good natured Products Inc. Announces Acquisition of Shepherd Thermoforming & Packaging Inc.
good natured acquires Shepherd Thermoforming, a distinguished vacuum forming company in The Greater Toronto Area of Ontario, Canada. The acquisition allows good natured to begin producing custom thermoforming including injection molding and blow molding. For customer inquiries, please contact good natured or read more about custom thermoforming.
The acquisition became official on May 13th, 2020. Below is the full timeline of the vacuum forming company acquisition.
March 3, 2020— (Vancouver, BC) good natured Products Inc. (the “Company” or “good natured®”) (TSX-V: GDNP) today announced that it has entered into a definitive agreement with the shareholders of Shepherd Thermoforming & Packaging Inc., (“Shepherd”) a leading thermoformer with over 35 years’ experience, to acquire 100% of Shepherd and all its real estate assets for CAD$9.5 million in cash (the “Share Purchase”). The assets include machinery, molds and a 42,000 square foot manufacturing facility, all located on 2.31 acres of land in the Greater Toronto Area of Brampton, Ontario.
Shepherd designs custom packaging including engineering, mold production and final product manufacturing for both thin gauge and heavy gauge applications. Their customers include several Fortune 500 companies located throughout eastern Canada and the northeast United States. Shepherd operates six different thermoforming lines as well as two CNC machines at its fully integrated design, mold manufacturing, testing and manufacturing facility.
“After nearly doubling our revenues in 2019, this transaction marks another significant milestone in the company’s growth trajectory. The acquisition enables us to increase our production capacity and expand our plant-based packaging assortment to meet the needs of more customers,” said Paul Antoniadis, CEO of good natured®. “Whether it be through existing molds available at the Shepherd facility, or the ability for us to expand on the development of custom packaging solutions, one of our largest growth sectors, our production capacity and assortment has now increased significantly.” Paul went on to add “the strategic location of Shepherd’s facility also provides good natured® with a strong and easily accessible entry point into Ontario and eastern Canada, as well as the northeastern United States.”
Paul concluded by saying, “We’re delighted to welcome Mark and Todd Shepherd and the entire Shepherd team to the good natured® family. We share a common vision to be leaders in the development and adoption of sustainable, planet-friendly packaging solutions in North America, so the combination of our collective expertise, people and manufacturing capability further positions the Company to execute against this ambition.
Shepherd generated average annual revenue of over CAD$5.5 million and average annual adjusted EBITDA of CAD$420,000 in the prior three fiscal years. Completion of the Share Purchase remains subject to financing and a number of customary closing conditions in favor of good natured® and TSX Venture Exchange approval. The acquisition is expected to be accretive during the current fiscal year.
The Company is completing the final stages of financing required to close the Share Purchase with its financial partners, including Business Development Bank of Canada (“BDC”), under the terms and conditions of its previously announced BDC financing from June 2019.
“We are very excited to partner with good natured® and continue the legacy of our business that was started in 1984 by our father Barry Shepherd,” said Todd Shepherd, President of Shepherd Thermoforming & Packaging Inc. “Our customers are increasingly requesting plant-based alternatives, so joining together with good natured®, as we have on several projects over the past four to five years, will accelerate our ability to meet this growing demand.”
The closing of the transaction is expected to be not later than April 30, 2020.
In addition to the $9.5 million payable in cash at closing, the Share Purchase contemplates an earnout payment of $2.25 million may be payable at some point between 42 and 60 months post-closing, upon satisfaction of a condition relating to increase in the value of the real estate purchased as part of the transaction. The Company also intends to redeem the remaining $1.18 million in principal amount of its convertible debentures issued February 2018 at the closing of the transaction.
The definitive agreement governing the Share Purchase will be available on the Company’s SEDAR profile at www.sedar.com subsequent to closing the transaction in accordance with TSX filing regulations.
Acquisition Conference Call
To provide more details on the Company’s acquisition of Shepherd Thermoforming & Packaging Inc., the Company is pleased to host a live conference call with Paul Antoniadis, Executive Chair & CEO, and Don Holmstrom, Executive Vice President & CFO, on Wednesday, March 4 at 11:30am EST.
In addition to discussing the Acquisition, Paul will provide an overview of the Company’s acquisition strategy, while Don will talk to the financial aspects of the acquisition and what this means for the Company moving forward.
Paul and Don will both be available to answer questions at the end of the call. To ask a question, use the question form on the webcast web page or email invest@goodnatured.ca
Conference call details
Date: Wednesday, March 4
Time: 11:30am EST
Link: https://www.gowebcasting.com/10526
About good natured Products Inc.
good natured® is producing and distributing one of North America’s widest assortments of better everyday products® made from the highest possible percentage of renewable, plant-based materials and no BPAs, phthalates or other chemicals of concern potentially harmful to human health and the environment.
