Hyduke Provides Strategic Update
NISKU, AB, Nov. 23, 2012 /CNW/ - Hyduke Energy Services Inc. ("Hyduke" or the "Company") (TSX:HYD) provides a strategic update to shareholders in advance of the expiry of Do All Industries Ltd. ("DoAll") unsolicited offer of $0.83 per common share.
Hyduke's Board of Directors (the "Board") would like to reiterate to shareholders that the Board maintains its belief that the DoAll unsolicited bid of $0.83 per common share is grossly inadequate, not in the best interests of Hyduke shareholders, and remains firm in their unanimous recommendation to reject the offer.
This recommendation is based on a number of reasons including:
- current year record sales growth,
- the fair value of net assets,
- further analysis of strategic options relating to Hyduke's value, and
- all other reasons set out in the Directors' Circular.
Hyduke's Board would also like to re-confirm their commitment to the strategic review process initiated earlier. The Company and its advisors are actively continuing with an ongoing process to find strategic alternatives that increase shareholder value as measured in the public market.
Hyduke's balance sheet strength is a major asset for a company operating in a cyclical industry. Specifically, during the last three months, Hyduke successfully delivered on two major turn-key drilling rig projects and Hyduke's customer paid two major milestone payments (approximately $19 million) in accordance with the contract. Accordingly, Hyduke's cash position and liquidity on the balance sheet is very strong.
Hyduke's successful strategy to maintain a strong balance sheet allows Hyduke options going forward. One of those options is to implement a share buyback plan through a Normal Course Issuer Bid. The Board is of the opinion that the public market trading value is extremely low relative to the value of the Company and accordingly, is in the process of submitting a request to the TSX to implement the Normal Course Issuer Bid.
Hyduke is in a growth phase. Significant amounts of this growth are expected to come from markets outside of Canada. Hyduke is successfully executing on this growth strategy. Hyduke recently released its Fiscal 2012 third quarter results which demonstrated record revenue growth and in particular, record revenue growth in international markets. On a trailing twelve month basis, Hyduke has generated over $117 million in total revenue. Over $51 million (44%) of this total revenue is coming from international markets. This record level of revenue has been achieved in a flat Canadian market and an international economy that shows some uncertainty. Clearly, Hyduke's strategic growth plan is working.
In conjunction with this sales growth, Hyduke is focused on improving margins through implementing lean manufacturing principles combined with accessing a lower manufacturing cost environment through its new facility in Houston, Texas. Hyduke is very confident that successful implementation of its lean manufacturing projects will result in improved margins.
Hyduke's Board and Management remain committed to its shareholders to unlock the value discrepancy in its publically traded share price and to continue to develop and execute sound strategic plans with the objective of growing the company and creating value for shareholders.
Hyduke is an integrated oilfield services company with over thirty years experience in the manufacture, repair and distribution of oilfield equipment and supplies in Canada and worldwide. Hyduke specializes in providing customized, integrated solutions to the drilling and well service industries including:
- Turn-Key Equipment - drilling rig and service rig packages including in-house design, engineering and drafting, major component procurement and overall project management;
- Life Cycle Management - inspection, certification, service, repair and supply services throughout the operating life of the drilling or well service rig; and
- Single Source Supply - providing new capital equipment, repair and maintenance on existing capital equipment and supply of operating consumables.
Hyduke is headquartered in Nisku, Alberta and has facilities in Edmonton, Calgary, Nisku, Leduc, Red Deer and Lloydminster, Alberta and Houston, Texas, USA.
Hyduke operates in three operating segments. The Drilling Equipment segment includes manufacture and repair of land based drilling rigs and drilling rig structures, supply and repair of drilling rig equipment, procurement and distribution of drilling supplies, supply and service of pneumatic controls, engineering and design of drilling rigs and inspection and certification of drilling rig equipment. The Well Service Equipment segment includes manufacture and repair of well service rigs, mobile and skid mounted pump units and other well service equipment, procurement and distribution of well servicing supplies, supply and service of pneumatic controls, engineering and design of well service rigs and inspection and certification of well service equipment. The Other Oilfield Services segment includes manufacture and distribution of cased hole and overburden drill bits and drilling systems, custom and production machining services, distribution and repair of truck-mounted equipment including cranes, winches and dump boxes and industrial sandblasting, painting and collision repair.
The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this News Release.
Forward Looking Statements
This report contains certain forward-looking statements under the heading "Outlook" and elsewhere concerning future events or the Company's operations, anticipated financial performance, business prospects and strategies of Hyduke. Forward-looking information typically contains statements with words such as "anticipate", "believe", "estimate", "expect", "plan", "intend" or similar words suggesting future outcomes or outlooks on, without limitation, estimates of business activity, supply and demand for the Company's products, the estimated amounts and timing of capital expenditures, anticipated future debt levels, or other expectations, beliefs, plans, objectives, assumptions or statements about future events or performance. Readers are cautioned not to place undue reliance on forward-looking information. By its nature, forward-looking information involves numerous assumptions, inherent risks and uncertainties both general and specific that may cause actual future results to differ materially from those contemplated and contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur. These factors may affect anticipated earnings or assets and include, but are not limited to: industry activity levels, market liquidity, customer credit risk, competition, oil and gas prices, product liability, fixed price contracts, development of new products, uninsured and underinsured losses, access to additional financing, source of supply of raw material and third party components, availability of key personnel, agreements and contracts, government regulations, foreign exchange exposure, interest rate risk, international scope of operations, environmental health and safety regulations and Hyduke's anticipation of and success in managing the risks implied by the foregoing. The Company cautions that the foregoing list of important factors is not exhaustive. The Company believes that the expectations reflected in the forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this report should not be unduly relied upon. The forward-looking statements in this report speak only as of the date of this report. Hyduke undertakes no obligation to update publicly or otherwise revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required pursuant to applicable securities legislation.
SOURCE: Hyduke Energy Services Inc.For further information:
Chair of the Board
Gordon R. McCormack
President and Chief Executive Officer