$20-million plant will employ 300 workers within five years
EDMONTON, ALBERTA, CANADA - Surface Engineered Products Corp., a subsidiary of The Westaim Corporation, today officially opened its $20-million surface engineering plant in Edmonton’s Ellerslie Technology/ Industrial Park development, located at the southern entrance to the city. The new plant presently employs more than 100 workers. That number is expected to rise to approximately 300 employees during the next five years.
“The plant opening represents a very important step for Surface Engineered Products as we are now able to produce our CoatAlloyTM line of products on a commercial scale,” said Ted Redmond, President of Surface Engineered Products. “The demand for our anti-coking products has already increased, requiring us to expand plant capacity six months ahead of schedule.”
The new plant will have an initial capacity of 50,000 feet (15,000 meters) per year of 2-inch (50-millimeter) diameter tubes. Due to increased demand, the company is expanding the plant’s capacity to 66,000 feet (20,000 meters) per year of 2-inch diameter tubes. Expansion is expected to be complete by the second quarter of 1999, instead of the previously scheduled time frame of the fourth quarter of 1999. With the expanded capacity, Surface Engineered Products will be able to service approximately 9 per cent of the North American ethylene industry.
“The City of Edmonton worked hard to ensure that Westaim’s Surface Engineered Products division located its new facility here,” said Edmonton Mayor Bill Smith. “Westaim’s decision is an endorsement of our ability to supply highly trained employees, and also of the pro-business atmosphere we have created here in Edmonton.”
The company also announced today it has received an order for its CoatAlloyTM tubes and fittings from BASF AG. Surface Engineered Products will provide its anti-coking products to retube a full furnace in BASF’s ethylene plant in Ludwigshafen, Germany, site of the world’s largest petrochemical complex. BASF is the first European ethylene producer to install Surface Engineered Products’ revolutionary anti-coking products. The installation will take place in May 1999. The build-up of coke or carbon in furnace tubes is a major problem for ethylene producers because it leads to costly decoking steps, reduces efficiency of operation and increases the rate of metal corrosion and erosion. The coking problem is estimated to cost the worldwide ethylene industry more than $2 billion annually in lost production alone.
The Product
Surface Engineered Products’ CoatAlloyTM tubes and fittings have been shown to reduce the rate of coking or carbon build-up in ethylene pyrolysis furnace tubes by up to 90 per cent, leading to longer and more economical ethylene production runs. CoatAlloyTM-I tubes and fittings, the first generation product, can increase the throughput of ethylene plants by 2 per cent to 8 per cent, and lead to lower unit production costs and increased profitability for ethylene producers.
The CoatAlloyTM anti-coking products consist of standard commercial-alloy steel tubes and fittings whose inner walls are resurfaced using Surface Engineered Products’ proprietary technology. The selected tubes and fittings are sourced from major producers in Japan, Europe, Canada and the United States, and have an established performance record in their original condition. When resurfaced with Surface Engineered Products’ technology, they provide significant value-added performance to an ethylene plant.
The Market
Ethylene demand is growing rapidly as products derived from ethylene are displacing conventional materials in packaging, building materials, automotive and other applications. World production of ethylene is forecast to grow from 73 million tonnes in 1996 to more than 100 million tonnes by 2005.
Ethylene producers currently consume $400 million per year of tubular products worldwide and are projected to consume $600 million per year by 2005. The market is typically 80 per cent for maintenance or retubing of existing furnaces and 20 per cent for new installations.
Shareholder Rights Plan
Westaim also announced that its Board of Directors has approved the adoption of a Shareholder Rights Plan designed to ensure the fair treatment of shareholders in the event of a take-over offer for the common shares of Westaim. This action has been taken as part of the Board’s fiduciary responsibility to shareholders and is not in response to any specific effort to acquire control of the company. The plan is subject to regulatory approval, and must be approved at Westaim’s annual and special meeting of shareholders on April 28, 1999. Full details of the plan will be included in the proxy circular that will be sent to all shareholders prior to the annual and special meeting.
The plan will provide Westaim's Board and shareholders more time to evaluate any unsolicited take-over bid and, if appropriate, to seek out alternatives to maximize shareholder value. The plan will be in effect for six years, but must be reconfirmed by shareholders after a three-year period.
Under the plan, one right is issued and attaches to each outstanding common share at no cost. Rights issued under the plan become exercisable only when a person, including certain related persons, acquires or announces their intention to acquire 20 percent or more of Westaim's outstanding common shares without complying with the "permitted bid" provisions of the plan or without the approval of Westaim's Board. Should such an acquisition occur, each right, if exercised, would entitle the holder, other than the acquiring person and persons related to it, to purchase Westaim's common shares at a price equal to half their current market value.
A "permitted bid" or offer for Westaim's common shares must be made to all shareholders. The offer must remain open for at least 60 days and must be accepted by a minimum of 50 per cent of the shares not already held by the bidder. If this occurs, the bidder may take up and pay for tendered shares, but must extend the offer for another 10 days. This will allow shareholders sufficient time to consider the bid and any other available options. It also gives Westaim's Board time to consider alternatives and make recommendations to shareholders. Westaim's plan is similar to plans adopted recently by a number of other Canadian companies.
About Westaim
The Westaim Corporation specializes in launching high-potential technologies into the marketplace. In addition to Surface Engineered Products, Westaim’s other technology businesses include: Westaim Biomedical Corp., which has developed an infection control technology for use in the treatment of wounds; and Westaim Advanced Display Technologies Inc., which is developing a revolutionary low-cost flat panel display. Westaim also operates three industrial businesses which produce aerospace materials, coin blanks and chemical products. A TSE 300 company, Westaim’s common shares are listed on The Toronto Stock Exchange, The Alberta Stock Exchange and The Montreal Exchange under the trading symbol WED.
*CoatAlloy is a trademark of Surface Engineered Products Corp.
For more information, contact:
Tony Johnston
Senior Vice President, Corporate Affairs
(403) 234-3103
tjohnsto@westaim.com
website: www.westaim.com
e-mail: info@westaim.com
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