Acquisition of Ultima Labs
Sondex PLC
29 September 2006
Friday 29th September 2006
Sondex plc
("Sondex" or the "Group")
Acquisition of Ultima Labs Inc
Sondex plc announces the acquisition of Ultima Labs Inc ("Ultima Labs"), a
private Houston based technology development company with a range of IP and
products related to Logging While Drilling ("LWD") and Wireline applications for
the oilfield service industry, for a consideration of up to US$9.225 million
(£4.855 million), including sales related earn-out.
Ultima Labs is a technology development company based in Houston, USA. The
primary product that has been developed and is in the process of being
commercialised is for LWD involving multiple depth resistivity measurements of
the rock formations and their fluid content in order to asses the potential for
oil or gas production. This technology is a complementary, next step,
measurement for the existing LWD tools provided by Sondex drilling division.
Ultima Labs have a Memorandum of Understanding to provide these products, with
an initial order to the value of $4.5 million, to a Chinese company that is also
an existing customer of Sondex.
The management of Ultima, who have extensive experience in technology
development for both wireline and drilling applications will remain with the
business and participate in the integration of the technology and development of
future product lines.
Consideration
The maximum consideration of US$9.225 million (£4.855 million) will be settled
as follows:
1. At completion a payment in cash of US$1.65 million (£0.87
million);
2. On each of the first and second anniversaries of completion
a cash payment of US$1.5 million (£0.79 million);
3. A payment of up to US$2.25 million (£1.18 million)
depending on Ultima Labs achieving certain milestones related to the development
and sales of Ultima's CPR Tool, such amount to be satisfied by the issue of up
to 415,584 ordinary shares in Sondex; and
4. Earn-out payments of up to an aggregate maximum of US$2.325
million (£1.224 million) paid annually in cash over a maximum of five years as a
royalty from sales of specified Ultima products.
Funding for the maximum consideration and projected working capital requirements
has been arranged through an extension to the existing bank facilities with the
Bank of Scotland.
* using an exchange rate of £1: $1.9
Martin Perry, Chief Executive of Sondex, commented:
"This acquisition is an excellent strategic fit with Sondex's drilling division.
Ultima Labs have an innovative highly regarded product range with strong IP
protection as well as an extremely skilled and experienced development team,
they will add to the range of high technology products that we can offer to our
existing and new clients across the world."
For further information, please contact:
Sondex Tel: 01252 862 200
Martin Perry (Chief Executive)
Chris Wilks (Finance Director)
Investec Tel: 020 7597 5000
James Grace / Patrick Robb
College Hill Tel: 020 7457 2020
Nick Elwes / Paddy Blewer
www.sondex.com
For further information about Ultima Labs please visit:
www.ultimalabs.com
This information is provided by RNS
The company news service from the London Stock Exchange
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