International Road Dynamics Inc.
TSX : IRD
December 05, 2007 18:30 ET
IRD to Acquire 50% Interest in Leading Chinese Intelligent Transportation Systems Company
SASKATOON, SASKATCHEWAN--(Marketwire - Dec. 5, 2007) - International Road Dynamics Inc. (TSX:IRD) (IRD) announced today that it intends to acquire a 50% interest in Xuzhou-PAT Control Technologies Limited (XCPT) located in Xuzhou, Jiangsu, China. XCPT has been IRD's distributor in China since 2003 and is a design, manufacturing and service company focused on providing high technology Intelligent Transportation Systems ("ITS") solutions to the growing highway and road way infrastructure business throughout China. The remaining 50% interest is owned by (XCMG) Xuzhou Construction Machinery Group whose head office is located in the Xuzhou Economic Development Zone.
The purchase price will be CDN$4.5 million which includes CDN $3.5 million paid on closing and vendor loans of CDN $750,000 payable one year and CDN$250,000 payable in two years from closing. An additional CDN$250,000 will be paid in each of 2009 and 2010 provided XCPT achieves certain net profit targets. The transaction is expected to close on or before December 31, 2007, and will be funded by new credit facilities available on closing. Since becoming IRD's distributor in late 2003, sales for XCTP's most recent financial year have grown to approximately CDN $10 million with net earnings in the range of 10% to 15%.
Utilizing IRD's proprietary Weigh-in-Motion ("WIM") technologies, and other products and solutions owned by IRD and XCPT, the Company provides toll road and traffic monitoring solutions and support to government and private enterprise engaged in China's growing investment in highway and roadway infrastructure. In addition to the sale of its products, XCPT also offers a comprehensive service and maintenance program to support its industry-leading solutions.
According to the Ministry of Communications of China, the next five years will see significant investment in road building initiatives and weight control measures. The Government's goal is to link all major cities by expressway as well as to open up all of China to economic development via transportation routes and expressways. Weight control for roads and bridges will be a priority to protect the infrastructure. The initiative for growth of China's motorways is outlined in the People's Republic of China Five-Year plan, which can be viewed at the PRC website: http://www.gov.cn/english/2006-03/06/content_219504.htm
Mr. Terry Bergan, IRD's President and Chief Executive Officer commented: "We are very excited to be acquiring a 50% interest in this leading ITS Company. XPCT is well positioned in the Chinese marketplace, and we are confident the purchase will bring significant benefits to IRD's shareholders over the long term as China continues to invest in its highway infrastructure to link major cities and ensure the smooth and efficient transport of goods and services throughout the country."
Related to this acquisition, IRD also announced that Mr. Hong Fang has joined the Company's sales and marketing team in Canada. Mr. Hong has more than 15 years of experience in the Chinese market designing, implementing and maintaining ITS and toll road systems. He was awarded a Masters Degree in Industrial Automation from ChongQing University in 1998. His responsibilities include developing the Chinese market for IRD, helping to define toll road system requirements for this and other overseas markets, as well as assisting with the transition of ownership in the XCPT acquisition.
XCMG was founded in March 1989, and with a total business turnover reaching RMB20.26 billion (USD2631 million) in 2006 XCMG has become the largest developing, manufacturing, and export concern for construction machinery in China. For more information about XCMG see: www.xcmg.com
IRD is a highway traffic management technology company specializing in supplying products and systems to the global Intelligent Transportation Systems (ITS) industry. IRD is a North American company based in Saskatoon, Saskatchewan with sales and service offices throughout the United States and overseas. Private corporations, transportation agencies and highway authorities around the world use IRD's products and advanced systems to manage and protect their highway infrastructures.
The Company's shares trade on the Toronto Stock Exchange under the symbol IRD.