The Bank of Canada is selling off its division that manufactures optical security material for bank notes.

The BoC said Wednesday that, following a strategic review, it decided to close its Optical Security Material division, which produces the optically variable security material used in the security threads contained in Canadian banknotes and other security documents, and sell off its assets.

Vancouver-based Fortress Optical Features Ltd., a subsidiary of Fortress Paper Ltd., was the successful bidder for those assets in a competitive tender process, the BoC said. Fortress has signed a purchase agreement for the acquisition of the OSM assets.

Fortress said that it is paying $750,000 for the assets. The deal is expected to close in January 2011.

The assets being acquired by Fortress Paper include certain patent applications and intellectual property rights to optical security features, unique security applications and the production equipment and machinery currently used at the OSM division.

Following closing of the acquisition, Fortress intends to relocate the assets to a new multi-million dollar high security production and research and development facility which it’s building adjacent to its Thurso Mill in Quebec.

Additionally, the BoC notes that it retains a royalty-free licence to use the intellectual property sold to Fortress for Canadian bank note applications.

Fortress has offered employment to affected Bank of Canada staff.

“We are very pleased to announce this new acquisition which will supplement our existing paper-based high security feature offerings and which we intend to market as a security feature to other banknote producers around the world,” said Chad Wasilenkoff, CEO of Fortress Paper, in a release.

IE