- - Signs letter of intent to purchase assets of 'Top 3' oil sands mining contractor currently under CCAA protection - -
TORONTO, Aug. 9 /CNW/ - Aecon Group Inc. ("Aecon") (TSX:ARE) today announced that it has entered into a Letter of Intent to acquire the assets of Cow Harbour Construction Ltd. ("Cow Harbour"), one of the top three oil sands mining, land reclamation and contracting services business, based in Fort McMurray, Alberta.
Under the Letter of Intent, Aecon will pay $180 million to acquire Cow Harbour's capital assets in Alberta, including its fleet of over 500 pieces of mining equipment, as well as all of Cow Harbour's real property, inventory, contracts, leases, licenses, intellectual property and other assets. The Letter of Intent has been approved by the Court of Queen's Bench of Alberta ("the Court") pursuant to the Companies' Creditors Arrangement Act (CCAA) and the transaction is targeted to close on or about August 31, 2010. Completion is subject to a number of conditions, including applicable regulatory approval and approvals that are required from a large number of interested parties, including the Court, within a complex CCAA process. Therefore until these conditions are satisfied and approvals secured there is no certainty that the transaction will be completed.
A private company founded in 1987, Cow Harbour had grown to become one of the top three mining and land reclamation companies in the oil sands, with over 800 employees, revenues of $230 million, and strong EBITDA performance before it ran into difficulties when a number of operational issues emerged following consecutive years of rapid growth. The subsequent tightening of credit markets exacerbated Cow Harbour's financial difficulties, and the company filed for CCAA protection from its creditors in April of this year.
The Letter of Intent provides for a $10 million deposit, a further $50 million to be paid in cash upon closing, and the balance of the purchase price to be paid within 90 days of closing. Aecon intends to finance the transaction primarily through traditional equipment loan financing from asset-based lenders that have already expressed strong interest in assisting with this transaction.
With the addition of Cow Harbour, Aecon would become one of the largest mining and land reclamation contractors in the oil sands, complementing its current position as one of the leading heavy industrial contractors in the oil sands. Upon completion of the transaction, Cow Harbour's assets would become part of Aecon's Infrastructure division.
The acquisition of Cow Harbour's equipment and resources in Alberta, combined with those of Aecon subsidiary Alarie Construction in Ontario, would significantly enhance Aecon's ability to service the mining needs of clients right across Canada. In particular, as demand for Canada's resource commodities continues to increase, Aecon will be well positioned to participate in those opportunities.
"The expansion of our capabilities in the oil sands industry has been a strategic priority for us," said John M. Beck, Chairman and CEO of Aecon Group Inc. "This acquisition will solidify our competitive profile in a market we believe is poised for significant growth. The fact that we've been able to acquire a truly competitive fleet in this manner only adds to the attraction of this investment for us."
"We believe this transaction provides important benefits to all parties," stated Scott Balfour, President of Aecon Group Inc. "It is a solution that keeps Cow Harbour intact as a going concern, allows creditors to achieve significant repayment of their loans, and provides Aecon with entry into a strategically important market segment at a discount to any other entry strategy."
"The addition of Cow Harbour provides the ideal platform for Aecon's growth in the mining segment of the oil sands market," said Teri McKibbon, CEO of Aecon's Infrastructure division. "Cow Harbour has a strong presence in the contract mining and land reclamation market, a sizeable equipment fleet, and most importantly, a very strong and well respected employee base. We believe this acquisition will enable us to strengthen and deepen our relationships with key clients in the oil sands and lead to many additional opportunities to work with those clients across our wide range of services."
Upon closing of the transaction, Aecon intends to offer employment to most of the employees of Cow Harbour at compensation levels reasonably consistent with those currently in place.
Aecon Group Inc. is Canada's largest, publicly traded construction and infrastructure development company. Aecon and its subsidiaries provide services to private and public sector clients throughout Canada and on a selected basis internationally. Aecon is committed to safely and profitably delivering best of class services and products in an environmentally sensitive manner, and is pleased to be recognized as one of the 50 Best Employers in Canada as published by Report on Business Magazine.
The information in this presentation includes certain forward-looking statements. These "forward-looking" statements are based on currently available competitive, financial and economic data and operating plans but are subject to risks and uncertainties. In addition to general global events outside Aecon's control, there are factors which could cause actual results, performance or achievements to vary from those expressed or inferred herein. Risk factors are discussed in greater detail in the section on "Risk Factors" in the Annual Information Form filed on March 31, 2010 and available at www.sedar.com. Forward-looking statements include information concerning possible or assumed future results of operations or financial position of Aecon, as well as statements preceded by, followed by, or that include the words "believes," "expects," "anticipates," "estimates," "projects," "intends," "should" or similar expressions. Important factors, in addition to those discussed in this document, could affect the future results of Aecon and could cause those results to differ materially from those expressed in any forward-looking statements.
SOURCE Aecon Group Inc.
For further information: For further information: Mitch Patten, Senior Vice President, Corporate Affairs, Aecon Group Inc., 416-436-2803, firstname.lastname@example.org; www.aecon.com