Bayside Capital Corp., a publicly held Canadian holding company that has invested in plastics processors, plans to merge with a Hong Kong-based injection molding firm. Bayside has agreed conditionally to acquire the shares of Pearl River Plastics Ltd., resulting in a reverse takeover of Bayside, which is listed on the Alberta Stock Exchange in Calgary, Alberta.
``Bayside is buying the Pearl River factory in China for $19.5 million and issuing shares of stock to raise enough capital,'' Bayside President George Lunick said in an interview from his London, Ontario, office.
Bayside plans to acquire the shares of Hong Kong-based Pearl River in exchange for 19,546,798 new Bayside consolidated common shares worth $1 each, contingent on approvals by Alberta regulators and Bayside shareholders.
Pearl River investors ``will end up with about 90 percent of Bayside after the two companies are merged,'' Rodney Bell, executive chairman of Pearl River, said in a separate interview.
In addition, Bayside shareholders will vote, probably in February, on possible changes of corporate name and outside auditor and a consolidation of Bayside's existing stock. Bayside directors George Lunick and Mark Lunick will remain on the board with four appointees of the Asian private investment holding company.
Pearl River raised US$4.5 million through two private placements of special warrants to meet funding obligations for its joint venture Guangzhou Rodman Plastics Co., which operates in Guangzhou in the People's Republic of China. Pearl River is incorporated in the British Virgin Islands and owns 64 percent of Guangzhou Rodman.
The joint venture employs 450 and forecasts 1996 sales of US$22 million, up from $20.5 million the previous year. The venture has a factory and five sales outlets in Guangzhou.
The venture recently has expanded its molding operations with US$2.3 million in equipment from Mitsubishi Heavy Industries of Nagoya, Japan. Guangzhou Rodman in November took delivery of two 650-ton and two 850-ton injection molding machines, plus a single 1,300-ton and 2,500-ton machine in December. The venture operates 28 other machines with clamping forces of 3-1,000 tons to produce industrial pallets, large trash containers, heavy-duty aprons and gardening equipment.
The new machines will increase the factory's annual injection molded output by about 25 percent, Bell said.
Separately, the venture is negotiating with Bemis Manufacturing Co. to make toilet seats and other products at the factory in Guangzhou.
``This expected long-term relationship will involve considerable transfer of technology,'' Bell said. Bemis, based in Sheboygan Falls, Wis., has annual sales of about $200 million.
Bayside Capital acquired custom injection molder Exacu-Mould Inc. of London, Ontario, on Jan. 18. Exacu-Mould employs 15, operates nine presses with clamping forces of 25-400 tons and supplies the appliance, business machine, consumer goods and medical markets.