H2O Innovation announces the completion of the acquisition of Clearlogx

Posted: Tuesday 24th November 2015

H2O Innovation Inc. (“H2O Innovation” or the “Corporation”), a leader in membrane filtration, is proud to announce the execution of a definitive asset purchase agreement completing the acquisition of Clearlogx®, a patented technology, developed by Gregg McLeod, that helps maintain and optimize chemical performance, while improving the overall efficiency, of water treatment processes. This technology is especially critical for ultrafiltration (UF) water treatment plants to minimize membrane fouling’s, extend membranes’ lifecycle, and thus, reduce overall plant operating expenses.

This proprietary technology with sustained recurring revenues is a low risk tuck-in acquisition which provides immediate accretion to EBITDA performance. Moreover, the addition of Clearlogx® to H2O Innovation is expected to improve consolidated gross profit margin.

In addition to Clearlogx® technology, H2O Innovation has acquired the Clearlogx Inc.’s business related to the sale of coagulants, which further complement the Corporation’s specialty chemicals marketed under the name PWTTM.

This acquisition was made for a total of $ 1.97 million (US$1.5 million), with potential earn-out payments over a period of three (3) years following the effective date of the transaction. To avoid dilution of H2O Innovation shareholder ownership, H2O Innovation has entirely financed this acquisition with a long-term loan of $ 2.63 million (US$2 million) borrowed from BMO Bank and secured at 75% by EDC, allowing the Company to reduce its interest rate.

The acquisition of Clearlogx® continue to increase the level of H2O Innovation recurring sales, while further strengthening the business sector dedicated to water treatment systems.

“I am excited to be joining H2O Innovation who, with their experience and presence in the water sector, will expand on the early successes of Clearlogx®. Our patented technology has already improved UF membrane filters performance on numerous installations in North America such as the Carter Lake Potable Water Plant, a 30 MGD UF system which was facing de-rated production capacity, inefficient chemical cleanings, shortened membrane life and regulatory compliance issues. After the integration of Clearlogx® controls into the process, the customer saw a dramatic reduction in membrane fouling enabling to increase production up to design capacity while reducing chemical & power consumption. H2O Innovation is the perfect partner to expand Clearlogx® controls technology and the associated specialty coagulants into additional market segments such as industrial and municipal wastewater reuse”, explained Gregg McLeod, Vice President, Clearlogx® Technology.

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