$21.5M sale of FOX-TEK to Mooncor signals a new day dawning for Augusta Industries
Augusta Industries Inc. (TSXV: AAO) is a Canadian company made up of two key subsidiaries – FOX-TEK and Marcon. The Company has recently sold FOX-TEK to Mooncor Oil & Gas Corp. Augusta is engaged in the development, design, manufacture and supply of systems using fiber optic sensors, related monitoring instruments, and software. These systems serve the needs of the oil and gas, power generation, chemical, mining, and civil structure market sectors worldwide.
An experienced management and technical team lead operations and expansion in North America and locations around the world.
Augusta Industries clients include Canadian Natural, Shell, Chevron, and Petron. Augusta has industrial relationships with many US Government departments including, the Department of the Interior, Homeland Security, US Army, US Navy, US Air force and NASA. Internationally clients also include Kuwait Oil Company and Qatar Gas.
Augusta Industries subsidiary FOX-TEK handles the installation and reporting of information on an outsourcing basis. FOX-TEK also provides support engineering services related to planning, training, on-site installation, and data interpretation and reporting.
On May 28th, the Company announced the sale of one of its’ two subsidiaries (FOX-TEK) for up to C$21.5 million, consisting of $9,500,000 in common stock of the acquirer (Mooncor) and additional potential royalties of $12,000,000. Mooncor Oil and Gas Corp. is a Canadian junior oil and gas exploration and development company. Augusta plans to distribute a portion of the consideration shares to shareholders.
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Regarding the portion to distribute, CEO Allen Lone states: “It will be in the 25% range. If you do the math, 25% of $9.5M is $2.37M being returned to shareholders. At a market cap of $6.5M (as on May 28, 2018), that amounts to an approximate 35% return to current shareholders. Plus the remaining shares go on the balance sheet of the company and royalty payments could add substantial cash to the company in the coming years. Not bad. Not bad at all.”
With a current market cap of just C$ 5.1 million, it becomes very obvious that both the Company and the shareholders will benefit greatly from the sale of FOX-TEK for up to $21.5 million.
Marcon International is Augusta Industries other subsidiary. Marcon is involved in the industrial supply of equipment and parts procuring for its clients, which are principally clients in the oil and gas industry and United States government agencies.
Initially the Company had focused on providing services in the energy sector but has moved on to also work with Government contracts and Government services. Marcon itself has two subsidiaries, Marcon USA and Marcon UK, to help enhance and support its logistic and sales operations. Over the years it has established a great reputation of being a consistent performer for its clients in the Government as well as the international oil and gas industry.
As CEO Allen Lone states: “A new day is dawning for Augusta and investors, both old and new.” Investors should definitely take a look at this undervalued gem.
Matthew Bohlsen holds a Graduate Diploma in Applied Finance and Investment (similar to CFA), and a Graduate Diploma in Financial Planning. He has 30 years ... <Read more about Matthew Bohlsen>