Aveda Transportation and Energy Services Announces Signing of
Definitive Agreement for a Transformational Acquisition and an
Increase in the Company's Senior Lending Facility
CALGARY, ALBERTA--(Marketwired - Dec 24, 2013) - Aveda
Transportation and Energy Services Inc. (TSX-VENTURE:AVE) ("Aveda"
or the "Company"), a leading provider of oilfield hauling services
and equipment rentals to the energy industry, today announced that,
through its operating subsidiary in the US, it has signed an asset
purchase agreement to acquire the operating assets of Williston,
North Dakota-based M&K Hotshot & Trucking, Inc. and M&K
Rig Service, Inc. (collectively "M&K"). Aveda expects to
acquire approximately 170 pieces of oilfield hauling equipment,
including 79 trailers, 15 conventional tractors, 14 winch trucks
and three cranes, and approximately 395 pieces of rental equipment
with an estimated total fair market value of US$22.0 million,
working capital estimated at US$5.5 million and other intangible
assets. The initial purchase price is expected to be between
US$38.0 million and US$42.0 million or 3.18 times 2013 EBITDA
(expected to fall in the range of US$12.0 million and US$13.0
million), which includes the issuance of US$5.0 million in equity
of Aveda at a price of $3.60 per share. An estimated US$9.0 million
in additional consideration may be payable on an earnout basis over
a period of three years if certain EBITDA levels are generated.
"This transformational acquisition will provide Aveda with a
strong presence in another established, oil-focused basin in the
US," said Kevin Roycraft, President and CEO of Aveda. "We expect to
realize a number of synergies through the combination of Aveda's
brand and operational platform and M&K's high quality fleet and
regional expertise that will help support future growth. This
transaction also supports our entry into the US rentals business
and will provide opportunities to re-deploy under-utilized assets
from the Western Canadian Sedimentary Basin to areas of more stable
activity in the Williston Basin."
Between 2010 and 2012, M&K nearly tripled revenue from
US$11.6 million (unaudited) to US$33.5 million and grew EBITDA from
US$3.1 million (unaudited) to US$12.4 million. EBITDA margins
between 2010 and 2012 ranged between 26.8% and 40.2% (unaudited).
Fiscal 2013 revenue is estimated to be between US$39.0 million and
US$41.0 million and normalized EBITDA to fall in a range between
US$12.0 million and US$13.0 million. Investors are cautioned that
historical financial information is not indicative of either
expected or actual future performance.
"Completing this acquisition essentially doubles the size of the
Company on an EBITDA basis, adding valuable scale, stability and
further geographic diversity to our US operations," said Bharat
Mahajan, Vice-President, Finance and CFO of Aveda. "The assets
being acquired have a demonstrated track record of supporting solid
margins and creating value in a region with continued robust
activity levels."
Upon the transaction closing, former owners Mark and Kelly
Brunelle will join the Aveda team along with current M&K
management and nearly 90 staff to support ongoing operations and
relationship continuity with key customers in the region.
The transaction will have an effective date of January 1, 2014
with closing expected on or before January 31, 2014 unless mutually
extended by the parties. The transaction is subject to a number of
standard conditions precedent to close, including but not limited
to receipt of applicable regulatory approvals, including approval
of the TSX Venture Exchange, and receipt of consents from certain
of M&K's customers to the transfer of their master service
agreements to Aveda's US subsidiary.
With respect to Aveda's senior credit facility arrangements with
PNC Bank Canada Branch, ("PNC"), the Company announces that it has
entered into an agreement with PNC pursuant to which the
availability under its current operating facility (the "Facility")
will conditionally (i) be increased to $75.0 million effective
December 31, 2013, $15.0 million of which will not be available to
the Company unless and until the M&K acquisition closes; (ii)
be extended to January 1, 2018; (iii) have the interest rate
decreased by 50 basis points as long as Undrawn Availability (as
defined in the Facility agreement) is greater than $10.0 million;
and (iv) the removal of all financial covenants as long as Undrawn
Availability is greater than $15.0 million. The Company will pay a
facility increase fee to PNC (the "Initial Facility Fee"), which
will be paid by the Company to PNC on December 31, 2013 and the
balance (the "Facility Fee Balance") to be paid concurrently with
the closing of the M&K acquisition. In the event that the
M&K acquisition does not close (i) the availability under the
Facility will be decreased back to the current amount of $50.0
million; (ii) the Initial Facility Fee will not be recovered; (iii)
the Facility Fee Balance will not be payable; (iv) the interest
rate will remain as is; and (v) the financial covenants will
continue to apply as is.
"Securing an increase in our senior credit facility offers us
the financial flexibility to pursue additional acquisition
opportunities in high activity jurisdictions on both sides of the
border, leveraging the expanded scale of our operations," said
Bharat Mahajan, Vice-President, Finance and CFO of Aveda. "We
continue to evaluate a range of acquisition and organic growth
opportunities that will help drive long term shareholder
value."
The Company is actively pursuing a number of other acquisition
opportunities along with several organic growth initiatives.
