OTTAWA, Feb 27, 2018 /CNW/ - Clearford Water Systems
Inc. ("Clearford" or the "Company"), (TSX-V: CLI), winner of the
Frost & Sullivan 2017 Best Practices Award for Enabling
Technology Leadership in the Global Decentralized Water and
Wastewater Treatment Industry, today announced that it has entered
into a memorandum of understanding ("MOU") with Sustainable Water
Investments Inc. ("SWI"), a Vancouver-based investment vehicle formed and
capitalised by a European bond issuance platform, pursuant to which
SWI agreed to arrange the financing, up to 100% of the capital
costs, associated with the implementation of certain qualified
water and wastewater-related infrastructure development projects,
including ongoing operations and maintenance contracts, under
Clearford's Pay-for-Performance (P4P®) delivery model,
up to an aggregate value of $100 million (the "Project Finance
Facility").
The MOU supersedes and expands on funding terms previously
agreed with Clearford to include Canadian private developments, in
addition to municipal, with adequate credit rating and/or
collateral value to service long-term financial obligations under
the P4P® delivery model for the Design and Build,
Operate and Maintain ("DBOM") offering of water and wastewater
systems, including, but not limited to, the Company's proprietary
all-in-one Clearford One® wastewater system and
advanced M‑brane™ packaged treatment solutions. Under the terms of
the MOU, SWI was granted a right of first refusal ("ROFR") on the
financing of each qualified DBOM project until February 28, 2020. The Project Finance Facility
will support the execution of the strategic business plan
originally announced by the Company on June
22, 2017, and supplements the Company's recent acquisition
of Koester Canada Inc. (now "Clearford-Koester") and its
subsidiary, Team Aquatic Operations Group (now "Clearford
Waterworks").
In conjunction with the execution of the MOU, the Company has
already drawn the amount of US$1.1
million from the Project Finance Facility, supported by
ongoing operations and maintenance contracts of Clearford-Koester.
The advance was made by way of a 10-year loan, bearing a simple
interest rate of 9.75%, payable on a semi-annual basis, with the
principal amount due at end of term, secured by way of general
security agreement on the assets of Clearford-Koester. A
transaction fee of US$82,500 was
charged with respect of the MOU and the first instalment made
thereunder.
The Company is also providing an update on its activities in the
North American market. Clearford-Koester recently moved into a
30,000 square foot manufacturing facility and offices located in
Hamilton, Ontario, which, along
with integrated business and engineering support from other members
of the Clearford group of companies, will allow the Company to
triple its production capacity for fabricating containerized and
skid-mounted treatment solutions.
Richard Nie, formerly President
of Koester Canada Inc. commented: "The support we have received
since joining Clearford has enabled us to accelerate the sales and
delivery of our packaged M-brane™ plants, particularly in
New York State where the Koester
brand is well recognized for its quality. The sales backlog in
New York State alone currently
stands at US$1.4 million, while
interest from customers in the United
States as a whole is growing due to Clearford-Koester's
newly enhanced value proposition." Clearford has signed conditional
contracts totally CAD $8.3 million,
under these contracts clients have the right to delay or cancel all
future obligations at their discretion.
Opportunities in Ontario also
continue to develop after the first two
M-brane™ plants were delivered under DBOM contracts for (i)
the Fetherston mobile part servicing project in late 2015, and (ii)
the $1.2 million landfill
leachate treatment facility in Ontario in 2017. Clearford-Koester is the
first contractor in Ontario to
implement hybrid membrane technology from Ontario-based Fibracast and German-made
industrial tubular membranes from Berghof Membranes.
"The sales pipeline in Ontario
is strengthening with $1.5 million in
signed contracts for execution in 2018 and $5.5 million in awarded contracts, which are
currently going through governmental approval processes. The
Company also has additional opportunities, in relatively advanced
stages, mainly for recreational, resort and estate-type
developments requiring innovative water servicing solutions", added
Mr. Nie. "The Company is uniquely positioned for complementary
sales of the unified Clearford One® solution,
including treatment plants which utilise the
UV Pure® disinfection products and long-term
operating services contracts through its Clearford Waterworks
division, similar to the recently signed 5-year operations and
maintenance agreement for the private water distribution and
wastewater treatment systems at Carp Airport in Ottawa, which is currently completing the
installation of the Clearford One collection network."
Kevin Loiselle, President &
CEO of Clearford, commented: "This is precisely the type of robust
sales pipeline that Clearford requires in order to execute on its
business plan. In the space of only three months since acquiring
Koester-Canada, Clearford has taken control of the value chain
critical to its market penetration. It has also identified advanced
sales opportunities, with increasing margins, generating steady
cash flows from utility-like operations of water and wastewater
systems". Mr. Loiselle added: "Under the previous P4P funding
arrangement, Clearford was restricted to municipal servicing
opportunities that meet the credit ratings required by traditional
lending facilities. The expanded P4P framework provides for far
greater flexibility, and therefore opportunity, capturing the
underlying value of the assets being created or serviced under our
watch."
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term defined is in policies of TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
About Clearford Water Systems Inc.
Clearford Water Systems Inc. (TSX-V: CLI) is a
provider of unified water management solutions for the design,
build, finance, operation and maintenance of water and wastewater
infrastructure systems. The Company's technology-based water
solutions include the Clearford One® wastewater
infrastructure systems, Clearford M‑brane™ packaged treatment
solutions, and a full range of UV Pure® water
disinfection products. Clearford is the winner of the
Frost & Sullivan 2017 Enabling Technology Leadership Award
for Global Decentralized Water & Wastewater Treatment. For
more information on Clearford Water Systems, please visit
www.clearford.com.
Forward Looking Statements
This news release contains certain statements that constitute
forward-looking statements as they relate to the Company and its
management. Forward-looking statements are not historical facts but
represent management's current expectation of future events, and
can be identified by words such as "believe", "expects", "will",
"intends", "plans", "projects", "anticipates", "estimates",
"continues" and similar expressions. Although management believes
that the expectations represented in such forward-looking
statements are reasonable, there can be no assurance that they will
prove to be correct.
By their nature, forward-looking statements include assumptions
and are subject to inherent risks and uncertainties that could
cause actual future results, conditions, actions or events to
differ materially from those in the forward-looking statements. If
and when forward-looking statements are set out in this news
release, Clearford will also set out the material risk factors or
assumptions used to develop the forward-looking statements. Except
as expressly required by applicable securities law, the Company
assumes no obligation to update or revise any forward looking
statements. The future outcomes that relate to forward-looking
statements may be influenced by many factors, including, but not
limited to: industry cyclicality; the ability to secure third party
agreements; successful integration of Clearford's system with third
party technology; competition; reduction in demand for products;
collection from customers; relationships with suppliers; product
liability; intellectual property; reliance on key personnel;
environmental; interest rates; uninsured and underinsured losses;
operating hazards; risks of future legal proceedings; income tax
matters; credit facilities; availability and terms of financing;
distribution of securities; restrictions on potential growth;
effect of market interest rates on price of securities; and
potential dilution.
www.clearford.com
SOURCE Clearford Water Systems Inc.