[Translation] | |
April 15, 2021 | |
To Whom It May Concern | |
Company Name: | OUTSOURCING Inc. |
Representative: | Haruhiko Doi |
Chairman and CEO | |
(First Section of TSE, Securities Code: 2427) | |
Contact: | Kazuhiko Suzuki |
Executive Vice President and | |
Executive General Manager | |
in charge of Business | |
Management Division | |
Phone: | +81-3-3286-4888 (main) |
Notice Regarding Acquisition of Equity Interest of California Pacific Technical Services LLC
OUTSOURCING Inc. (hereinafter "the Company") hereby announces that the Board of Directors, at its meeting held on April 15, 2021, resolved that consolidated subsidiary American Engineering Corporation (Delaware, USA, President: Kenneth Mark Exsterstein, hereinafter "AEC"), which is part of the Domestic Service Operations Outsourcing Business segment, will make California Pacific Technical Services LLC (Guam, USA, President: In Hui Yu-Healy, hereinafter referred to as "CalPac") a subsidiary, as per the details below.
1. Purpose of the acquisition of equity interest
For some time, the OUTSOURCING Group (hereinafter "the Group") has sought to strengthen its foundation of growth by smoothing its business performance and expanding its business in fields that have a different cycle from the highly volatile Manufacturing Outsourcing Business, and in Public Work Outsourcing Business, such as government-related businesses, which are less susceptible to impact from economic fluctuations. Even amidst the unprecedented COVID-19 pandemic, efforts to diversify our business and geographic portfolio have been successful.
AEC provides a wide range of services such as repair and maintenance services for buildings and equipment, as well as air-conditioning and electrical work construction services, primarily on U.S. military facilities throughout Japan. AEC has been successful in expanding operations since joining the Group through synergies, which enabled it to increase the allocation for performance bonds (project completion compensation insurance), which is a key factor in bidding for U.S. military construction projects, as well as credit rating and track record enabling it to win orders for large-scale projects.
CalPac is a market leader in IT infrastructure business in Guam and surrounding areas, building IT and light electrical equipment systems for private companies centered on the U.S. military, U.S. local governments, and the telecommunications industry. There are only a few small companies that can provide IT infrastructure services in this region, and the average annual growth rate from 2015 to 2019 is 16% for net sales and 61% for EBITDA, and it has extremely high growth potential.
Through this acquisition, the Group can expect synergies that will contribute to the expansion of Public Works Outsourcing Business, which is a primary measure of the growth strategy in the Medium-Term Management Plan. With CalPac joining the Group, AEC will be able to smoothly enter the IT / light electrical equipment systems market and expand its business in Guam. Further, we will continue to both expand and stabilize Group business through expansion into the Pacific Rim, which by extension brings into view full-scale entry into the significantly larger market on the U.S. mainland, accelerating growth of business for U.S. military facilities.
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[Translation]
2. Outline of the subsidiary acquiring the equity interest (AEC)
(1) | Company name | American Engineering Corporation |
(2) | Head office | 229 South State Street, Dover, Delaware, USA |
(3) | Name and title of | Kenneth Mark Exsterstein, CEO |
representative | ||
(4) | Major businesses | Domestic services/Outsourcing business |
(5) | Capital stock | USD 200 thousand |
(6) | Established | April 1964 |
3. Outline of the sub-subsidiary being transferred (CalPac) | ||
(1) | Company name | California Pacific Technical Services LLC |
(2) | Head office | 150 E. Harmon Industrial Park Road. Tamuning, Guam 96913 |
(3) | Name and title of | In Hui Yu-Healy, President |
representative | ||
(4) | Major businesses | Electrical and telecommunications construction work |
(5) | Capital stock | USD 2,925 thousand* |
(6) | Established | June 2000 |
* Value of members' Equity (employee capital equivalent to shareholders' equity, as of the end of FY12/19)
4. Equity interest being acquired and equity stake before and after the acquisition
(1) | Equity interest before | Equity 0% (Ratio of voting rights owned: 0%) |
transfer | ||
(2) | Equity interest being | Equity 100% |
acquired | ||
(3) | Equity interest owned | Equity 100% (Ratio of voting rights owned: 100%) |
after transfer | ||
5. Schedule | ||
(1) | Date of board of | April 15, 2021 |
directors resolution | ||
(2) | Date of agreement | April 15, 2021 (Scheduled) |
(3) | Date of equity interest | May 1, 2021 (Scheduled) |
acquisition | ||
6. Future outlook
Through this acquisition of equity interest, CalPac is expected to become a consolidated subsidiary of the Company in 2Q FY12/21. The impact of this matter on consolidated financial results for FY12/21 is negligible.
(Disclaimer with respect to earnings and other forecasts)
The forward-looking statements including financial outlook contained in this document are based on information currently available to the Company, and certain assumptions that the Company believes are reasonable. Accordingly, the Company can give no assurance that such statements will prove to be correct. Actual results may differ due to a variety of factors.
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[Translation]
(Reference) Consolidated financial forecasts for FY12/21 (announced on February 15, 2021) and consolidated financial results for FY12/20
(Unit: millions of JPY)
Profit | |||||
Revenue | Operating | Profit before | Profit for the | attributable to | |
profit | tax | year | owners of the | ||
company | |||||
FY12/21 | 528,000 | 25,100 | 21,400 | 14,200 | 12,800 |
forecasts | |||||
FY12/20 | 366,711 | 14,337 | 9,143 | 4,088 | 3,324 |
results | |||||
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Outsourcing Inc. published this content on 15 April 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 April 2021 08:32:05 UTC.