Mr. Hadi Abassi reports

ATLAS ENGINEERED PRODUCTS ANNOUNCES ACQUISITION OF A TRUSS AND WALL PANEL MANUFACTURER IN NEW BRUNSWICK, CANADA

Atlas Engineered Products Ltd. has completed the acquisition of Leon Chouinard et Fils Co. Ltd./Ltee. (LCF) located in New Brunswick, Canada. LCF is a manufacturer of roof trusses, floor systems and wall panels, and a supplier of engineered wood products (EWP).

"We are excited to announce the acquisition of our eighth manufacturing facility. Now is the time to move forward with a strategic acquisition that expands our reach into a new location as we continue to grow our national footprint," said Hadi Abassi, chief executive officer, president and founder of the company. "LCF fits nicely into our overall, long-term strategic plan and we are excited they have joined the AEP group of companies. The company is currently reviewing a number of additional acquisition targets and will maintain a disciplined approach to acquiring new manufacturing facilities that fit our long-term goals."

This transaction is aligned with the company's strategic acquisition plan and expands the company's geographical reach, as well as growing its wall panel manufacturing expertise and capacity. In 2022, LCF generated over $25.7-million in revenues, net income of over $6.3-million and non-IFRS (international financial reporting standards) measure normalized EBITDA (earnings before interest, taxes, depreciation and amortization) of approximately $9.47-million. Moving forward, Atlas Engineered anticipates being able to bring its considerable operating synergies and material buying power to LCF's operations as it integrates LCF into the Atlas Engineered group of companies.

The acquisition of LCF was completed effective Aug. 23, 2023. To acquire all the issued and outstanding shares of LCF, the company paid a purchase price of $26-million plus $2,884,737 ($28,884,737 total) in net closing adjustments for LCF's cash, income taxes receivable and payable, and working capital excluding inventory as at June 30, 2023. The purchase price includes the land and buildings on which LCF's facilities are located which have been appraised at $2,792,000. The purchase price was paid by:

1. The issuance of 1,739,129 common shares in the capital of the company having a value of $2-million at a price of $1.14 per share to certain shareholders of LCF;
2. Payment of $26,884,737 in cash, financed using a combination of the company's existing cash and bank financing through the company's existing banking relationships with a major Canadian chartered bank. The bank financing consists of a term loan and mortgage for $22.4-million, having a term of five years with an amortization period of 10 years for the term loan and 25 years for the mortgage. Both the term loan and the mortgage will bear interest at the bank's prime rate of interest plus an additional amount determined based on the company's quarterly debt to EBITDA ratio. At closing, the interest rate applicable is expected to be prime plus 25 basis points. The amounts advanced are secured by the company's assets as well as mortgages over the facilities in Lantzville, B.C., and Eel River Crossing, N.B. The company opted to finance this acquisition mainly with debt to preserve majority of its cash for future strategic plans.

The purchase price for LCF is subject to additional postclosing adjustments based on LCF's working capital, inventory, cash and income taxes payable/receivable at closing. The consideration shares issued to former shareholders of LCF are subject to a hold period of four months plus one day from the closing date of the acquisition.

About Atlas Engineered Products Ltd.

Atlas Engineered is a growth company that is acquiring and operating profitable, well-established operations in Canada's truss and engineered products industry. It has a well-defined and disciplined acquisition and operating growth strategy enabling it to scale aggressively and apply new technologies, giving the company a unique opportunity to consolidate a fragmented industry of independent operators.

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