By combining cutting-edge renewable material technology and the latest sustainable design features, good natured® creates planet-friendly products and packaging that do good for the planet, good for human health and good for business by driving incremental sales, minimizing waste and improving logistics, all bundled up in a fresh and friendly brand.
For more information, visit our sustainable investment site.
About Shepherd Thermoforming and Packaging Inc.
Shepherd Thermoforming is a family owned-and-operated business that has become a placeholder in the North American plastics industry since its inception in 1984. With a commitment to customer satisfaction, Shepherd has grown to become an all-in-one solution for custom thermoforming and vacuum forming needs.
Shepherd’s 42,000 square foot facility is home to industry leading sales, engineering and production teams. With a commitment to offer complete solutions for all clients, Shepherd applied for and attained SQF (Safe Quality Food) certification to go along with its fully integrated ISO 9001:2015 certificate. This means that Shepherd has the ability to produce custom, food safe clamshells, blister packs and other forms of thermoformed and vacuum formed packages to suit each customer’s specific needs.
On behalf of the Company:
Paul Antoniadis – Chief Executive Officer
Contact: 1-604-566-8466
Investor Contact:
Jackson Spence
Investor Relations Manager
1-877-286-0617 ext. 113
invest@goodnatured.ca
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibilities for the adequacy or accuracy of this release.
Cautionary Statement Regarding Forward-Looking Information
Information in this news release regarding the expected closing of the Share Purchase, the availability of BDC or other financing for the Share Purchase, redemption of convertible debentures and the payment of the earn-out payment constitutes forward-looking information within the meaning of securities laws. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
Such factors include, among others, the risk that the closing conditions for completion of the Share Purchase are not satisfied, including due to lack of financing.
When relying on the Company’s forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company has assumed that the material factors referred to in the previous paragraph will not cause such forward-looking statements and information to differ materially from actual results or events. However, there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.
Other than as required under securities laws, we do not undertake to update this information at any particular time.
Forward-looking information contained in this news release is based on our current estimates, expectations and projections regarding, among other things, sales volume and pricing which we believe are reasonable as of the current date. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date. All forward-looking information contained in this news release is expressly qualified in its entirety by this cautionary statement.
March 4, 2020 – (Vancouver, BC) good natured Products Inc. today held a conference call to provide further details and respond to Q&A regarding the Company’s acquisition of Shepherd Thermoforming & Packaging Inc. Click below to listen to an audio recording of the call.
April 29, 2020 — (Vancouver, BC) good natured Products Inc. (the “Company” or “good natured®”) (TSX-V: GDNP) today announced it has entered into a Letter of Offer with Business Development Bank of Canada (“BDC”) to provide financing (“BDC Financing”) for the previously announced acquisition of Shepherd Thermoforming & Packaging Inc. (“Shepherd”).
Concurrent with the BDC Letter of Offer, good natured® also announced execution of an amending agreement (the “Amending Agreement”) with the shareholders of Shepherd (the “Vendor”) amending some of the provisions of the previously disclosed Share Purchase Agreement announced on March 3, 2020 (the “Share Purchase Agreement”).
The key terms of the BDC Financing include the following:
- a drawdown of approximately $1.7 million USD under the Company’s existing $5 million USD M&A credit facility with BDC announced in June 2019;
- a $6 million CAD mortgage to support the acquisition of the real estate at Shepherd; and
- a conversion of $1 million CAD of the Company’s existing long term credit facility into common shares in good natured® at a price per share of $0.15 (the “Debt for Shares Transaction”), and issuance of loan bonus shares (described in more detail below).
The Amending Agreement locks in the effective date for transfer of the economics relating to the Share Purchase Agreement at April 30, 2020, provides for increasing the Vendor financing component from $1 million to $1.35 million CAD, extends the outside date for closing from April 30, 2020 to May 31, 2020 and allows for the $6 million CAD in BDC mortgage financing.
The parties remain focused on closing the acquisition of Shepherd as soon as possible during May. The Amending Agreement provides that cash and working capital adjustments will be calculated at a month-end cutoff as of the end of April, even if the actual closing slips into May, which in effect transfers the benefit and risk of the Shepherd business to good natured® as of and from May 1, 2020.
The $6 million CAD mortgage was obtained at an interest rate of 6.8% and an amortization period of 25 years, with payments commencing in October 2020. In addition, as an incentive to BDC to provide the financing described above, good natured® has agreed to issue 3,000,000 common shares as a loan bonus to BDC at the closing of the Shepherd acquisition, subject to TSX-V approval.
