CALGARY, Dec. 1 /CNW/ - The board of directors (the "Board of Directors") of the administrator of Enerflex Systems Income Fund ("Enerflex") (TSX:EFX.UN) today unanimously recommended that unitholders reject the unsolicited offer (the "Toromont Offer") from Toromont Industries Ltd. ("Toromont") and not tender their units into the Toromont Offer.
"We believe the Toromont Offer does not offer full value for Enerflex or its extensive international growth prospects and contains objectionable terms and conditions that are not in the best interests of unitholders," said P. John Aldred, Chairman of the Board of Directors. "We advise unitholders to reject Toromont's offer and not to tender their units. The Board of Directors is pursuing and evaluating alternatives to the Toromont offer in order to identify the alternative that is in the best interests of Enerflex. Enerflex and its financial advisors have received expressions of interest from bona fide third parties and are broadly canvassing other parties, in Canada and internationally, who may be interested in a transaction with Enerflex. We urge unitholders to allow this process to run its full course before taking any action."
The Board of Director's recommendation, as well as a discussion of its reasons for rejecting the Toromont offer, is contained in a Directors' Circular to be filed today with Canadian securities regulators. Unitholders are urged to read the Directors' Circular in its entirety. Copies are being mailed to the Fund's unitholders. In addition, the Directors' Circular will be available on SEDAR at www.sedar.com and on the Enerflex website at www.enerflex.com.
In making its recommendation, the Board of Directors considered many factors, including the recommendation of the special committee of the Board of Directors (the "Special Committee"), comprised of independent directors Douglas J. Haughey (Chair), Patrick D. Daniel, Timothy W. Faithfull and Robert B. Hodgins, which was formed to evaluate the Toromont Offer and other alternatives available to Enerflex. The Board of Directors and the Special Committee have received the written opinions of Scotia Capital Inc., financial advisor to Enerflex, and BofA Merrill Lynch, the independent financial advisor to the Special Committee, respectively, each stating that the consideration offered under the Toromont Offer is inadequate, from a financial point of view, to Enerflex's unitholders other than Toromont. The full text of the opinions of Scotia Capital Inc. and BofA Merrill Lynch are included in the Directors' Circular.
Reasons for the Recommendation
The Board of Directors, on the recommendation of the Special Committee and assisted by its financial and legal advisors, has carefully reviewed the Toromont Offer and believes that it: (1) does not offer full value for Unitholders; and (2) contains objectionable terms and conditions that are not in the best interests of Unitholders. The principal factors considered by the Board of Directors in concluding to recommend that unitholders REJECT the Toromont Offer and NOT TENDER their Units are summarized below:
The Toromont Offer does not offer full value for Unitholders
- Each of Enerflex's Financial Advisors has delivered a written opinion
stating that the consideration offered under the Toromont Offer to
the holders of Units is inadequate from a financial point of view.
- The Toromont Offer does not adequately value the unique strategic
opportunity that Enerflex represents, Enerflex's track record of
successfully delivering growth, or the future growth prospects of
Enerflex, particularly in its international business.
- The value of the Toromont Offer is lower than premiums typically paid
in unsolicited Canadian take-over offers and equity analysts have
suggested that the Toromont Offer does not fully value Enerflex.
- The value of the Toromont Offer is dependent on the trading price of
the Toromont Shares and, for certain U.S. Unitholders, is also
dependent upon the net proceeds from the forced sale of Toromont
- The Toromont Offer attempts to take advantage of the currently
depressed market for natural gas processing, compression, power and
- Superior proposals delivering greater value for Unitholders may
The Toromont Offer contains objectionable terms and conditions that are
not in the best interests of Unitholders
- The Toromont Offer is highly conditional and is not a firm offer.
- The Toromont Offer imposes both unfavourable and unpredictable tax
consequences on Unitholders.
- The Toromont Offer requires Unitholders to give up rights they
currently have, prior to being paid for their Units.
- The Toromont Offer is not a permitted bid under Enerflex's Unitholder
Enerflex Directors and Officers do not intend to tender
Each of the directors and officers of the administrator of Enerflex who, together with their associates and affiliates, hold or exercise control or direction over an aggregate of approximately 12.4% of the trust units of Enerflex (on a fully-diluted basis), has indicated his or her intention not to accept the Toromont Offer.
