Abakan Inc., an emerging leader in the advanced coatings market, is pleased to announce that, following its long term strategy, Abakan has increased ownership in subsidiary, MesoCoat Inc. to 100%.
In exchange for 20.5% of Abakan's minority ownership in Powdermet Inc. (from 24.1% to 3.6%), Abakan has acquired from Powdermet: the remaining 11.9% of MesoCoat, along with land and equipment worth $550,000, the extinguishment of existing inter-company debt of $486,000, the return of 400,000 outstanding Abakan common shares to authorized capital and $1,000,000 in cash.
"Obtaining 100% ownership of MesoCoat along with owning the 5.7 acres of land where our clad pipe manufacturing facility sits and on which we plan to build a 160 ton/year PComP powder production facility were some of Abakan's goals for CY 2015. This transaction also transfers ownership of necessary PComP powder production equipment from Powdermet to MesoCoat, in addition to 6 cash payments over 5 months totaling $1,000,000 which will be utilized in part to fund capital expenses for the PComP facility. PComP testing and recent sales have been very successful so we expect to meet the growing demand for this product with increased production capacity. When constructed, the new plant running at full capacity would be able to increase annual revenues by approximately $20,000,000," said Abakan CEO, Robert Miller.
The decision to divest a significant portion of Abakan's ownership of Powdermet, was mutually agreed upon by the respective Boards of Abakan and Powdermet, and is the culmination of the staged acquisition of MesoCoat planned as part of Abakan's initial investment in 2009. The price per share of the latest conversion of Abakan's investment in MesoCoat is equal to the last price at which Abakan converted invested capital to equity in May 2014. Abakan originally purchased a 41% interest in Powdermet specifically because of the MesoCoat shares owned by Powdermet. The 41% interest was purchased from Kennametal Inc., in March, 2011 for $1,700,000, of which 37.4% has now been returned to Powdermet in two separate transaction for an approximate value to Abakan of $10,000,000, based on the same value per share calculated in the valuation of MesoCoat relied upon Abakan's May 31, 2014 year end audit, translating into an effective return on investment of around 500%.