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Atlas Engineered Products Ltd
Symbol AEP
Shares Issued 59,446,981
Close 2024-04-02 C$ 1.48
Market Cap C$ 87,981,532
Recent Sedar Documents

Atlas Engineered repays $1.08M of BDC loans

2024-04-03 12:40 ET - News Release

Mr. Hadi Abassi reports

ATLAS ENGINEERED ANNOUNCES PRINCIPAL DEBT PREPAYMENT OF $1.08 MILLION AND BUSINESS UPDATE - NEW WALL PANEL ORDER

Atlas Engineered Products Ltd. has made a principal debt prepayment of $1.08-million on its Business Development Bank of Canada (BDC) loans.

The BDC loans were entered into February of 2019 to finance the South Central Building Systems acquisition in March of 2019. The first loan was secured by the land and building of South Central and was initially to be amortized over 256 months. The second loan was secured by the equipment of South Central and was initially to be amortized over 100 months.

These loans were recently generating interest at 7.8 per cent and 9.3 per cent, respectively. As a result of the debt prepayment, the company has paid off its debt with BDC. These loans would have had an interest expense of $86,000 for the fiscal year 2024 if they had not been paid off. Excess cash on hand was used to prepay the BDC loans. It was determined by the company that this was the best use of cash at this time, as these loans would have reset at higher rates than the initial five-year fixed interest rate, and the company will still have access to debt and further cash on hand for potential future organic and acquisitive growth.

Business update

The company has secured its first large wall panel order out of its Atlas Building Systems (ABS) location in Nanaimo, B.C., and has already begun manufacturing and shipping for this project. This is a positive sign that premanufactured wall panels are becoming accepted in an area and industry where contractors traditionally stick-frame walls on site with framing crews. Premanufactured wall panels save a contractor from finding labour or framing crews in this difficult construction labour market, and can save significant time and money on a build. The time and labour savings could help contractors build more homes more efficiently, which would help alleviate Canada's housing shortage, and complete their projects quicker and realize their profits sooner. ABS is looking forward to more projects in the future as the appeal and knowledge of premanufactured wall panels increases.

The company has also experienced a 30-per-cent increase in quoting from January to February of this year, indicating that construction activity and production is poised to grow for the last three quarters of the fiscal year after experiencing a more typical seasonal and cyclical slowdown recently compared with the previous few years. There continues to be a significant need for housing in Canada and management expects demand to increase with any lowering of interest rates.

About Atlas Engineered Products Ltd.

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

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