- Acquisition will strategically position CVTech's growth in the
electrical services market
- Expected annual contract revenue in excess of US$100 million
- Purchase price of approximately US$37.1 million
- Formal closing expected over the next few daysDRUMMONDVILLE, QC, July 15 /CNW Telbec/ - CVTech Group Inc. ("CVTech" or
the "Corporation") (TSX: CVT) today announced it has signed the share purchase
agreement for the acquisition of Riggs Distler & Company Inc. ("Riggs
Distler") (www.riggsdistler.com). This acquisition will firmly position CVTech
as a leading provider of electrical services to the North American industrial
and utility markets and strongly complements the operations of Thirau ltée
("Thirau") (formerly "Thiro ltée"), the Corporation's subsidiary in the
electrical services industry. The transaction will be effective retroactively
to July 1, 2009. Unless otherwise indicated, all amounts are in Canadian
dollars.
Founded in 1909 and headquartered in Cherry Hill, NJ, Riggs Distler
provides maintenance and construction services to the utility and heavy
industrial markets. In the electric utility market, Riggs Distler performs
both overhead and underground services including new construction, maintenance
and upgrades, as well as emergency storm damage repair services. For heavy
industrial markets, it provides mechanical and electrical fabrication,
installation and maintenance services, mainly to the power, refining,
chemical, pharmaceutical and steel industries. Riggs Distler operates
primarily in the Northeast and Mid-Atlantic regions of the U.S. and also has a
significant presence in the Gulf Coast region.
For the year ended December 31, 2008, Riggs Distler earned contract
revenues of US$116.8 million and generated net earnings of US$5.4 million. Net
earnings were not subject to federal and state income taxes, as Riggs Distler
was under the provisions of Subchapter S of the Internal Revenue Code and
under similar provisions for state income tax purposes. Following the
acquisition, net earnings will be subject to normal U.S. statutory income tax
rates. CVTech currently anticipates that contract revenues for 2009 should be
at least similar to last year.
The purchase price and acquisition costs approximate $43.0 million and
$2.3 million, respectively. The transaction is being financed by issuing
approximately $6.5 million of CVTech common shares to Riggs Distler's
shareholders, five of whom are senior officers who will continue to manage
Riggs Distler's daily operations; proceeds from a $15.0 million equity
financing, completed on June 22, 2009, and consisting of a private placement
of common shares and the issue of subscription receipts, whose rights for each
are to receive one common share without payment of additional consideration on
the closing date of the acquisition; guaranteed loans totalling $11.6 million;
non-guaranteed loans of $11.6 million; and $0.6 million in working capital.
Burkman Capital Corporation acted as the exclusive financial advisor to
the Corporation in connection with the acquisition of Riggs Distler.
OVERVIEW OF THE CORPORATION
CVTech is a management corporation that operates in two major sectors.
Through Thirau, and its subsidiary, Thirau LLC (formerly "Thiro USA Inc."),
the Corporation services the electrical utility industry with the construction
and maintenance of transmission and distribution lines primarily in Quebec and
the Northeast of the United States. Thirau's subsidiary, J.J.L. Déboisement
inc., specializes in vegetation control surrounding the lines and clearing the
lines' rights of away. Through CVTech-IBC Inc., the Corporation services the
vehicle industry through the design, manufacture and sale of continuously
variable power transmission systems, or CVTs. CVTech-AAB specializes in
rebuilding crankshafts and cylinders, as well as distributing engine parts.
CVTech currently has 715 employees, distributed as follows: 555 in the
electricity segment and 160 in the CVT systems and related products segment.
FORWARD-LOOKING STATEMENTS
This document may contain forward-looking statements that reflect
management's current beliefs regarding future events. Forward-looking
statements are based on a number of factors and include risks and
uncertainties. Actual results may differ from forecast results. Management has
no obligation beyond what is required under the law to update or revise
forward-looking statements pursuant to new information or future events.
For further information regarding CVTech, the reader may consult the
SEDAR database as well as the Corporation's web site at: www.groupecvtech.com.
%SEDAR: 00021045EF
For further information: André Laramée, MBA, President and Chief
Executive Officer, CVTech Group Inc., (819) 479-7771; Mario Trahan, CMA, Chief
Financial Officer, CVTech Group Inc., (819) 479-7771
