Velan Announces Major Strategic Initiatives Investing.com

• Enters into a definitive agreement with an affiliate of Global Risk Capital to terminate its asbestos-related liabilities at a cost of US dollars143 million
• Enters into exclusive negotiations with Framatome to sell its French subsidiaries for a purchase price of US$175.2 million ( €170 million), in favor transfer of intercompany loan from US$23.2 million ( €22.5 million), for full compensation to Velan from the US$198.4 million ( €192.5 million)

MONTREAL, Jan. 14, 2025 (GLOBE NEWSWIRE) — Velan Inc. (TSX: VLN) (Velan or the Company), a leading global manufacturer of industrial valves, today announced major strategic initiatives that will significantly reduce operational and financial risks as well as strengthen its financial position. All amounts are in US dollars unless otherwise stated.

We believe these two transactions are key to unlocking Velan’s inherent value, and we are thrilled with the outcome, which makes us a financially and operationally stronger company going forward. The release of asbestos-related liabilities will allow Velan to confidently move forward with the execution of its business plan, while the sale of French subsidiaries to local interests also supports the protection of French sovereign interests, said James A. Mannebach, chairman and CEO of Velan.

Beyond these transactions, the company will continue to be a leader in flow control solutions for clean energy and other industrial sectors driven by its strong brand, high quality products and superior market positioning combined with expertise in demanding applications. Our activities will also benefit from strong momentum in the clean energy sector, including nuclear, which is undergoing a multi-year growth cycle worldwide. We remain well positioned in this market with our own offering of valves for small modular reactors, together with our global base of installed products on existing nuclear reactors. In addition, we are firmly rooted in other markets driven by global energy transition trends. Consequently, we intend to focus on the execution of our strategic plan and are committed to delivering sustainable profitable growth. The company continues to consider opportunities to increase value for our shareholders, added Mr. Mannebach.

These transactions would meet two key financial objectives, namely de-risking and resolving our asbestos-related liabilities through a sale transaction and strengthening our balance sheet. After their closure, Velan would be almost debt-free, allowing for greater investment in growth opportunities. Ultimately, the successful completion of these initiatives would offer significantly higher value to all of our shareholders, said Rishi Sharma, chief financial and administrative officer of Velan.

DISCHARGE OF VELAN’S ASBESTOS LIABILITIES

Velan entered into an agreement (Asbestos Sale Agreement) with an affiliate of Global Risk Capital (Buyer) to permanently release its asbestos-related liabilities (Asbestos Sale Transaction (YOU:)). Global Risk Capital is a long-term liability management firm specializing in the acquisition and management of legacy corporate liabilities. The asbestos sale transaction will be accomplished by Velan selling its existing US subsidiary, Velan Valve Corp., which will be capitalized with $143 million (subject to certain adjustments) from Velan and $7 million from the Buyer. The asbestos sale transaction will permanently remove all asbestos-related liabilities from Velan’s balance sheet and will indemnify Velan for all legacy asbestos-related liabilities. Velan plans to finance the Asbestos Sale Transaction using available cash and a portion of the proceeds from the sale of its French subsidiaries listed below. The company will retain its US operations and continue to conduct its US activities under the newly established subsidiary.

Closing of the Asbestos Sale Transaction is subject to securing financing and other customary closing conditions. If the France Transaction (as defined below) is not completed, the Company will seek alternative financing options for the Asbestos Sale Transaction.

The asbestos sale transaction is expected to result in a one-time non-cash earnout charge of approximately $67 million, before any taxes.

SALE OF FRENCH BRANCHES

The Company’s wholly-owned subsidiary, Velan Valves Limited, has entered into a Memorandum of Understanding (MoU) relating to the sale of 100% of the share capital and voting rights of its French subsidiaries, Segault SAS (Segault) and Velan SAS (Velan France), to Framatome SAS (Framatome), a world leader in nuclear energy, for a purchase price of USD 175.2 million (EUR 170 million), with the benefit of the transfer intercompany loan of USD 23.2 million (EUR 22.5 million), for a total compensation to the Company of USD 198.4 million (EUR 192.5 million) (transaction France).

In accordance with French law, Segault, Velan France and Framatome will notify and consult their employee representative bodies before entering into any final agreement between the parties.

Completion of the transaction in France under the definitive agreement would be subject to approval by Velan’s shareholders. Velan Holding Co. Ltd. (Velan Holding), the controlling shareholder of Velan, entered into a voting and support agreement with Velan in connection with the approval of the Transaction in France.

If and after the definitive agreement is signed, a meeting of Velan’s shareholders (the Meeting) will be convened to consider and approve the Transaction in France. Additional information regarding the French transaction will be contained in a management information circular that will be distributed in connection with the meeting.

COUNSELORS

In connection with the Asbestos Sale Transaction, Ducera Partners LLC is acting as the exclusive financial advisor to the Company. Latham & Watkins LLP provided legal advice in connection with the Asbestos Sale Transaction and related corporate matters. Davies Ward Phillips & Vineberg LLP is also acting as legal counsel to the Company. Jones Day acts as legal advisor to Global Risk Capital.

In connection with the France Transaction, BMO Capital Markets is acting as financial advisor to the Company and Davies Ward Phillips & Vineberg LLP and Bredin Prat are acting as legal advisors to the Company. McCarthy Tétrault LLP is acting as legal advisor to Velan Holding and Jones Day is acting as legal advisor to Framatome.

About VELAN

Founded in Montreal in 1950, Velan Inc. (www.velan.com) is one of the world’s leading manufacturers of industrial valves, with sales of USD 346.8 million in its last fiscal year. The company employs 1,617 people and has production facilities in 9 countries. Velan Inc. is a public company whose shares are listed on the Toronto Stock Exchange under the symbol VLN.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this press release are forward-looking statements within the meaning of applicable securities laws, including, but not limited to, statements relating to the Board of Directors’ reasoning for approving the Asbestos Sale Agreement and the Memorandum of Understanding, the expected benefits of the Transactions, the timing of the various steps to be taken in connection with the Transactions, the prospects of the Company after the completion of the Transactions as a company in the nuclear valve space in North America and the rest of the world, excluding France, and other statements that are not material facts. Often, but not always, forward-looking statements can be identified by the use of forward-looking terminology such as may, will, expect, believe, estimate, plan, could, should, would, outlook, forecast, anticipate , anticipate, continue or negative of these terms or variations thereof or similar terminology.

Although the Company believes that the forward-looking statements in this press release are based on information and assumptions that are current, reasonable and complete, these statements are by their nature subject to a number of factors that may cause actual results to differ materially from management’s expectations and plans. as set forth in such forward-looking statements, including, without limitation, the following factors, many of which are beyond the Company’s control and the effects of which are difficult to predict: (a) the possibility that the Transactions will not be completed on terms and conditions or on time; schedule, which is currently under consideration, and may not be completed at all, due to the failure to obtain or satisfy, on a timely basis or otherwise, the required shareholder approval or for other reasons; (b) risks related to tax matters; (c) the possibility of unwanted reactions or changes in business relations resulting from the announcement or completion of Transactions; (d) the possibility of litigation related to the Transactions; (e) credit, market, currency, operational, liquidity and funding risk generally and specifically relating to the Transactions, including changes in economic conditions, interest rates or tax rates; and (f) other risks inherent in the Company’s operations and/or factors beyond its control, which could have a significant negative effect on the Company or the ability to execute Transactions.

Readers are cautioned not to place undue reliance on the forward-looking statements and information contained in this press release. Velan disclaims any obligation to update any forward-looking statements contained herein, whether as a result of new information, future events or otherwise, except as required by law.

Source: Velan Inc.