Armtec announces agreement to acquire Con-Force for $120 million



    Toronto Stock Exchange: ARF.UN

    GUELPH, ON, Sept. 10 /CNW/ - Armtec Infrastructure Income Fund (the
"Fund") (TSX: ARF.UN), through its wholly-owned subsidiary Armtec Limited
Partnership ("Armtec"), today announced it has entered into an agreement to
acquire all of the outstanding shares of the corporations which, directly or
indirectly, carry on the Con-Force business ("Con-Force") for an aggregate
purchase price of approximately $120 million subject to an adjustment for
working capital to be determined upon closing of the acquisition. Closing of
the acquisition is expected to occur on or about October 1, 2007, subject to
the satisfaction of customary closing conditions.
    Management will host a conference call at 4:30 p.m. (ET) on Monday,
September 10, 2007 to discuss the acquisition. Details of the call are found
at the end of this release.
    Con-Force is a leading manufacturer of precast and pre-stressed concrete
in Western Canada. Founded in 1949, Con-Force has developed a strong
reputation for providing innovative and quality engineered solutions.
Con-Force focuses on high value-added products requiring significant
engineering and manufacturing expertise. With approximately 40 in-house
engineers and drafts people and three large-scale, specialized production
facilities in British Columbia, Alberta and Manitoba, Con-Force is able to
service large infrastructure construction projects requiring specialized
engineered solutions. With revenue of $109.8 million and EBITDA(1) of $18.9
million for the 12 months ended July 31, 2007, management believes Con-Force
is the market leader in Western Canada.
    "Armtec's acquisition of Con-Force is a transformational step forward for
our company and our unitholders," said Charles M. Phillips, President and CEO
of Armtec. "It builds on our growth momentum, increasing consolidated revenues
by approximately two-thirds, and expands our range of products and services.
Con-Force is an excellent fit with Armtec and we look forward to integrating
their strong management team and utilizing their expertise to strengthen our
presence in the fast-growing infrastructure markets in Western Canada. Armtec
is now positioned for considerable expansion in infrastructure markets across
North America."

    Transaction Highlights

    -   The transaction will reinforce Armtec's position as a leader in the
        Western Canadian infrastructure construction market. Armtec will own
        one of the leading manufacturers of precast and pre-stressed concrete
        structures in Western Canada with high value-added engineered
        products, a diverse customer base that includes government,
        commercial and industrial clients.

    -   Con-Force is complementary to Armtec's product offering, leading to
        an expansion of current product offerings, such as engineered
        concrete solutions for a variety of infrastructure applications,
        including bridges and building applications.

    -   Con-Force has recently invested a large amount of capital to expand
        their production capacity and is well positioned to benefit from
        projected growth trends in Western Canadian infrastructure spending.

    -   The acquisition will provide greater cash flow stability through
        diversification of customers, products and geography.

    -   Significant future growth opportunities as a result of:

        -  Positive outlook for Western Canadian infrastructure growth due
           to increased government and private sector spending supported by
           strength in the energy and resources sectors.

        -  Precast and pre-stressed concrete solutions representing a growing
           product category.

        -  The fragmented nature of precast concrete industry providing
           considerable acquisition opportunities across North America.

    -   Con-Force is recognized as an industry leader in manufacturing of
        precast and pre-stressed concrete structures.

    -   Con-Force's management team has extensive knowledge of precast and
        pre-stressed concrete manufacturing and will continue in their
        leadership roles within the business.

    -   The acquisition would have been approximately 12% accretive to cash
        flows available for distribution per unit on a pro forma basis for
        the last 12 months ended June 30, 2007(2).

    "This transaction is a very positive development for our customers,
suppliers and employees," said Ron Adams, President and CEO of Con-Force. "Our
strong market presence in Western Canada directly complements Armtec's
existing lines of business. We look forward to working with Armtec's
management team to accelerate our significant growth opportunities and to
build greater value for the Fund's unitholders."
    TD Securities Inc. acted as exclusive financial advisor to Armtec and the
Fund on the acquisition of Con-Force.

    Description of Con-Force

    Con-Force designs, manufactures and installs precast and pre-stressed
concrete components for a variety of structures. Headquartered in Calgary with
three large scale, specialized production facilities in Calgary, Richmond, and
Winnipeg, Con-Force currently employs approximately 500 employees. In an
industry where shipping costs can be significant and facilities are typically
located close to the market, Con-Force has three strategically located
manufacturing facilities in Western Canada.
    Con-Force's products are used for both structural and architectural
purposes and in a variety of applications including:

    -   Bridges (47% of 2006 Sales): Girders and other components used for
        short- and medium-span bridges. Con-Force pioneered the use of
        precast/pre-stressed concrete in bridge construction throughout
        Western Canada. Durability, cost-effectiveness and low maintenance
        benefits have made precast concrete the dominant structural material
        for short to medium span bridges in Western Canada.

    -   Traditional (17% of 2006 Sales): Precast concrete solutions used in
        structural applications for a wide variety of building types,
        including stadiums, arenas, schools, healthcare facilities,
        industrial buildings and warehouses, retail shopping centres, office
        buildings and multi-family residential buildings.

    -   Architectural (13% of 2006 Sales ): Architectural precast concrete
        used for cladding that is customized by texture, colour and shape, to
        build facades for a wide range of construction projects.
        Architectural precast concrete provides architects with a flexible
        medium when designing facades for a wide range of buildings.

