WesternOne Announces Update to Capital Allocation Strategy and Provides 2015 Outlook

VANCOUVER, Feb. 11, 2015 /CNW/ - WesternOne Inc. ("WesternOne" or the "Company") (Toronto Stock Exchange: WEQ, WEQ.DB and WEQ.DB.C) today announced an update to its capital allocation strategy following a meeting of its Board of Directors. This new strategy is discussed below in the context of WesternOne's 2015 outlook and is intended to provide a prudent and conservative approach to enhancing the Company's financial flexibility to deploy capital.

Update to Capital Allocation Strategy

The rapid and unexpected decline in global crude oil prices in recent months has impacted capital spending budgets among many participants in the oil and gas and related support industries, which has contributed to a softer economic environment for companies throughout North America.

Although a majority of WesternOne's revenues is not directly tied to the oil and gas sector, recent forecasts for a potentially protracted period of lower crude oil prices have created lingering uncertainty across many business areas in which WesternOne operates, including the construction and infrastructure sector in Western Canada and industries which support the shale oil and gas markets of the continental USA.

Consequently, WesternOne believes it is fiscally prudent to enact immediate changes to its 2015 capital allocation strategy, which include suspending the Company's monthly dividend in order to maintain its financial flexibility to deploy capital. The Premium DividendTM and Dividend Reinvestment Plan will therefore also be suspended.

Future decisions over reinstating a dividend will be based on a number of factors that will be carefully weighed, including but not limited to, evolving market conditions and the financial and operational performance of the Company and each of its business platforms.

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TM Denotes trademark of Canaccord Genuity Corp.

2015 Outlook

Preservation of cash flow from sustainable operations, cost management, and orderly servicing and repayment of debt are WesternOne's main goals for 2015. Management expects to achieve these goals through redeploying existing capital to opportunities that deliver higher returns.

"We will continue to assess WesternOne's operating performance and its business environment, and implement appropriate capital allocation, financial and operational strategies as we navigate the current business environment," said Peter Blake, Chief Executive Officer. "We believe the prudent and conservative steps we are announcing today are in the best long-term interests of our shareholders and investors. We also believe that over the coming years, the Western Canadian energy, construction and infrastructure industries, in particular, continue to represent an exceptional growth opportunity for WesternOne".

WesternOne Infrastructure Services ("WIS")

Management intends to take steps within WIS to ensure that existing capital in the business is deployed effectively and efficiently to deliver designed returns, including, as part of its ordinary course of business, redeployment of rental assets to markets in which higher utilization and demand presently exist. Management expects to deploy minimal new growth capital expenditures on rental equipment in 2015, although it will continue to assess the market conditions and adjust the level of fleet disposals and capital expenditures as necessary to optimize utilization and to maintain and grow market share in specific markets.

Management expects WIS to continue to operate in 2015 in a business environment with: (i) ongoing general construction activities in its major markets; (ii) organic growth from recently launched branches in Terrace and Fort St. John, BC and in Grande Prairie and Fort McMurray, Alberta; and (iii) the movie and TV production sector supported by a more favourable foreign exchange rate. 

WIS's oil and gas related heat business is expected to continue to be stable as its heat and power services primarily support maintenance and production operations at existing, mature producers.

Britco – Western Canadian Operations

To better balance workload to capacity, Britco recently reduced its workforce in its Penticton, BC plant by 30 workers, representing 16% of the manufacturing staff at this facility. Britco expects to have a solid start to 2015 at its three manufacturing facilities in BC and Alberta, as it executes on the balance of the construction of modular work camp units for the Manitoba Hydro and Devon workforce accommodations projects. Other than the completion of the manufacturing component of these two projects sometime in mid 2015, the completion of the related installations for these projects which is likely to run through the end of 2015 and the relatively steady modular building leasing activity anticipated for 2015, management believes that Britco is entering a period of lower revenue predictability for large construction projects.  

