Carmanah acquires SPS, becomes largest Canadian solar company

May 30, 2005
Carmanah Technologies is to acquire all the issued and outstanding shares of Soltek Powersource Ltd. (SPS), a leading privately-held manufacturer/supplier of solar power systems for industrial, government, residential and retail applications. Carmanah will pay $10 million for SPS: $6 million in cash and $4 million equivalent in common shares.

"With this acquisition, Carmanah will become the largest solar company in Canada," said Art Aylesworth, Carmanah's CEO. "The synergies we see from this purchase are extensive. Our two companies have complementary expertise - Carmanah with its self-contained packages and proprietary LED technology, and SPS with its larger solar power systems."

With approximately 60% market share, SPS is currently the largest Canadian supplier of solar systems and solar-related equipment. In its fiscal year ended August 31, 2004, SPS achieved revenues of approximately $17.5 million and EBITDA of approximately $1.2 million.

Carmanah anticipates a new range of co-developed solar/LED general illumination products, including security lighting, street lighting and sign lighting, for applications in all of the markets it currently serves.

Aylesworth also foresees an entirely new product line of standardized "plug-and-play" solar power sources that will take advantage of SPS's existing range of "solar engines" and Carmanah's world-leading energy management technology. The two companies have overlapping customer bases, including government agencies, traffic OEMs, and resellers.

David Egles, CEO of SPS, said that the company "feels like the timing is right for a deal such as this and we look forward to the possibilities that will arise from the combined entity and its considerable market strength." From an operational standpoint, SPS will gain access to capital, enabling it to expand to meet growing demand. Carmanah will also be applying its engineering and design experience to enhance margins on proprietary SPS technologies. The combined purchasing power and market share will make Carmanah a formidable player in solar power markets both domestically and internationally. This energy sector is growing rapidly; in fact, the solar photovoltaic industry worldwide grew by an unprecedented 62% in 2004 to $6.5 billion, and it is predicted to grow 300% to $18.5 billion by 2010.

"With the expansion of renewable energy and sustainability mandates worldwide, as well as the obligations associated with international pollution reduction agreements such as the Kyoto Accord, the timing for our acquisition couldn't be better," says Aylesworth.