Do All Industries to acquire Hyduke Energy Services for $34 million

EDMONTON, June 21, 2012 /CNW/ - Hyduke Energy Services Inc. ("Hyduke") (TSX: HYD) is pleased to announce that it has entered into a definitive agreement (the "Arrangement Agreement") with Do All Industries Ltd. ("Do All"), a private oil and gas equipment and services company based out of Estevan, Saskatchewan, under which Do All will acquire all of the issued and outstanding common shares of Hyduke, including any shares issued upon the exercise of options to acquire Hyduke shares, for $1.37 per share in cash, or approximately $34 million in aggregate.  The transaction is to be completed by way of a plan of arrangement under the Business Corporations Act (Alberta) (the "Arrangement").  The cash consideration of $1.37 per share under the Arrangement Agreement represents a 109% premium over the closing price of the Hyduke shares on the Toronto Stock Exchange for the 20 trading days ending on June 20, 2012 and a 108% premium over the closing price of the Hyduke shares on the Toronto Stock Exchange on June 20, 2012 of $0.66.

Hyduke Board Chairman Myron Yurko stated: "This business combination will strengthen Hyduke's ability to continue to provide its customers with the life cycle management that they are now accustomed to.  It will also provide different venues to provide service from as well as adding much more square footage of manufacturing ability. Business will continue as usual for all customers and employees. The acquisition of Hyduke's business by Do All will give the employees even more opportunity to grow within the organization. I believe that this is fair value for all shareholders and provides a liquidity event for the shareholders at more than twice the current trading value of the shares."

Do All's President, Kordel Korf, commented: "We are dedicated to continuing to provide quality products and services to both Hyduke's and Do All's customers.  We plan to continue to conduct business with integrity and allow for the positive merger of these two successful organizations.  We are excited about the immediate growth of our Canadian operations through this acquisition, and are looking forward to the new possibilities the Houston, Texas Manufacturing Facility has to offer.

The expansion of our organization through this acquisition will allow all employees the opportunity for further development and advancement within the organization.  We are looking forward to working with Hyduke's highly-regarded team of professionals.  We thank all involved for their diligence in ensuring this merger to be a positive venture for all."

Recommendation of the Board of Directors

The board of directors of Hyduke (the "Hyduke Board") formed a Special Committee of independent directors to engage in a review of the Arrangement Agreement. Sequeira Partners Inc. ("Sequeira"), Hyduke's financial advisor, has provided the Hyduke Board with a verbal fairness opinion that, as of the date hereof, the consideration to be received by Hyduke's shareholders pursuant to the proposed Arrangement is fair, from a financial point of view, to such holders.

After receiving financial and legal advice, the Special Committee and the Hyduke Board have approved the Arrangement Agreement and determined that the Arrangement is in the best interests of Hyduke.  A majority of the Hyduke Board recommends that shareholders and option holders vote in favour of the Arrangement. Certain members of the Hyduke Board and Hyduke's executive officers, who collectively own approximately 22.7% of the outstanding Hyduke shares on a fully-diluted basis, have entered into voting support agreements with Do All and have confirmed their intention to vote their shares in favour of the Arrangement.

The Arrangement

The Arrangement is subject to a number of customary conditions for a transaction of this nature including, but not limited to, the approval of at least 66 ⅔% of the votes cast in person or by proxy by Hyduke shareholders and option holders, voting as a single class at a special meeting of Hyduke's securityholders, as well as court and relevant regulatory approvals. The terms and conditions of the arrangement and additional details of the transaction will be summarized in Hyduke's management information circular, which is expected to be filed and mailed to Hyduke's securityholders in early July 2012. The special meeting of Hyduke securityholders is scheduled to be held on August 8, 2012, with closing expected to shortly thereafter.  Under the Arrangement Agreement, it is a condition that all Hyduke options shall be exercised, surrendered or terminated.

The arrangement agreement is subject to customary non-solicitation provisions and Hyduke's right to consider and accept superior proposals. In the event of a superior proposal, Do All will have a five-business-day right to match the superior proposal. If the Arrangement is not completed as a result of a superior proposal, or for other certain specified circumstances, a termination fee equal to $1.0 million will be paid by Hyduke to Do All.  The Arrangement Agreement also contains a non-completion fee of $1.0 million payable by Do All to Hyduke in certain circumstances if the Arrangement is not completed.

A copy of the Arrangement Agreement will be filed on Hyduke's SEDAR profile and will be available for viewing at www.sedar.com.

