NEWMARKET, Ontario—AirBoss of America Corp. said Jan. 2 it has closed on the merger between its AirBoss Defense businesses and Critical Solutions International Inc. to create AirBoss Defense Group.
In its news release, AirBoss said the new entity will be a "dedicated defense player better positioned to capitalize on emerging opportunities."
The Jan. 1, 2020, transaction saw AirBoss operations in Acton Vale, Quebec, merge with CSI, a privately owned, Charleston, S.C.-based company that supplies route clearance vehicles as well as countermine capability and survivability products to U.S. and foreign military forces.
"We have developed strong relationships with militaries, legislators and manufacturers globally, ideally placing us to identify, tender and win high-value contracts around the world," said Patrick Callahan, CEO of AirBoss Defense Group and former CEO of CSI. "In a period of record U.S. defense spending budget allocations, combined with high levels of geopolitical instability around the world, we feel we are very well positioned to capitalize on an even broader array of opportunities to grow the new combined business going forward."
AirBoss contributed shares of AirBoss Engineered Products Inc. and the membership interests of Immediate Response Technologies L.L.C.—a Landover, Md.-based company acquired by AirBoss in July 2015—to the Canadian and U.S. entities that now comprise AirBoss Defense Group, according to the firm's news release. Critical Solutions Holdings Inc., the parent of CSI, has contributed all of the shares of CSI to the new business, according to AirBoss.
AirBoss said that its contribution in ADG is valued at $100 million while CSH's was valued at $32.7 million. AirBoss will receive 55 percent of the equity in AirBoss Defense Group and $60 million in the form of a vendor take-back note, while CSH will hold a 45-percent equity interest in the new business.
The $60 million vendor take-back note is secured against "the assets and equity of ADG," according to AirBoss, and matures Jan. 1, 2026.
The New Year's Day merger also offers "financial flexibility to fund planned capital expenditures and target potential acquisitions," AirBoss said.
In addition, AirBoss said it has amended its credit facilities to add the AirBoss Defense Group entities as borrowers, providing ADG with up to $15 million in revolving credit. Lenders consist of Toronto-Dominion Bank, National Bank of Canada, Comerica Bank and J.P. Morgan, AirBoss said. Aggregate availability on these credit facilities will be about $120 million.
Heather Miller, former chief strategy officer at CSI, continues in the same capacity for AirBoss Defense Group, while Chris Bitsakakis, president and chief operating officer of AirBoss, will be COO at ADG.
"This transaction offers us enhanced scale and improved flexibility to drive even greater levels of value creation in the future," Bitsakakis said. "We expect ADG to grow through a combination of organic initiatives, including new and next-generation product development, as well as acquisitions that add new solutions, relationships and customers to the business."