Acquisition provides further market penetration and portfolio diversification
/NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES/
TORONTO, Feb. 2, 2016 /CNW/ - Crius Energy Trust (TSX: KWH.UN) ("Crius" or "the Trust") today announced that Crius Energy, LLC ("Crius Energy" or "Company") has successfully acquired the customer contracts and associated assets for approximately 75,000 electricity Residential Customer Equivalents ("RCEs") (the "Acquisition") from Iron Energy LLC d/b/a Kona Energy for a total acquisition cost of approximately US$7 million.
The Acquisition increases Crius' RCEs by more than 9% to approximately 875,000 RCEs and expands the Company's customer base in Illinois, New York, Ohio, and Texas.
Crius expects annual gross margin of between US$70 and US$90 per RCE and the Acquisition is expected to be accretive to distributable cash per unit in 2016.
"Consistent with our growth strategy to acquire assets that continue to diversify the business, we are very pleased to have completed this acquisition that brings another 75,000 RCEs to the Crius portfolio," said Michael Fallquist, Chief Executive Officer of both the Trust and Crius Energy. "The Acquisition diversifies the business by strengthening the geographic footprint, increasing the longer-term commercial customer base, and adding to our proportion of fixed rate contracts. Additionally, we expect the economics of the Acquisition to be enhanced by cross-selling natural gas products to the customers, furthering the accretive value to unitholders."
The Acquisition was funded by cash and availability under the Company's credit facility with Macquarie Energy, LLC ("Macquarie Energy"). Concurrent with the execution of the Acquisition documents and effective upon closing, Macquarie Energy will reduce its energy supply fees under the Company's Credit Facility. The reduction will lower interest costs charged to the Company by US$5.0 million over the next four years.
Customers added through this acquisition will not experience any change to their service and will be seamlessly transitioned to an established Crius Energy brand, based on their location and the type of service they receive.
About Crius Energy Trust
Crius Energy Trust was established to provide investors with a distribution-producing investment through the acquisition of a 43.1% ownership interest in Crius Energy, LLC. With approximately 875,000 residential customer equivalents, Crius Energy, LLC is a comprehensive energy solutions partner that provides electricity, natural gas and solar products to residential and commercial customers. Crius Energy, LLC connects with energy customers through an innovative family-of-brands strategy and multi-channel marketing approach. This unique combination creates multiple access points to a broad suite of energy products and services that make it easier for consumers to make informed decisions about their energy needs. Crius Energy, LLC currently sells energy products in 20 states and the District of Columbia with plans to continue expanding its geographic reach.
The Trust intends to continue to qualify as a "mutual fund trust" under the Income Tax Act (Canada) (the "Tax Act"). The Trust will not be a "SIFT trust" (as defined in the Tax Act) provided that the Trust complies at all times with its investment restriction which precludes the Trust from holding any "non-portfolio property" (as defined in the Tax Act). Material information pertaining to the Trust may be found on SEDAR under the Trust's issuer profile at www.sedar.com or on the Trust's website www.criusenergytrust.ca.
Forward-looking statements are subject to certain risks and uncertainties, and should not be read as guarantees of future performance or results and actual results may differ materially from the conclusion, forecast or projection stated in such forward-looking statements. These risks, uncertainties and other factors include but are not limited to, the ability of the Trust to maintain a distribution on Units, the ability of Crius Energy, LLC to continue completing acquisitions and continue its organic growth strategy, Crius Energy, LLC's results of operations, financial position or cash flows, customer revenues and margins, customer additions and renewals, customer attrition, customer consumption levels, general and administrative expenses, treatment under governmental regulatory regimes, the Trust's objectives and status as a mutual fund trust and not a SIFT trust, the Trust's distributable cash and the Trust's expectations and estimates regarding the payment of distributions to Unit holders. Such assumptions, expectations, estimates, risks and uncertainties are discussed under the headings "Risk Factors" (beginning on page 67) and "Special Notes to Reader - Forward-Looking Statements and Risk Factors" (beginning on page 9) in the Annual Information Form of the Trust dated March 24, 2015, and under the headings "Financial Instruments and Risk Management" (beginning on page 19) and "Forward-Looking Statements" (beginning on page 32) in the Management's Discussion and Analysis of the Trust dated March 24, 2015. Consequently, we cannot guarantee that any forward-looking statements will materialize. Readers should not place any undue reliance on such forward-looking statements.
SOURCE Crius Energy Trust
For further information: Crius Energy Trust: Michael Fallquist, Chief Executive Officer, (203) 663-7545; Crius Energy Trust: Roop Bhullar, Chief Financial Officer, (203) 883-9900; Crius Energy Trust: Kelly Castledine, Investor Relations, (416) 644-1753, email@example.com