Britco – USA Operations ("Britco USA")

In light of realigned capital spending plans by many of Britco USA's customers related to the shale oil and gas industries, management has undertaken cost alignment measures by recently reducing plant headcount by 125 workers, representing 46% of the manufacturing staff.

Management will continue to monitor activity in both its Western Canadian and US businesses and adjust production levels to meet the demands of the energy and other potential markets throughout 2015.

2014 Annual Financial Information

Management expects to release its financial results for the year ended December 31, 2014 by March 12, 2015. Conference call details will be contained in a subsequent press release.

Forward-looking Information

Certain statements in this press release may constitute "forward-looking" information that involves known and unknown risks, uncertainties and other factors, and it may cause actual results, performance or achievements or industry results, to be materially different from any future results, performance or achievements or industry results expressed or implied by such forward-looking information. Forward-looking information is identified by the use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", "will", "would", and similar terms and phrases, including references to assumptions. Such information includes, without limitation, statements with respect to: future decisions regarding WesternOne's dividend; management's goals of preserving cash flow from sustainable operations, cost management, and orderly servicing and repayment of debt through redeploying existing capital to opportunities that deliver higher returns; the future growth opportunity for WesternOne provided by the Western Canadian energy, construction and infrastructure industries; steps to be taken by WIS to ensure effective and efficient deployment of capital; management's expectation of deployment for growth capital expenditures for WIS during 2015; management's expectation of the business environment for WIS in 2015; Britco's expected manufacturing activities in 2015; the anticipated completion date of the manufacturing and installation components of the Manitoba Hydro and Devon workforce accommodation project; management's belief that Britco is entering into a period of lower revenue predictability for large construction projects; management's intention to monitor activity in Britco's Western Canadian and US businesses to adjust production levels to meet the demands of markets throughout 2015; and the expected timing of the release of WesternOne's financial results for the year ended December 31, 2014. Actual events or results may differ materially.

Forward-looking information contained in this press release is based on certain key expectations and assumptions made by WesternOne, including, without limitation: the outlook of WesternOne's business and the economy in Western Canada and the US, the supply and demand for WesternOne's products and services, a protracted period of lower crude oil prices and management's assessment of future plans and operations. Although the forward-looking information contained in this press release is based upon what the WesternOne's management believes to be reasonable assumptions, WesternOne cannot assure investors that actual results will be consistent with such information. Forward-looking information reflects current expectations of management regarding future events and operating performance as of the date of this press release. Such information involves significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking information, and a description of these factors can be found under "Risk Factors" in WesternOne's Annual Information Form dated March 28, 2014 and Management's Discussion and Analysis dated November 13, 2014, which are available on SEDAR (www.sedar.com).

The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement. Forward-looking information reflects management's current beliefs and is based on information currently available to WesternOne. The forward-looking information is made as of the date of this press release and WesternOne assumes no obligation to update or revise such information to reflect new events or circumstances, except as may be required by applicable law.

About WesternOne

WesternOne seeks to acquire and grow businesses in the construction and infrastructure services sectors in order to generate value for its shareholders.

Additional Information

Additional information relating to WesternOne and other public filings, is available on SEDAR at www.sedar.com or on WesternOne's website at www.weq.ca.

Trading Symbols

Toronto Stock Exchange: WEQ, WEQ.DB and WEQ.DB.C

THE TORONTO STOCK EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR THE ACCURACY OF THIS RELEASE.

SOURCE WesternOne Inc.

For further information: Peter Blake, Chief Executive Officer, WesternOne Inc., Suite 910, 925 West Georgia Street, Vancouver, BC V6C 3L2, Phone: (604) 678-4042, E-mail: peter.blake@weq.ca; For investor relations information, please contact: Andrew Greig, Manager of Investor Relations, WesternOne Inc., Suite 910, 925 West Georgia Street, Vancouver, BC V6C 3L2, Phone: (604) 678-4042, E-mail: agreig@weq.ca

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