The following news item was recently published on the PCB007 site:

DDi Proposes Acquisition of Coretec
Monday, October 26, 2009

DDi Corporation, a leading provider of technologically advanced PCB engineering and manufacturing services, has announced that it has made a proposal to the Board of Directors of Coretec Inc., a designer and manufacturer of PCBs for the prototype and quick-turn production segments of North America, to acquire all the outstanding shares of Coretec common stock for a price of, CDN $0.20 per share (U.S. $0.19 per share), or approximately CDN $3.6 million (U.S. $3.4 million). DDi's proposal also includes a proposal to assume or refinance the debt on Coretec's balance sheet which was disclosed to be CDN $18.8 million as of June 30, 2009.

Paul Langston, CEO of Coretec, proposed in a filing to the Toronto Stock Exchange October 22, 2009, to acquire all the company's common stock for CDB $1 million. That involved conversion of all the common stock at 10 cents a share to interest bearing convertible securities plus warrants. Langston and Robert Morrison now have 44% of the outstanding 18 million shares.

The DDi offer, doubling the price to shareholders, was an unsolicited surprise. Very, very clever--not only is it a better deal for the other stockholders, but also for the banks, which will receive a full CDN $18.8 million in cash repayment of loans.

Should the deal come to pass, I am sure that Toronto DDi , the old Olympic Circuits, will move into Coretec Shepard. As for Sovereign versus Proto (referring to former names) in Northeastern Ohio, I'm not sure which will survive, but they are neighbors. DDi's sales will grow US $75 million per year to over $235 million in 2010, with increased share of military/aerospace and rigid-flex markets. The Coretec Colorado plant will be a nice complement to the prototype DDi Virginia operation.

Certainly, it's not a done deal, just an offer, but the Toronto Stock exchange might prefer that path to the debenture/warrant takeover proposed by Coretec insiders. DDi is now a minority stockholder in Coretec, with 3% of shares, at a cost of approximately $54,000 each. That gives them a voice in the resolution, and DDi may not be the only objecting stockholder. Was Mikel Williams a champion chess player?

There will undoubtedly be a counter from Paul Langston and Co. They would like to reject the DDi offer out of hand, but I don't think they can.

I'd bet on the consummation of this acquisition.

As Mikel Williams said in the recent DDi analyst conference call, the North American PCB industry needs rationalization. I'd put it another way: The global industry needs rationalization, but the North American industry needs it more. By the way, analyst attendance at the above-mentioned DDi meeting had to be very sparse--only two questions were asked. Apparently, not many institutions are interested in investing in the PCB industry today.

My prediction? That will change.