Stratmin gets stake in Applied Carbon

Graphite producer Stratmin (ME) will buy 52% of the issued and outstanding shares of Applied Carbon Technology (TSE), its main competitor in North America.

Applied Carbon’s main assets are a blending unit in Brocton, N.Y., and a graphite ore processing plant in Kearney, Ont., which is currently inactive. Under the agreement, Stratmin will buy 19.2 million shares and 2.8 million Applied Carbon warrants from affiliates of the Hillman Company for the total consideration of $1. In addition, Stratmin will buy a promissory note in the amount of $6.4 million in consideration of the following:

* $1.5 million Stratmin preferred shares at 7%, redeemable one year after the closing of the purchase;

* $1.5 million Stratmin preferred shares, convertible into common shares of Stratmin at their closing price on the day of the conversion, two years after the closing of the purchase; and

* 300,000 warrants of Stratmin, not exercisable until three years after the execution of the purchase agreement. The exercise price is $2.50 per share. The purchase is subject to certain conditions, including regulatory approvals and the completion of a due diligence inquiry by Stratmin within 60 days. Applied Carbon was formerly known as Cal Graphite.