H2O Innovation Acquires the Groupe OxydH2O Companies

Sept. 20, 2002

H2O Innovation (2000) Inc., a leading Canadian company in the application of innovative solutions for the treatment of drinking water and wastewater, has completed the acquisition of the common and preferred shares of OxydH2O Canada, Inc., Les Systèmes Bioflo, Inc., and 3765415 Canada, Inc. (Groupe OxydH2O). This agreement follows the agreement in principle announced May 30th and the terms of the transaction allowing H2O Innovation to acquire both knowledge and expertise in wastewater treatment.

As part of the terms and conditions of the transaction, H2O Innovation agreed to issue a total of 4,040,953 common shares at a price of $0.30 per share upon closing of the acquisition of the Groupe OxydH2O companies and for ancillary transactions associated with FondAction CSN, Almasa Capital, Inc. and the initial shareholders of Les Systèmes Bioflo, Inc. As part of the transaction, an additional private placement of $300,000 at $0.30 per share with a half warrant at $0.40 per share for 18 months has been completed. In addition, FondAction also will exercise 625,000 of its existing warrants at $0.30 per share for a total amount of $187,500. All shares issued by H2O Innovation both for the acquisition and the private placement are subject to a 12-month holding period following the closing date of this transaction.

The agreement with the principal shareholders

Total cost of this acquisition is $1,130,000. This includes a cash component of $159,094 and a further issuance of 963,685 common shares of H2O Innovation for a value of $289,105 to the principal shareholders of the Groupe OxydH2O companies, both to be paid upon closing. The company undertook to pay the remaining $681,801 in shares over a 3-year period conditional on meeting sales objectives for the Groupe OxydH2O. Issue price will be based on the weighted average for the 20 days preceding any annual additional issuance date. The major shareholders involved are Mr. Jean-Jacques Demers, OxydH2O president; Mrs. Lise Nantel, OxydH2O vice president; FondAction CSN; and the initial shareholders of Les Systèmes Bioflo, Inc.

As a part of this acquisition, H2O Innovation has paid off an OxydH2O loan from FondAction CSN in the amount of $396,486 (principal and interests) as well as debts towards Almasa Capital Inc. in the amount of $45,833.

Benefits of the transaction

This acquisition will enable H2O Innovation to further develop in the municipal, industrial, agro-food, residential and tourist water sectors as OxydH2O/Bioflo are already recognized specialists in these areas of used water treatment with their "turnkey" biological treatment using fixed film growth.

The acquisition will also increase the company’s product line with the addition of certain additional products already certified "standard" by the ministère de l’Environnement du Québec et le ministère des Affaires municipales et de la Métropole du Québec, for the treatment of wastewater. The acquisition also will further add to the company's existing sales order book.

H2O Innovation, in the summer of 2002, announced the conclusion of $1,105M worth of contracts including $655,000 for the design and manufacturing of a waste water treatment system for the Alger Sheraton Hotel in Algeria.

H2O Innovation (2000) Inc. designs, develops and markets a complete package of products and services for the treatment of drinking water and waste water through the perfecting of membrane filtration systems, biological procedures and physical treatment alternatives which are environmentally friendly.

Source: H2O Innovation (2000), Inc.

Image by Burnham RNG, courtesy twentytwo & brand.