Oaktree’s Neo Performance to acquire assets of Asia Magnets

Neo Performance Materials Inc (TSX: NEO) has agreed to acquire the assets of Asia Magnets, a Chuzhou, China-based maker of compression-moulded neodymium-iron-boron (NdFeB) magnets, for about US$9.9 million plus working capital.

The purchase is being made by Magnequench, the Asian affiliate of Neo, a Toronto-based maker of rare-earth and rare-metal-based functional materials.

Neo said the transaction will enable its production of NdFeB magnets for automotive, home appliance and other markets.

Earlier this year, Luxfer Holdings PLC‘s proposed acquisition of Neo was terminated. The deal was supported by Oaktree Capital Management, Neo’s largest shareholder.

PRESS RELEASE

Neo Performance Materials to Purchase Magnet Manufacturing Facility and Expand its Capabilities and Capacity in High-Growth NdFeB Magnet Markets

Company to Produce Compression Molded, Neodymium-Iron-Boron (“NdFeB”) Magnets for Automotive, Home Appliance and Other Markets Using Its Market-Leading Magnequench NdFeB Powders

TORONTO, July 15, 2019 /CNW/ – Neo Performance Materials Inc. (“Neo”, the “Company”) [TSX: NEO] is pleased to announce that its Magnequench subsidiary (“Neo Magnequench”) has entered into a definitive agreement to purchase the assets of Asia Magnets (“SAMAG”), a privately owned manufacturer in Chuzhou, China of compression molded NdFeB bonded magnets, for a purchase price of 68.5M RMB (US$9.9M), plus working capital. The acquisition will further enhance the value that Neo provides to customers and is expected to leverage Neo’s ability to produce high-performance magnetic powders and magnets.

Located west of Shanghai, SAMAG constructed a new production facility in 2016 and recently completed a US$2.9 million capacity expansion, including the installation of new manufacturing equipment and additional production footprint. This increased capacity and new equipment, which is included in the purchase price, will allow Neo Magnequench to accelerate its strategy to expand into compression molded magnet production.

SAMAG was founded by Gao Qingguo, a 20-year veteran of the bonded NdFeB magnet industry, and has an established reputation as a reliable and responsive supplier of high-quality compression molded magnets to multiple markets. Mr. Gao will continue with the Company following the acquisition.

Neo Magnequench is the global market leader in magnetic powders for high-performance NdFeB magnets, which are critical to supporting the rapid growth of high-efficiency micro motors and sensors used in automobiles, home appliances, industrial automation, and other applications. NdFeB magnets deliver more power and greater efficiency to these applications, which in turn can reduce operational costs, energy and fuel consumption, and harmful air emissions.

“As global demand for NdFeB magnets continues to expand across multiple industry segments, this strategic acquisition will enable Neo to work more closely with our magnetic powder customers and will help us expand direct sales of additional value-added engineered materials into multiple, high-growth markets,” said Geoff Bedford, President and Chief Executive Officer of Neo.

Greg Kroll, Executive Vice President of Neo Magnequench, added: “This acquisition is compelling for the Neo Magnequench business as it immediately expands our existing magnet manufacturing knowhow and enhances our production capability, and SAMAG’s production will benefit from Neo’s technical expertise, extensive global sales team and networks. The acquisition will expand our ability to work more closely with magnet users from concept through the entire product lifecycle. It also helps us respond to a clear market demand for a compression molded magnet supplier that can both produce at competitive cost and deliver superior technical and development expertise for current and next-generation applications.”

In this asset purchase, the purchase price was 68.5M RMB (US$9.9M), plus working capital. This acquisition includes SAMAG’s newly installed magnet manufacturing equipment and expanded production footprint to support future growth. SAMAG’s annual revenue is approximately US$4.0M and its existing adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) (unaudited) is approximately US$1.0M. The purchase will be funded by existing cash on hand. The purchase is subject to customary closing conditions but is not expected to require any material government regulatory approvals. The Company expects the transaction to close later in the third quarter or early fourth quarter of 2019.

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About Neo Performance Materials

Neo Performance Materials is a global leader in the innovation and manufacturing of rare earth- and rare metal-based functional materials, which are essential inputs to high technology, high growth, future-facing industries. The business of the Company is organized along three segments: Magnequench, Chemicals & Oxides and Rare Metals. The Company is headquartered in Toronto, Ontario, Canada; with corporate offices in Greenwood Village, Colorado, US; and Beijing, China. The Company operates globally with sales and production across 10 countries, being Japan, China, Thailand, Estonia, Singapore, Germany, United Kingdom, Canada, United States, and South Korea. For more information, please visit www.neomaterials.com.

For further information: Information Contacts Ali Mahdavi, Investor Relations, (416) 962-3300, Email: a.mahdavi@neomaterials.com; Jim Sims, Media Relations, (303) 503-6203, Email: j.sims@neomaterials.com; Website: www.neomaterials.com; e-mail: info@neomaterials.com