Sep 6 2013
CRAiLAR Technologies Inc. (“CL” or the “Company”), which produces and markets CRAiLAR® Flax fiber The Friendliest Fiber On The Planet™, today announced that it has executed a letter of intent (“LOI”) to acquire a European fiber dyeing facility with more than thirty years of experience in the industry.
The acquisition, which is subject to the entry into definitive agreements and prior regulatory approval, would establish CRAiLAR flax fiber production for the Company in one of the most prolific flax growing regions in Western Europe.
The facility is currently capable of producing in excess of 250,000 pounds of CRAiLAR Flax fiber per week with room to expand. Under the terms of the LOI, CRAiLAR will acquire the facility by retiring approximately U.S.$1.2 million of the vendor’s debt over a three-year period. Additionally, CRAiLAR will enter into a ten-year lease and option to purchase agreement on the building housing the facility with a renewal option for an additional ten years.
“We are thrilled by the prospect of having complete control of the CRAiLAR production process and, we believe, an immediate path to positive gross margin with no capital outlay,” stated Ken Barker, Chief Executive Officer. “Acquisition of this facility would accelerate our production timeline by six to nine months; eliminate construction risks inherent with a ‘green field’ project; and substantially reduce the capital required to achieve one million pounds per week of capacity. The plant is also is located in an area known for flax growing excellence, thereby providing an abundant source of feedstock, and ties in perfectly with our European flax fiber sourcing initiative.”
The proposed establishment of a CRAiLAR wet processing facility in Europe is in addition to the longer-term plan to establish a fully integrated CRAiLAR facility at the Company’s present site in Pamplico, South Carolina.
Source: http://www.crailar.com/