-Tex ® fabrics including Wind-Stopper® and other work wear materials and has been a supplier to the Canadian Forces since the early 1950s. Its’ line of military operational clothing aims to reduce detection through camouflage and concealment while ensuring that soldiers are kept warm, dry and comfortable when exposed to extreme weather conditions. Peerless also produces tactical garments made of fire-resistant, anti-static and chemical warfare protective materials. Government business represents over 80% of Peerless’ revenue with the remaining revenue coming from sales to other Canadian government agencies, retailers, and other smaller customers including customers in the oil & gas industry.

About Unisync
Unisync is a privately held Canadian company majority-owned by Kilmer Capital Fund L.P., a private equity fund sponsored by well-known Canadian entrepreneur Larry Tanenbaum. Unisync has a highly attractive customer base of leading corporations and is an 11-time winner of the North American Association of Uniform Manufacturers and Distributers (“NAUMD”) “Image of the Year” award for leadership in product design. The award is the industry’s highest achievement and is selected by an independent panel of judges representing the fashion industry’s most celebrated designers, journalists and fashion authorities.

Unisync’s head office is located in Mississauga, Ontario, with a 100,000 square foot world-class distribution centre located in Guelph, Ontario and a satellite distribution facility and sales office in Calgary. Its unique multi-station “pick-to-light” carousel system efficiently handles large distribution volumes in a cost effective manner. Unisync also provides a state-of-the-art B2B ordering system with maximum flexibility for ordering processes including employee “kitting” and a “Best Fit” technology ensuring garments fit right the first time thus minimizing returns and exchanges.

These core capabilities combined with extensive reporting capabilities for corporate clients, have been a major contributor in securing multi-year agreements with many major Canadian corporations.

Unisync operates under three distinct brands: Hammill Workwear is the company’s leading, consumer recognized, Canadian workwear and servicewear brand with an 80 year heritage; the YORK brand has a 30+ year heritage as a leading designer, manufacturer and distributor of Canadian corporate uniforms; and Showroom One which sources and develops customized promotional apparel and corporate-branded retail items that support brand integrity and corporate marketing initiatives.

The Unisync/Peerless Combination
ComWest’s board and management believe that with the acquisition of Unisync, it has established a vertically integrated and unique Canadian enterprise with exceptional capabilities in domestic manufacturing and off-shore outsourcing, combined with state-of-the-art web based B2B/C ordering and distribution systems capable of adding scale at reasonable marginal costs. The combined client base stretches across a broad spectrum of Federal, Provincial and Municipal government departments and agencies such as the Armed Forces, RCMP, Canadian Border Services, as well as a list of leading Canadian corporations in a variety of industries. In addition, Unisync’s web based On Line Store capability provides an opportunity to market standard branded products directly to employees of smaller businesses and other retail customers in a cost efficient manner in the future.

The Unisync acquisition brings a strong complimentary management team with industry depth and demonstrated capability to develop and improve shareholder value. “This is truly an exciting opportunity for an industry leading management team and devoted employees to leverage complementary capabilities and drive growth and market diversification. The coming together of these two deep rooted uniform providers further strengthens the organizations leadership position in the direct uniform industry in Canada” said William “Fitz” Blackburn, Unisync’s chief executive officer and partner at Kilmer Capital Partners. We are also pleased that Kilmer Capital and the balance of existing Unisync shareholders will continue to have a vested interest in the ongoing success of the combined business.

ON BEHALF OF THE BOARD

Douglas F. Good, President

 

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