Pressure Technologies, parent company of Chesterfield Special Cylinders (CSC), has agreed a strategic investment to acquire 40% of the common stock of GTM Manufacturing LLC, a manufacturer of high pressure vessels for gas transport solutions.

Under the terms of the investment the company is providing a $4m loan to GTM, of which $500,000 will – on 1st January 2014 – convert to a 40% stake in GTM’s common stock.

Pressure Technologies is understood to be funding the loan to GTM from its existing resources, and has also been granted an option to acquire a further 40% stake in GTM and will be providing a working capital loan facility to GTM.

Based in Amarillo, Texas, GTM was founded in 2008 is part of the Kelley Family of Companies in Texas (Kelley), a group that has led the specialty gas transportation industry in the US and globally for over 60 years. Following the Investment, GTM will be re-named Kelley GTM, LLC.

The company manufactures gas containers that are themselves known as GTMs. Each GTM is made up of nine high pressure type II composite cylinders consisting of a welded steel cylinder liner, hoop wrapped with high strength glass-fibre mounted in a standard 20 foot ISO container.

The technology employed allows the manufacture of stronger, lighter storage units for gas, capable of working under high pressure. This in turn maximises the amount of gas able to be transported thereby giving large savings in logistics and transportation costs for customers. Under US Department of Transportation regulations, GTMs are approved for road, rail, sea and air transportation and are used for the transportation and storage of a wide range of compressed gases including hydrogen, helium and argon.

Together with CSC, GTM will now undertake a range of developments to expand its product range into higher pressure and larger cylinders, utilising carbon fibre technology to decrease weight and further increase the amount of gas transported.

CSC will lead a programme to apply for regulatory approval for use of GTMs in the European Union and ultimately worldwide through ISO.

“The investment allows the company to join the expertise of the design and manufacture of high pressure gas cylinders in our subsidiary Chesterfield Special Cylinders (CSC), with GTM’s expertise in the production of light-weight composite cylinders…”

Opportunity

Ken Kelley, founder and President of GTM, will continue to work for GTM alongside other senior management. In addition, representatives of Pressure Technologies will join the Board of GTM.

Pressure Technologies is understood to see a strong opportunity in the market for GTM and its gas container products. There are multiple applications for the GTM modules including, for example, the transportation of compressed gas from existing supply lines to a remote or unconnected dispensing station. There is also a significant potential market opportunity arising from the economic benefits of using gas-to-power oil drilling rigs where fuel cost savings of up to 45% can be achieved.

Alongside the oil and gas industry, which is expected to be the largest user of GTM modules, the provision of temporary gas solutions will provide opportunities where customers are delivering gas during periods of maintenance or repair work. All of which leads the Board of Pressure Technologies to believe that the market for GTMs in the US is set for rapid expansion.

Alan Wilson, Pressure Technologies Chairman, explained, “We believe that the agreement reached with GTM affords Pressure Technologies an excellent means by which to participate in the growth in the market for the transportation of gases across a wide number of sectors, particularly oil and gas where we already have considerable experience.”

“The investment allows the company to join the expertise of the design and manufacture of high pressure gas cylinders in our subsidiary Chesterfield Special Cylinders (CSC), with GTM’s expertise in the production of light-weight composite cylinders and to develop and expand GTM’s product range for use in the US and subsequently further afield. We are very excited to be working with Ken Kelley and his team at GTM.”

“The Board believes that the combination of Pressure Technologies and GTM will enhance the ability to capitalise on the growing market in the transportation of gases.”