Strongco Corporation Acquisition
On January 24, 2020, through a wholly-owned subsidiary of Nors, we celebrated an Arrangement Agreement for the acquisition of 100% of Strongco Corporation — an entity that at the time was listed on the Toronto Stock Exchange – TSX: SQP. This operation was carried out on March 18, 2020, and, as a result, the company was withdrawn from the stock exchange, leaving its status as a public entity on March 24. Strongco Corporation sells, rents and services equipment used in industries as diverse as construction, infrastructure, mining, oil and gas, utilities, municipalities, waste management, and forestry. Operating and serving customers through its 26 branches across Canada, it has about 500 employees. In 2019, the company invoiced 410,525 thousands of Canadian dollars.
The total investment amounted to approximately 132 million euros and included the cost of acquiring capital and assumed debt. At the closing date of this document, the process of allocating the acquisition cost to the net assets acquired is in progress. Strongco is the exclusive dealer of Volvo Construction Equipment (VCE) equipment in the Canadian provinces of Alberta, Ontario, Quebec, Newfoundland and Labrador, Nova Scotia, New Brunswick, and Prince Edward Island.
Covid-19 pandemic
Nors’ Management recognizes the real and tangible extent of the crisis caused by the COVID-19 pandemic. We acknowledge that, depending on how the pandemic affects each of the countries in which we operate, the impacts experienced by our operations may be asymmetric. As it is not possible to quantify the extent of these impacts at the date of this document, we guarantee that we are monitoring the evolution of the situation in each country and each subsidiary. Moreover, we can guarantee the fulfillment of the obligations of our subsidiaries and the continuity of our operations since there is liquidity and the ability to mobilize credit lines.
The mentioned liquidity is materialized in four main facts. On the one hand, on December 31, 2019, Nors’ Current Assets were higher than Current Liabilities by 10,665 thousand euros, and the balance of cash and cash equivalents amounted to 39,129 thousand euros. On the same date, we had contracted credit lines in the amount of 320,405 thousand euros — of which 160,447 thousand euros were unused — with the debt due to mature in 2020 only amounted in 43,694 thousand euros. In the first quarter of 2020, to face the acquisition of Strongco Corporation, we contracted additional lines of 17,000 thousand euros from Portuguese banks, having negotiated simultaneously with the current funding entities of Strongco Corporation, maintaining or increasing the company’s financing lines. Finally, in March 2020, we negotiated structured financing, increasing the lines contracted by 30,000 thousand euros — of which 15,000 thousand were approved but which are still being formalized — allowing us to refinance some of the lines in 2020 maturely.
As Nors’ Management, considering the aforementioned, we firmly believe that the assumption of continuity of operations used in the preparation of the consolidated financial statements remains appropriate.