TORONTO — Versatech Group Inc. has sold its PaintPlas Inc. division to its former owners, who plan to expand the operation to include injection molding.
Versatech of Toronto had purchased the Ajax, Ontario, plastic and metal auto parts painter in 1997. It sold the business back to Richard Myron and Alan Medad and "settled existing disputes" with the two men, Versatech announced April 5.
Myron said the disputes involved financial obligations related to the 1997 purchase, but he would not provide further details.
Ian Macdonald, Versatech chief executive officer, said his firm will expand its painting capacity by either investing in its Concord, Ontario, molding and paint plant or by building a new facility. It will fulfill existing paint contracts through its Concord operation and by subcontracting work out to PaintPlas.
Macdonald said running PaintPlas was not cost effective — that it makes the most sense to do molding and painting under one roof. As a separate facility, PaintPlas created problems with logistics and accountability, he said in a telephone interview.
Macdonald estimated the total purchase price at about C$48 million (US$33.1 million), including interest-bearing bank debt, notes, preference share notes, working capital and a foregiveness of PaintPlas fees and debts.
Versatech claimed a C$24 million (US$16.6 million) gain on the sale and a reduction in its debt obligations by C$43 million (US$29.7 million).
Myron said PaintPlas owns 5 acres adjacent to its Ajax plant and it plans to build an injection molding facility attached to the painting operation.
He said a timetable still is being worked out as the company's owners work on PaintPlas' new debt structure.
PaintPlas also runs a warehouse and light assembly plant in nearby Pickering, Ontario.