Velan's Strategic Moves: Reducing Risks and Fueling Growth

Velan Inc. (TSX: VLN), a world-leading manufacturer of industrial valves, has announced major strategic initiatives that will significantly reduce operating and financial risks while strengthening its financial position. The company's two key transactions – the divestment of asbestos-related liabilities and the sale of its French subsidiaries – are set to unlock Velan's inherent value and position it for future growth.



Divestment of Asbestos-Related Liabilities

Velan has entered into an agreement with an affiliate of Global Risk Capital to permanently divest its asbestos-related liabilities. This transaction involves the sale of Velan's existing U.S. subsidiary, Velan Valve Corp., for US$143 million. The Asbestos Divestiture Transaction will remove all asbestos-related liabilities and obligations from Velan's balance sheet and indemnify the company for all legacy asbestos liabilities. This move allows Velan to confidently execute its business plan without the burden of these liabilities, as stated by James A. Mannebach, Chairman of the Board and CEO of Velan.



Sale of French Subsidiaries

Velan's wholly-owned subsidiary, Velan Valves Limited, has entered into a memorandum of understanding relating to the sale of 100% of the share capital and voting rights of its French subsidiaries, Segault SAS and Velan S.A.S., to Framatome SAS for a purchase price of US$175.2 million (€170 million). The total consideration to Velan, including the transfer of an intercompany loan, amounts to US$198.4 million (€192.5 million). This sale supports the protection of French sovereign interests and allows Velan to focus more on its core business of manufacturing industrial valves and flow control solutions.

Strengthening Velan's Financial Position

Following the closing of these transactions, Velan will be virtually debt-free, allowing for greater investments in growth opportunities. Rishi Sharma, Chief Financial and Administrative Officer of Velan, emphasized that these initiatives would offer a significantly higher value proposition to all shareholders.

Aligning with Velan's Long-Term Growth Strategy

Velan's strategic moves align with its long-term growth strategy, particularly in the clean energy sector. By reducing operating and financial risks, strengthening its financial position, and focusing on its core business, Velan remains well-positioned to capitalize on growth opportunities in the clean energy sector and other markets. The company's strong brand, high-quality products, and superior market positioning will continue to drive its growth in these sectors.

Velan's commitment to executing its strategic plan and delivering sustained profitable growth is evident in these transactions. By reducing risks and strengthening its financial position, Velan can better capitalize on growth opportunities in the clean energy sector and other markets. As an investor, keeping an eye on Velan's progress and potential future developments could prove to be a lucrative strategy.