The Directors' Circular has been filed on SEDAR at www.sedar.com and is available on the Enerflex website at www.enerflex.com. Unitholders are urged to read the Directors' Circular in its entirety.
To reject the Toromont Offer, unitholders should do nothing. Any unitholder who has already tendered units to the Toromont Offer may withdraw their units from the Toromont offer by contacting their broker. Unitholders should contact Laurel Hill Advisory Group, the information agent retained by Enerflex, with any questions or requests for assistance, at the following phone numbers or email address:
North American Toll-Free Phone: 1-888-726-9084
Persons outside North America, Banks and Brokers
Call Collect: 1-416-637-4661
Enerflex is a leading supplier of products and services to the global oil and gas production industry. Our core expertise is the supply of products and services between the wellhead and the pipeline. Enerflex provides natural gas compression and process equipment for sale or lease, hydrocarbon production and processing facilities, electrical, instrumentation and controls services and a comprehensive package of field maintenance and contracting capabilities. Through our ability to provide these products and services in an integrated manner, or as standalone offerings, Enerflex offers its customers a unique value proposition.
Headquartered in Calgary, Canada, Enerflex has approximately 2,400 employees. Enerflex, its subsidiaries, interests in affiliates and joint-ventures operate in Canada, Australia, the Netherlands, the United States, Germany, Pakistan, the United Arab Emirates, Egypt, Oman, Indonesia and Malaysia. In October 2009 Enerflex was recognized as one of Alberta's Top 50 Employers. Enerflex's trust units trade on the Toronto Stock Exchange under the symbol "EFX.UN".
Forward-Looking Information Disclaimer
Certain information contained herein constitutes forward-looking information under applicable securities laws. All statements, other than statements of historical fact, which address activities, events or developments that we expect or anticipate may or will occur in the future, are forward-looking information. Forward-looking information typically contains statements with words such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "potential", "targeting", "intend", "could", "might", "should", "believe" or similar words suggesting future outcomes or outlook. The following discussion is intended to identify certain factors, although not necessarily all factors, which could cause future outcomes to differ materially from those set forth in the forward-looking information. The risks and uncertainties that may affect the operations, performance, development and results of Enerflex's businesses include, but are not limited to, the following factors: the impact of general economic conditions; industry conditions, including the adoption of new environmental and other laws and regulations and changes in how they are interpreted and enforced; volatility of oil and gas prices; oil and gas product supply and demand; risks inherent in Enerflex's ability to generate sufficient cash flow from operations to meet its current and future obligations; increased competition; the lack of availability of qualified personnel or management; labour unrest; fluctuations in the foreign exchange or interest rates; stock market volatility; opportunities available to or pursued by Enerflex; the ability of Enerflex to negotiate and conclude an alternative transaction to the Toromont Offer that provides superior value to unitholders; and other factors, many of which are beyond the control of Enerflex. The reader is cautioned that these factors and risks are difficult to predict and that the assumptions used in the preparation of such information, although considered reasonably accurate by Enerflex at the time of preparation, may prove to be incorrect or may not occur. Accordingly, readers are cautioned that the actual results achieved will vary from the information provided herein and the variations may be material. Readers are also cautioned that the foregoing list of factors and risks is not exhaustive. Additional information on these and other risks, uncertainties and factors that could affect Enerflex's operations or financial results are included in our filings with the securities commissions or similar authorities in each of the provinces of Canada, as may be updated from time to time. There is no representation by Enerflex that actual results achieved will be the same in whole or in part as those set out in the forward-looking information. Furthermore, the forward-looking statements contained herein are made as of the date hereof, and Enerflex does not undertake any obligation to update publicly or to revise any forward-looking information, whether as a result of new information, future events or otherwise, unless required by law. Any forward-looking information contained herein is expressly qualified by this cautionary statement.
SOURCE ENERFLEX SYSTEMS INCOME FUND
For further information: For further information: J. Blair Goertzen, President and Chief Executive Officer, Tel: (403) 236-6852, Fax: (403) 720-4385; D. James Harbilas, Vice-President & Chief Financial Officer, Tel: (403) 236-6857, Fax: (403) 720-4385