“I would like to recognize BDC and their commitment to supporting the growth of good natured® and sustainable businesses overall in Canada. Their ongoing support has made our success possible,” said Paul Antoniadis, CEO of good natured®. “Our history of working together with the Shepherd family made it possible for us to come to swift agreement on these amended terms, which benefit both parties and allow us to close on this important acquisition for all good natured® stakeholders.”
“We continue to be very excited about our partnership with good natured®, which gives us all the opportunity to build on the legacy of our business that was started by our father, Barry Shepherd, in 1984,” said Todd Shepherd, President of Shepherd Thermoforming & Packaging Inc. “Our customers are increasingly requesting plant-based alternatives, so joining with good natured®, as we have on several projects over the past four to five years, will accelerate our ability to meet this growing demand.”
The closing of the transaction is expected to be April 30, 2020 or soon thereafter in early May 2020 with an effective date of April 30, 2020. Closing of the transaction (including the Debt for Shares Transaction) remains subject to approval of the TSX Venture Exchange and other customary closing conditions related to the BDC Financing.
The Amending Agreement and Letter of Offer will be made available on the Company’s SEDAR profile at www.sedar.com.
The Company concurrently announced that it has granted share-based incentive compensation to directors and officers of the Company. Pursuant to the Company’s Omnibus Equity Incentive Compensation Plan it has granted (i) stock options exercisable for up to 1,033,389 common shares in the Company (“Company Shares”), (ii) 1,050,000 restricted share units (“RSUs”) vesting over a period of 3 years from the date of grant; and (iii) 1,525,000 RSUs vesting over a period of 2 years from the date of grant. The stock options are exercisable at $0.15 per Company Share, with a 4-year vesting term to be vested 1/48 per month over a 48 month period. Each RSU will entitle the holder to receive either one Company Share from treasury, the cash equivalent of one Company Share or a combination of cash and Company Shares, as the Board may determine in its sole discretion on settlement. The RSUs will vest over a period of 2 or 3 years as applicable, and on or following each annual vesting date the vested portion of the RSUs will be settled.
About good natured Products Inc.
good natured® is producing and distributing one of North America’s widest assortments of better everyday products® made with renewable, plant-based materials and no BPAs, phthalates or other chemicals of concern potentially harmful to human health and the environment.
By combining cutting-edge renewable material technology and the latest sustainable design features, good natured® creates eco-friendly home and business products, food packaging, restaurant/take-out containers and other industrial supplies designed to do good for the planet, good for human health and good for business by driving incremental sales, minimizing waste and improving logistics, all bundled up in a fresh and friendly brand.
For more information: goodnatured.ca
About Shepherd Thermoforming and Packaging Inc.
Shepherd Thermoforming is a family owned-and-operated business that has become a placeholder in the North American plastics industry since its inception in 1984. With a commitment to customer satisfaction, Shepherd has grown to become an all-in-one solution for custom thermoforming and vacuum forming needs.
Shepherd’s 42,000 square foot facility is home to industry leading sales, engineering and production teams. With a commitment to offer complete solutions for all clients, Shepherd applied for and attained SQF (Safe Quality Food) certification to go along with its fully integrated ISO 9001:2015 certificate. This means that Shepherd has the ability to produce custom, food safe clamshells, blister packs and other forms of thermoformed and vacuum formed packages to suit each customer’s specific needs.
On behalf of the Company:
Paul Antoniadis – Chief Executive Officer
Contact: 1-604-566-8466
Investor Contact:
Andy Phillips
Investor Relations
1-877-286-0617 ext.
113
invest@goodnatured.ca
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibilities for the adequacy or accuracy of this release.
Cautionary Statement Regarding Forward-Looking Information
Information in this news release regarding the expected closing of the Share Purchase, the availability of BDC or other financing for the Share Purchase, redemption of convertible debentures and the payment of the earn-out payment constitutes forward-looking information within the meaning of securities laws. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
Such factors include, among others, the risk that the closing conditions for completion of the Share Purchase are not satisfied, including due to lack of financing.
When relying on the Company’s forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company has assumed that the material factors referred to in the previous paragraph will not cause such forward-looking statements and information to differ materially from actual results or events. However, there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.
Other than as required under securities laws, we do not undertake to update this information at any particular time.
Forward-looking information contained in this news release is based on our current estimates, expectations and projections regarding, among other things, sales volume and pricing which we believe are reasonable as of the current date. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date. All forward-looking information contained in this news release is expressly qualified in its entirety by this cautionary statement.
