News Article

Florida firm to acquire ABQ's Adherent Technologies
Date: Nov 18, 2013
Author: Kevin Robinson-Avila
Source: ( click here to go to the source)

Featured firm in this article: Adherent Technologies Inc of Albuquerque, NM

Florida-based investment and management firm AMT II Corp. is acquiring a 75 percent stake in Albuquerque's Adherent Technologies for about $15 million.

The investor hopes to commercialize an array of technologies developed by Adherent, a homegrown materials science firm that launched in 1990.

Adherent has created about two-dozen new processes and products over the years for use in everything from the aerospace and automotive industries to household improvement such as repairing leaky pipes.

But it's lacked the capital and business acumen needed to effectively turn those things into commercial products and services, something AMT is skilled at doing, said Ron Allred, Adherent's founder, president and CEO.

"We've signed a letter of intent for AMT to purchase a 75 percent interest," Allred told the Journal. "We haven't signed the final contract yet, because they're now raising funds from investors. But once that's in place, the deal will close, which we expect before the end of the year."

The first stab at commercialization will be construction of a carbon fiber recycling plant in the Midwest that uses Adherent's proprietary process for efficiently pulling carbon fiber out of scrap composite materials and then reinforcing the recovered fiber for reuse in things like airplanes and cars.

The plant will cost about $5 million to build and will be capable of producing about five tons of recycled carbon fiber per day. It will be located in either Oklahoma or Kansas to be close to aircraft manufacturers and composite material factories in those states.

"The letter of intent with A™ outlines a staged buyout of just under $15 million and a cash infusion that will fund the recycling plant," Allred said. "There will be enough left over to commercialize more technologies, but most resources will be devoted first to setting up the recycling facility during the next year."

AMT primarily invests in companies in the aerospace, advanced composites and chemical industries, making Adherent a good fit for AMT, said President Paul W. Pendorf.

"We're very enthusiastic because Adherent has an excellent team of scientists who have developed an impressive range of technologies," Pendorf told the Journal. "The company has been supported by government grants over many years, which shows they can deliver. They have a real track record."

Allred, a materials scientist and former Sandia National Laboratories employee, originally launched Adherent to bid on research contracts with Sandia and other entities. In the past 23 years, the company has completed some 400 contracts, including many projects funded by the U.S. Department of Defense and NASA.

Trough those contracts, Adherent developed its carbon fiber recycling and fiber-finishing process, plus systems to reinforce bonding in composite materials used in military technologies.

It developed a rapidly hardening foam to repair and protect space vehicles and structures, a structural repair tape cured with ultraviolet light that's strong enough for space applications, and a catalytic combustor for air purification purposes.

It's now selling the air-purification device for use in fireplaces through a subsidiary, Clear Skies Unlimited. Allred also envisions retail sales of the UV-cured tape for everyday terrestrial applications, such as leaky pipes or garden hoses.

Adherent had reported about $2 million in annual revenue for years, mostly from government contracts. But federal spending cuts in the last two years have slashed income, forcing the company to reduce its workforce from 25 to 12.

Now, with the AMT investment, Allred expects to hire more scientists, possibly expand Adherent's 10,000-square-foot facility in the Southeast Heights, and set up the company's first commercial sales team.

Chip Roth, a business consultant who will lead sales efforts, said carbon fiber recycling is first up because it's low-hanging fruit.

"Their recycling technology is state of the art," Roth said. "We believe there will be huge markets in the aerospace and automotive industries for those materials."