LONGUEUIL, Que. — The Canam Manac Group Inc. of Saint-Georges de Beauce announced a new strategic plan that will result in a major reorganization in which the company will concentrate exclusively on nine construction products business units.
This plan paves the way for a return profitability during the 2004 fiscal year.
For Canam Manac’s President and Chief Executive Officer, Marcel Dutil, and the President and Chief Operating Officer, Marc Dutil, the objective is to concentrate the company’s activities on profitable business units in the construction products segment, while improving the company’s balance sheet.
The nine business units are: Canam Joists and Steel Deck Canada, Canam Joists and Steel Deck United States, Structal Heavy Structural Steel, Structal Bridges, Hambro Floor Systems, Murox and Expanpro Buildings, Solicor, SPS Technology Distribution and Technyx, Technical Resource Outsourcing.
The return to profitability must involve the disposal of certain assets as well as the discontinuation or the reduction of certain underperforming operations, particularly in the construction products sector. This reorganization will result in the sale of Manac, Tanguay Industries, and the Monterrey plant in Mexico; the closure of the Columbus, Ohio plant; and the temporary shutdown of the Laval facility in Quebec.
Manac, the division specialized in semitrailer production, has been sold to a group of Quebec investors that includes Charles Dutil, President and Chief Operating Officer of that subsidiary as minority shareholder. A letter of agreement has been signed by the parties to close a transaction on April 27, 2004. This transaction, which excludes the Orangeville plant, will create additional cash flow of $60 million for the Group while ensuring that Manac, whose main office will remain in Saint Georges, will continue its semitrailer manufacturing operations.
The decision to concentrate the Group’s operations exclusively on the construction products sector will involve the sale of Tanguay Industries to quipements Quadco and Trans-Gesco. This transaction will be completed at book value.
In addition, a letter of agreement was signed for the sale of the Monterrey facility in Mexico to a group of local investors. The agreement will allow Canam Manac to recover the current value of its assets. The transaction is set to close in May 2004. The slowdown in economic activity, turnaround costs, and future income tax credit write-offs resulted in heavy losses in Monterrey in 2002 and 2003.
To ensure the long-term profitability and growth of the construction products segment, a number of measures will be taken in the U.S. and Canada: Closure of the Columbus plant on June 4, 2004 resulting in 87 job cuts and the offering for sale of the land and building; Temporary shutdown of the Laval plant in July 2004; 23 job cuts at the Structal Heavy Structural Steel unit and at the corporate level in the United States and Canada.
The outlook for the remainder of 2004 is encouraging.
Unfilled orders for all business units in the construction products segment reached $161.5 million compared with $135.0 million for the same period in 2003, an increase of 20%. The recovery in the non-residential construction industry in Canada and the U.S. has renewed the company’s outlook for the rest of the year and the next several years.
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