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TORONTO and MARSEILLE, France, Jan. 20 /CNW/ - Foraco International SA (the "Company" or "Foraco"), a leading global provider of diversified drilling services, today announced it has entered into a binding agreement with Walvides Investment Ltd ("Walvides"), from Cyprus, to acquire a 50% interest of LLC Eastern Drilling Company ("EDC") from Russia. Once the deal is completed, Foraco and Walvides will each own 50% of EDC's shareholdings, but Foraco will have the controlling interest in EDC through a shareholders agreement to be entered into with Walvides.
EDC has operated diamond drilling services for major and junior foreign and Russian companies in the mining industry in the Russian territory since 2007. Headquartered in Moscow, EDC's operational facilities are located in Far East Russia and Eastern Siberia, where many mining developments are located or managed. EDC has two subsidiaries in Kazakhstan and the Kyrgyz Republic. EDC's fleet consists of five modern diamond drill rigs and ancillary equipment, supported by skilled managers and workers. The Company expects EDC to generate approximately 10 million USD revenue in 2010 through EDC's existing customer contracts.
The terms of the proposed transaction include:
- cash consideration of 2 million USD upon closing,
- adjustment based on EDC's 2010 financial performance, to be paid in
- completion of certain conditions precedent, including the entering
into of a shareholder agreement with Walvides.
Through Walvides, EDC' founders and present managers will retain a 50% (non-controlling) interest and will continue managing and developing EDC. Foraco will bring new drilling technologies, management, technical, financial and operational support to EDC and will support EDC's development.
"This is an excellent opportunity for Foraco to now establish a permanent presence in Russia and the CIS countries following our successful launch into northwest Russia in 2009," said Daniel Simoncini, Chairman and Chief Executive Officer of Foraco. "This acquisition will add a significant business region to our Company with high growth potential in the near future."
Jean-Pierre Charmensat, co-CEO and Chief Financial Officer added, "We are confident that the combination of EDC's proven track record, good reputation, energetic management and modern fleet when supported by Foraco's technical expertise and global strength will allow EDC to capitalize on Russian and CIS opportunities to accelerate the growth of a profitable business."
"Foraco's excellent reputation and impressive diversified assets base joining us as partner will enable us to expand EDC beyond our successful diamond drilling services. We're looking forward to exploiting new market opportunities and bringing our business up to a new level in Russia and the CIS," commented EDC's Managing Director, Mr Andrey Popov.
About Foraco International SA
Foraco International SA (TSX: FAR) is a global leading drilling services company that provides turnkey solutions for mining, energy, water and infrastructure projects. Supported by its founding values of integrity, innovation and involvement, Foraco has grown into a global enterprise with operations in 19 countries across five continents. For more information about Foraco, visit www.foraco.com.
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Caution concerning forward-looking statements
This document contains "forward-looking statements" and "forward-looking information" within the meaning of applicable securities laws, including the Company's expectations regarding EDC's revenues. These statements and information include estimates, forecasts, information and statements as to Management's expectations with respect to, among other things, the future financial or operating performance of the Company and capital and operating expenditures. Often, but not always, forward-looking statements and information can be identified by the use of words such as "may", "will", "should", "plans", "expects", "intends", "anticipates", "believes", "budget", and "scheduled" or the negative thereof or variations thereon or similar terminology. Forward-looking statements and information are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Readers are cautioned that any such forward-looking statements and information are not guarantees and there can be no assurance that such statements and information will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company's expectations are disclosed under the heading "Risk Factors" in the Company's Annual Information Form dated March 31, 2009, which is filed with Canadian regulators on SEDAR (www.sedar.com). The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements and information whether as a result of new information, future events or otherwise. All written and oral forward-looking statements and information attributable to Foraco or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements.
SOURCE Foraco International SA
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