May 13, 2020 — (Vancouver, BC) good natured Products Inc. (the “Company” or “good natured®”) (TSX-V: GDNP) today announced it has closed the previously announced strategic acquisition of Shepherd Thermoforming & Packaging Inc. (“Shepherd”) and all of its real estate for CAD$9.5 million. Shepherd is a leading thermoformer with over 35 years’ experience and includes assets such as machinery, molds and a 42,000 square foot manufacturing facility, all located on 2.31 acres of land in the Greater Toronto Area of Brampton, Ontario.
The terms of the acquisition were first announced in a good natured® news release on March 3, 2020 and further details of the transaction were released by the Company on April 29, 2020. The acquisition was an arm’s length transaction which closed in accordance with the terms and conditions as previously disclosed. The purchase price was financed through a combination of the previously announced $6 million BDC mortgage loan, $1.35 million in a vendor-take back promissory note, with the balance funded by drawdown of the Company’s previously announced June 2019 BDC credit facility.
“We’re very pleased to announce the completion of this acquisition, and welcome everyone at Shepherd to the good natured® family,” said Paul Antoniadis, CEO of good natured®. “Shepherd grows our customer base with an addition of over 75 customers, our capabilities, and our market reach into Eastern Canada and the Northeast United States.”
We are delighted to support an acquisition that marks a key milestone in good natured®’s history as well as its contribution to the adoption of plant-based plastics”, said Jahangir Bhatti, Director, Cleantech Practice at BDC. “With its wide assortment of products and strategic Eastern Canada location, Shepherd is in good stance to fuel good natured®’s already robust growth.”
The Company also confirms, further to its news release of April 29, 2020, that today the Company completed the conversion of $1 million CAD of its existing long term credit facility with BDC by issuing 6,666,667 common shares (“Shares“) to BDC at a deemed price of $0.15 per Share (the “Debt Settlement Shares“), and issued 3,000,000 Shares to BDC with a deemed price of $0.15 per Share as a loan bonus under the same facility (the “Loan Bonus Shares“). The Debt Settlement Shares and the Loan Bonus Shares are subject to a four month hold period expiring September 2020 under applicable securities laws.
$2,800,000 CAD Operating Line of Credit
The Company also announces that it has entered into a Sixth Supplemental Loan Agreement with Comerica Bank, the current senior lender to the Company, under which Comerica Bank will make available to the Company an additional $2.8 million CAD operating line of credit with interest at Prime Rate plus 0.5%, which is available for use upon the closing of the Company’s acquisition of Shepherd. The line of credit will be used to fund ongoing growth for the Company and Shepherd through procurement of raw materials, production molds and new product inventories.
About good natured Products Inc.
good natured® is producing and distributing one of North America’s widest assortments of better everyday products® made with renewable, plant-based materials and no BPAs, phthalates or other chemicals of concern potentially harmful to human health and the environment.
By combining cutting-edge renewable material technology and the latest sustainable design features, good natured® creates eco-friendly home and business products, food packaging, restaurant/take-out containers and other industrial supplies designed to do good for the planet, good for human health and good for business by driving incremental sales, minimizing waste and improving logistics, all bundled up in a fresh and friendly brand.
For more information: goodnatured.ca
About Shepherd Thermoforming and Packaging Inc.
Shepherd Thermoforming is a family owned-and-operated business that has become a placeholder in the North American plastics industry since its inception in 1984. With a commitment to customer satisfaction, Shepherd has grown to become an all-in-one solution for custom thermoforming and vacuum forming needs.
Shepherd’s 42,000 square foot facility is home to industry leading sales, engineering and production teams. With a commitment to offer complete solutions for all clients, Shepherd applied for and attained SQF (Safe Quality Food) certification to go along with its fully integrated ISO 9001:2015 certificate. This means that Shepherd has the ability to produce custom, food safe clamshells, blister packs and other forms of thermoformed and vacuum formed packages to suit each customer’s specific needs.
About BDC
BDC is the only bank devoted exclusively to entrepreneurs. It provides access to financing, both online and in-person, as well as advisory services to help Canadian businesses grow and succeed. Its investment arm, BDC Capital, offers a wide range of risk capital solutions. For 75 years and counting, BDC’s purpose has been to support entrepreneurs in all industries and all stages of growth. For more information and to consult more than 1,000 free tools, articles and entrepreneurs’ stories, visit bdc.ca.
On behalf of the Company:
Paul Antoniadis – Chief Executive Officer
Contact: 1-604-566-8466
Investor Contact:
Andy Phillips
Investor Relations
1-877-286-0617 ext. 113
invest@goodnatured.ca
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibilities for the adequacy or accuracy of this release.