Velan Announces Major Strategic Initiatives

Core View - The company announced two major strategic initiatives: the divestiture of asbestos-related liabilities and the sale of French subsidiaries, aimed at reducing operating and financial risks while strengthening its financial position [12][13] - These transactions are expected to unlock the company's inherent value, making it financially and operationally stronger, and allowing it to focus on growth opportunities in the clean energy sector [6][7][13] Divestiture of Asbestos Liabilities - The company entered into an agreement with Global Risk Capital to divest its asbestos-related liabilities through the sale of its US subsidiary, Velan Valve Corp, for US$143 million, which will permanently remove all asbestos-related liabilities from the company's balance sheet [14] - The transaction is expected to result in a one-time non-cash charge to earnings of approximately US$67 million, before tax benefits [1] - The company plans to fund this transaction using available cash and a portion of the proceeds from the sale of its French subsidiaries [14] Sale of French Subsidiaries - The company entered into a memorandum of understanding to sell 100% of its French subsidiaries, Segault SAS and Velan S A S, to Framatome for a purchase price of US$175 2 million (€170 million), with an additional intercompany loan transfer of US$23 2 million (€22 5 million), bringing the total consideration to US$198 4 million (€192 5 million) [8][15] - The completion of this transaction is subject to shareholder approval, and Velan Holding, the controlling shareholder, has entered into a voting and support agreement with the company [9][16] - The company will inform and consult employee representative bodies in accordance with French laws before finalizing the agreement [2] Strategic Positioning and Future Outlook - The company will continue to lead in flow control solutions for clean energy and other industrial sectors, leveraging its strong brand, high-quality products, and expertise in demanding applications [6] - The company is well-positioned in the nuclear energy market with proprietary valve offerings for small modular reactors and a global installed base of products at existing nuclear reactors [6] - The transactions are expected to strengthen the company's balance sheet, making it virtually debt-free and enabling greater investments in growth opportunities [7] Advisors and Legal Counsel - Ducera Partners LLC is acting as the exclusive financial advisor for the asbestos divestiture transaction, with legal counsel provided by Latham & Watkins LLP and Davies Ward Phillips & Vineberg LLP [3] - BMO Capital Markets is acting as the financial advisor for the France transaction, with legal counsel provided by Davies Ward Phillips & Vineberg LLP and Bredin Prat [10] - Jones Day is acting as legal advisor to Global Risk Capital and Framatome [3][10]