Investors are cautioned that the ability of the Company to execute
on any of these growth initiatives are subject to the risk factors
outlined below.
About Aveda Transportation and Energy Services
Aveda provides specialized transportation services and equipment
required for the exploration, development and production of
petroleum resources in the Western Canadian Sedimentary Basin and
in the United States of America principally in and around the
states of Texas and Pennsylvania. Transportation services include
both the equipment necessary to move the load as well as a trained,
professional driver capable of securing, moving and manipulating
the load at its origin and destination. Aveda's rental operations
include the rental of tanks, mats, pickers, light towers and other
equipment necessary for oilfield operations.
Aveda was incorporated in 1994 as a private company to serve the
oil and gas industry. In the spring of 2006 the Company went public
on the TSX Venture Exchange. Aveda has major operations in Calgary,
AB, Slave Lake, AB, Leduc, AB, Sylvan Lake, AB, Edson, AB, Mineral
Wells, TX, Pleasanton, TX, Midland, TX, Williamsport, PA and
Buckhannon, WV. Aveda is publicly traded on the TSX Venture
Exchange under the symbol AVE. For more information on Aveda please
visit www.avedaenergy.com.
This News Release contains certain forward-looking statements
and forward-looking information (collectively referred to herein as
"forward-looking statements") within the meaning of applicable
Canadian securities laws. All statements other than statements of
present or historical fact are forward-looking statements.
Forward-looking statements are often, but not always, identified by
the use of words such as "anticipate", "achieve", "could",
"believe", "plan", "intend", "objective", "continuous", "ongoing",
"estimate", "outlook", "expect", "may", "will", "project", "should"
or similar words, including negatives thereof, suggesting future
outcomes. In particular, this News Release contains forward-looking
statements relating to: demand for the Company's services and
general industry activity level; the Company's growth
opportunities; and expectation to maintain revenue and equipment
utilization. Aveda believes the expectations reflected in such
forward-looking statements are reasonable as of the date hereof but
no assurance can be given that these expectations will prove to be
correct and such forward-looking statements should not be unduly
relied upon.
Various material factors and assumptions are typically applied
in drawing conclusions or making the forecasts or projections set
out in forward-looking statements. Those material factors and
assumptions are based on information currently available to Aveda,
including information obtained from third party industry analysts
and other third party sources. In some instances, material
assumptions and material factors are presented elsewhere in this
News Release in connection with the forward-looking statements.
Readers are cautioned that the following list of material factors
and assumptions is not exhaustive. Specific material factors and
assumptions include, but are not limited to:
- obtaining customer consents for the transfer of the master
services agreements in respect of the M&K acquisition;
- the final approval of the TSX Venture Exchange for the M&K
acquisition;
- the completion of the M&K acquisition;
- the performance of Aveda's businesses, including M&K,
current business and economic trends;
- oil and natural gas commodity prices and production
levels;
- capital expenditure programs and other expenditures by Aveda
and its customers;
- the ability of Aveda to retain and hire qualified
personnel;
- the ability of Aveda to obtain parts, consumables, equipment,
technology, and supplies in a timely manner to carry out its
activities;
- the ability of Aveda to maintain good working relationships
with key suppliers;
- the ability of Aveda to market its services successfully to
existing and new customers;
- the ability of Aveda to obtain timely financing on acceptable
terms;
- currency exchange and interest rates;
- risks associated with foreign operations;
- changes under governmental regulatory regimes and tax,
environmental and other laws in Canada and the United States;
and
- a stable competitive environment.
Forward-looking statements are not a guarantee of future
performance and involve a number of risks and uncertainties, some
of which are described herein. Such forward-looking statements
necessarily involve known and unknown risks and uncertainties,
which may cause Aveda's actual performance and financial results in
future periods to differ materially from any projections of future
performance or results expressed or implied by such forward-looking
statements. These risks and uncertainties include, but are not
limited to, the risks identified in Aveda's annual information form
and management discussion and analysis for the year ended December
31, 2012 (the "MD&A"). Any forward-looking statements are made
as of the date hereof and, except as required by law, Aveda assumes
no obligation to publicly update or revise such statements to
reflect new information, subsequent or otherwise.
This News Release contains the terms EBITDA and normalized
EBITDA. EBITDA is defined in the MD&A. Normalized EBITDA is
EBITDA adjusted for one-time costs as agreed to in the definitive
agreement for the M&K acquisition. EBITDA and normalized EBITDA
as discussed do not have any standardized meaning prescribed by
international financial reporting standards (IFRS) and therefore
may not be comparable with the calculation of similar measures for
other entities. Management uses normalized EBITDA to analyze the
operating performance of the M&K acquisition. Normalized EBITDA
as discussed is not intended to represent cash provided by
operating activities, net earnings or other measures of financial
performance calculated in accordance with IFRS.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Aveda Transportation and Energy Services Inc.Bharat Mahajan,
CAVice President, Finance and Chief Financial Officer(403)
264-5769bharat.mahajan@avedaenergy.comwww.avedaenergy.com
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