Quickstep Completes Middle East Agency Agreement and Secures A$10Million to Underpin Future Growth
- Agency Agreement signed with Al Sahel Trading Agencies LLC ("Al Sahel"), a subsidiary of Al Farida Investments Company LLC, ("Al Farida") a diversified conglomerate headquartered in Abu Dhabi, United Arab Emirates ("UAE").
- Under the Agency Agreement the two companies are proposing to assist numerous other companies in the Middle East to actively pursue aerospace manufacturing contracts within the region's rapidly expanding aerospace sector.
- In addition, a A$10m Convertible Loan Agreement has been signed with Al Farida to fund ongoing growth and expansion.
- The Al Farida loan to Quickstep is interest free and may be converted by the lender into up to 50 million Quickstep fully paid ordinary shares at an issue price of 20 cents per share.
- On full conversion, Al Farida could potentially become one of Quickstep's largest shareholders.
International advanced composites group Quickstep Holdings Limited (ASX: QHL - "Quickstep") has secured two key agreements with Abu Dhabi-based diversified conglomerate, Al Farida Group, to support the Company's future growth, today announcing it has signed an Agency Agreement to promote sales in the United Arab Emirates, Saudi Arabia and other Middle East countries, along with a A$10 million Convertible Loan Agreement.
Al Farida has interests spanning the Gulf region, with active involvement in hospitality and hotels; retail, commercial and residential real estate; as well as engineering services; facilities management; and general trading. Al Farida's wholly owned subsidiary, Al Sahel Trading Agencies LLC, has agreed to act as the exclusive representative for Quickstep within the UAE and wider region for a minimum of two years, and to promote Quickstep's services to potential customers. Al Sahel is part of the trading arm of Al Farida. Al Sahel works to identify trade opportunities and consumer demand in the Gulf and aims to match this with international companies providing specialist services and products.
"These agreements come at a most opportune time for Quickstep, with the Company's three new autoclaves at our headquarters in North Coogee, Western Australia, due for final commissioning this month, and with the first commercial production from the Company's patented composites manufacturing process due to commence this year," said Quickstep's Chief Executive Officer, Mr Philippe Odouard.
The appointment of a local trading agent enables Quickstep to carry out business in the UAE. "Al Farida's expertise has already proved invaluable with Al Sahel and Quickstep already having identified a number of significant and highly promising manufacturing opportunities," Mr Odouard said.
Executive Vice Chairman and Managing Director of the Al Farida group, Sheik Hamed bin Ahmed Al Hamed, said, "We believe Quickstep represents an excellent funding opportunity, which will provide Al Farida with the prospect to access the very rapid growth in the region's multi-billion dollar global aerospace manufacturing industry."
"There are numerous companies in the UAE and elsewhere in the Middle East that are aggressively targeting aerospace manufacturing contracts within the region's rapidly expanding aerospace sector," he said. "These companies are aiming to become the hub of the aerospace industry in the region, and we believe Quickstep can offer key manufacturing solutions, knowledge and capability - using both the Quickstep Process and autoclave curing solutions - to assist them to achieve this goal. We see this region as a major potential contributor to Quickstep's future growth," he said.
Under the terms of the Convertible Loan Agreement, Al Farida or its nominee will lend up to A$10 million to Quickstep in tranches of up to A$2 million which can be drawn at intervals of at least 90 days, at Quickstep's discretion, with the first A$2 million to be made available 60 days after execution of the agreement. The term of the loan facility is two years from the date of and no interest is payable on the loan. Al Farida may elect to convert all or part of the outstanding balance of the loan into Quickstep shares at an issue price of 20 cents per share at any time. On expiry of the loan, Al Farida may either elect to convert the outstanding balance of the loan into Quickstep shares or seek repayment of the outstanding loan balance.
Given that conversion of the loan into shares could require Quickstep to issue more than 15% of its current issued capital, and could result in Al Farida potentially obtaining a relevant interest in more than 20% of Quickstep's shares., Quickstep will seek shareholder approval to Al Farida's conversion rights under the facility. Accordingly, a general meeting of Quickstep shareholders will be arranged as soon as practicable and further details regarding the convertible loan agreement will be set out in the notice of meeting. The loan itself is not subject to shareholder approval.
The Convertible Loan Agreement with Al Farida is independent of the Agency Agreement with Al Sahel and the funding is not contingent on Quickstep securing any business in the UAE or wider region.
"These agreements provide a very exciting opportunity for us to cement Quickstep's move to aerospace manufacturing in Australia, while also providing the Company with access to potential new business in a major new growth market in the Middle East," Mr Odouard commented.
"The $10 million funding agreement represents a major milestone for Quickstep's growth," he added. "We are delighted to have secured the support of Al Farida, particularly in light of the significant business opportunities we believe are available for Quickstep within the rapidly-expanding aerospace industries in the UAE and wider Middle East region.
"With Quickstep poised to shortly commence aerospace manufacturing from its headquarters in North Coogee, Western Australia, this funding facility means the Company is now exceptionally well positioned for future growth."
Australian-based Quickstep Holdings Limited (ASX Code: QHL) is an advanced materials company which owns a scalable platform for the energy efficient manufacture of performance efficient composite materials.
Composites combine high strength with light weight and are key materials in aerospace, automotive, marine, defence, public transport and industrial applications. The global composites parts market is growing strongly, reflecting a shift towards the greater use of composites as an increasingly desirable replacement for metals in many applications because of their high strength and reduced weight.
Quickstep's proprietary process is based around a fluid-based curing technology that significantly reduces the cost and time involved in the production of composites compared with conventional processes. Quickstep has been at the leading edge of the growing need to reduce part costs since the early 1990s, with a significant investment in the development of the Quickstep Process over the past decade.
Quickstep already has automated Quickstep pilot production facilities operating at five separate locations with, aside from its own plant in Fremantle, West Australia; one at the Victorian Centre for Advanced Materials Manufacturing (VCAMM) in Geelong; a third at the North West Composites Centre (NWCC) in Manchester, England in conjunction with the University of Manchester; a fourth in the US at Dayton, Ohio, the birthplace of the aviation industry; and a fifth machine located inside the European Aeronautic Defence & Space Company (EADS) group facilities in Munich, Germany, to support a Cooperation & Development Agreement with Eurocopter, the world's largest helicopter manufacturer, signed in May 2007.
Quickstep's business model is to manufacture composite parts using Quickstep technology or other traditional technologies; licensing, including technical support and machine supply; and joint venture manufacturing arrangements with leading composites manufacturers, Original Equipment Manufacturers (OEM's), Tier One suppliers and contract development in composite.
Quickstep is listed on the Australian Stock Exchange, following an IPO in 2005. The Company's North Coogee Aerospace Manufacturing Facility is scheduled to achieve commercial readiness to commence manufacturing by mid March 2009, with an official opening to be held in April.