Financial Advisors

Sequeira is acting as financial advisor to Hyduke and has provided the Hyduke Board with an opinion regarding the proposed Arrangement.  A copy of Sequeira's written opinion, which will contain the assumptions, limitations, qualifications and conditions set forth therein, will be included in the information circular to be sent to Hyduke's securityholders for the special meeting to be called to consider the Arrangement.

About Hyduke

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 operates its businesses through a number of subsidiaries operating in four segments:

Manufacturing

The Manufacturing segment includes the design, manufacture, refurbishment and repair of land-based drilling rigs, well service and workover rigs, drilling support equipment and well service and workover support equipment.

Distribution

The Distribution segment includes the procurement and distribution of spare parts, equipment components, operating supplies and pneumatic controls to the drilling and well service industries.

Truck Mounted Equipment

The Truck Mounted Equipment segment includes the distribution, service and repair of truck-mounted cranes, winches and dump boxes.

Other Services

The Other Services segment includes the inspection and certification of drilling rig and well service equipment, the design, manufacture and distribution of cased hole and overburden drilling downhole tools, custom and production machining services, industrial sandblasting and painting, and corporate head office expenses.

About Do All

Do All Industries Ltd. is a market leader providing an expansive range of integrated products and services for the oil and gas industry.  Specializing in the production of complete turn-key drilling rig packages, as well as drilling rig rental equipment, Do All is the only Canadian company in the Rig Manufacturing Industry, which under sole ownership, operates its own Electrical, PLC Automation, Hydraulic, Sandblasting, Painting, Machining, Fabrication, Engineering, Equipment Repair and Recertification, Rig up and Transport Divisions.  With the ability to provide its customers with unparalleled service, and a wide range of quality products, Do All's customer base and market share continues to grow. Headquartered in Estevan, Saskatchewan, Do All also has locations in Nisku, Alberta (API-4F, ISO 9001) and Glenburn, North Dakota.

Forward-looking statements:

This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking statements or information. More particularly and without limitation, this news release contains forward-looking statements and information concerning: the anticipated benefits of the Arrangement to Hyduke and its securityholders, the timing and conditions including the receipt of required regulatory, court, and shareholder approvals for the Arrangement; the ability of Hyduke and Do All to satisfy the other conditions to, and to complete, the Arrangement; and the anticipated timing of the mailing of the information circular regarding the Arrangement and the closing of the Arrangement.

In respect of the forward-looking statements and information concerning the anticipated completion of the proposed Arrangement and the anticipated timing for completion of the Arrangement, Hyduke has provided such in reliance on certain assumptions that it believes are reasonable at this time, including assumptions as to the time required to prepare and mail Hyduke's meeting materials, including the required information circular; the ability of the parties to receive, in a timely manner, the necessary regulatory, court, shareholder and other third party approvals; and the ability of the parties to satisfy, in a timely manner, the other conditions to the closing of the Arrangement. These dates may change for a number of reasons, including unforeseen delays in preparing meeting materials, inability to secure necessary shareholder, regulatory, court or other third party approvals in the time assumed or the need for additional time to satisfy the other conditions to the completion of the Arrangement. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release concerning these times.

Risks and uncertainties inherent in the nature of the Arrangement include the failure of Hyduke or Do All to obtain necessary shareholder, regulatory, court and other third party approvals, or to otherwise satisfy the conditions to the Arrangement, in a timely manner, or at all. Failure to so obtain such approvals, or the failure of Hyduke or Do All to otherwise satisfy the conditions to the Arrangement, may result in the Arrangement not being completed on the proposed terms, or at all. In addition, the failure of Hyduke to comply with the terms of the Arrangement Agreement may result in Hyduke being required to pay a termination or other fee to Do All, the result of which could have a material adverse effect on Hyduke's financial position and results of operations and its ability to fund growth prospects and current operations.

Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on other factors that could affect the operations or financial results of Hyduke are included in reports on file with applicable securities regulatory authorities, including but not limited to, Hyduke's Annual Information Form for the fiscal year ended December 31, 2011 which may be accessed on Hyduke's SEDAR profile at www.sedar.com.

The forward-looking statements and information contained in this news release are made as of the date hereof and Hyduke undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.


SOURCE Hyduke Energy Services Inc.

For further information:

Mr. Myron Yurko, Chairman of the Board of Directors
Tel: 780-719-3353
Fax: 780-737-5680
Website: www.hyduke.com


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