Petrowest Energy Services Trust Announces $94.2 Million of Acquisitions, Major Strategic Alliance, First Quarter Results and Drip Implementation
Calgary, Alberta, May 9, 2007.
Petrowest Energy Services Trust (“Petrowest” or the “Trust”) (TSX – “PRW.UN”) announced today that it has entered into agreements to acquire five private road construction, gravel crushing and log hauling businesses in the Grande Prairie and Peace River regions of Alberta and the Ft. St. John region of British Columbia for an aggregate purchase price of approximately $94.2 million. The revenue generated by these companies over their last fiscal year totaled approximately $76.6 million. These acquisitions will expand the Trust’s geographic footprint, client base and provide increased utilization of assets within the Trust. In addition Petrowest also announced that it has also entered into a memorandum of understanding with the Woodland Cree First Nations (“WCFN”) that contemplates a major strategic alliance, structured as a joint venture, which will see Petrowest provide a combination of services within the WCFN traditional lands comprising over 3,800 square miles, including a significant portion of the Peace River oil sands. This memorandum of understanding also contemplates that Petrowest will acquire road construction equipment from a subsidiary of the WCFN for a purchase price of $4.0 million.Taken together, these acquisitions significantly enhance Petrowest’s existing infrastructure business and provide access to a significant portion of the expansion activities associated with the Peace River Oil Sands development.
The maximum total purchase price for the acquisitions will be approximately $94.2 million, comprised of the payment of $50.4 million in cash, the issuance of approximately 4.3 million trust units of Petrowest and the assumption of $10.3 million of debt of the companies (assuming a trust unit price of $7.75). The effective total purchase price is reduced by changes in working capital for the period from January 1, 2007 to closing which accrue to the benefit of Petrowest. In addition, the terms of the agreements require minimum working capital on the acquisitions to be approximately $11.1 million in the aggregate. It is estimated that actual cash balances acquired on closing will be in excess of $6.0 million
Concurrently, Petrowest intends to expand the Trust’s available credit facilities. This expanded facility will be used to fund the cash portion of the acquisitions and to repay the assumed debt.
The trust units issued pursuant to the acquisitions will be subject to escrow, with 25% of such units to be issued on the first anniversary of closing and the remainder on the second anniversary of closing.
The acquisitions announced today involve acquiring all of the outstanding shares and shareholder loans of Cutbank Trucking Ltd. Cutbank Transport Ltd., Jim Moffatt Construction Ltd., Quigley Contracting Ltd, Rick’s Mechanical Services Ltd. and Tri-Dave Gravel Sales Ltd. In addition, Petrowest will acquire the road construction equipment of Woodland Cree Industries Ltd.
“Each of the companies to be acquired is well established with a significant operating history, experienced and proven management and a business that will provide synergies with Petrowest’s existing competencies, clients, industries, work activities and geographic region”, said Kenneth N. Drysdale, President and Chief Executive Officer of Petrowest. “Not only do these acquisitions bring an accretive financial contribution, but they strengthen Petrowest in our target geographic region. The operators that will join Petrowest as part of the acquisitions, Ray Wardill, Jim Moffatt, Rick Serhan, Rick Quigley and Dave Hall are experienced operators who will fit well with Petrowest’s corporate culture and we are pleased to have them as part of Petrowest. Overall, we are excited with this first step in the execution of our acquisitions strategy and look forward to working with the new members of the Petrowest group of companies”.
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