    -   Parkades (12% of 2006 Sales): Components for parkades, including
        precast concrete columns, beams, walls, stairs and clear-span double-
        tees. Con-Force's innovative solutions, such as the 12-foot, pre-
        topped double tee and the Vista Wall, maximize parking efficiencies,
        increase the speed of construction, improve aesthetics and user
        safety and reduce maintenance costs.

    -   Standard Products (8% of 2006 Sales): A variety of standard products,
        such as precast utility vaults, manholes and highway barriers for
        infrastructure construction applications.

    -   Marine (3% of 2006 Sales): Specialized precast components used for
        the construction of marine projects such as ports, marinas and docks.
        Concrete has increasingly become the material of choice for deep-sea
        wharves and trestles, due to its low initial costs and minimum
        maintenance requirements.

    Revenue in Alberta, British Columbia and Manitoba represented 51%, 40%,
and 9% of Con-Force's 2006 sales, respectively. In addition, management
estimates approximately 78% of 2006 revenue was generated from publicly funded
projects. Con-Force is well positioned to capitalize on the trend toward
increased spending on infrastructure and construction projects in Western
Canada that is resulting from a strong outlook for the energy and resources
    For the 12 months ended May 31, 2007, Con-Force had revenue of $107.4
million and EBITDA of $17.3 million. On a pro forma basis, Armtec's
distributable cash per unit, for the 12 months ended June 30, 2007, would have
increased by approximately 12% on a fully diluted basis(2). This level of
accretion does not reflect any potential synergies. For the 12 months ended
July 31, 2007, Con-Force had revenue of $109.8 million and EBITDA of
$18.9 million.

    Acquisition Financing

    The Fund has entered into an agreement with TD Securities Inc. and Scotia
Capital Inc. pursuant to which a syndicate of underwriters have agreed to
purchase 3,705,000 Units from the Fund for sale to the public at a price of
$16.40 per Unit, representing aggregate gross proceeds to the Fund of
$60,762,000 (the "Offering"). Such funds will be used to finance the
acquisition of the Con-Force business and related transactions. The remainder
of the purchase price will be funded by Armtec through existing cash balances,
committed credit facilities provided by Scotia Capital and a syndicate of
lenders and the issuance of $17,500,000 of securities exchangeable into Units
to be held by current Con-Force shareholders. The closing of the Con-Force
acquisition is expected to occur on or about October 1, 2007, and the closing
of the Offering is conditional upon the contemporaneous closing of the
Con-Force acquisition.
    The Fund's financial leverage is expected to remain modest, with a Debt
to Pro Forma Last 12- Month EBITDA(1) ratio of approximately 1.9 times(3).
    The securities to be offered have not been registered under the U.S.
Securities Act of 1933, as amended, and may not be offered or sold in the
United States absent registration or an applicable exemption from the
registration requirements. This news release shall not constitute an offer to
sell or the solicitation of an offer to buy nor shall there be any sale of the
securities in any state in which such offer, solicitation or sale would be

    Conference Call & Webcast

    Management will host a conference call at 4:30 p.m. (ET) on Monday,
September 10, 2007 to discuss the acquisition. Persons who wish to participate
can access the call using the following numbers: 416-849-9305 or
1-866-838-4337. The call will be webcast live and archived on the Armtec web
site at
    A taped rebroadcast will be available to listeners following the call
until 12:00 a.m. on Monday, September 17, 2007. To access the rebroadcast,
please dial 416-915-1035 or 1-866-245-6755 and quote the passcode 694925.

    About Armtec

    Armtec is a leading manufacturer and marketer of drainage products and
engineered solutions for infrastructure applications in a diverse
cross-section of industries, including the public infrastructure market and
private sector markets such as natural resources, residential drainage and
agricultural drainage in Canada. Armtec is Canada's only national
multi-material manufacturer specializing in corrugated high-density
polyethylene pipe, corrugated steel pipe and related engineered products.
Armtec also distributes a broad range of water control and geosynthetic
products, and manufactures and distributes certain high value-added engineered
products internationally. For further information, please visit Armtec's
website at Armtec Infrastructure Income Fund is
listed on the Toronto Stock Exchange, under the trading symbol ARF.UN.

    Forward-Looking Statements

    This news release contains certain statements that constitute
forward-looking information within the meaning of applicable securities laws
("forward-looking statements"). All statements other than statements of
historical fact contained herein are forward-looking statements, including,
without limitation, statements regarding the future financial position, cash
distributions, business strategy, proposed acquisitions (including the
Con-Force acquisition), budgets, litigation, projected costs and plans and
objectives of or involving the Fund or the businesses in which it has
invested. Prospective investors can identify many of these statements by
looking for words such as "believe", "expects", "will", "intends", "projects",
"anticipates", "estimates", "continues" and similar words or the negative
thereof. There can be no assurance that the plans, intentions or expectations
upon which these forward-looking statements are based will occur. Although
management believes that the expectations represented in such forward-looking
statements are reasonable, there can be no assurance that such expectations
will prove to be correct.
    By their nature, forward-looking statements require assumptions and are
subject to inherent risks and uncertainties, including those discussed herein.
There is significant risk that forward-looking statements will not prove to be
accurate. You are cautioned not to place undue reliance on forward-looking
statements made herein because a number of factors could cause actual future
results, conditions, actions or events to differ materially from the targets,
expectations, estimates or intentions expressed in the forward-looking
    The future outcomes that relate to forward-looking statements may be
influenced by many factors, including but not limited to: industry
cyclicality; competition; reduction in demand for products; collection from
customers; relationships with suppliers; lack of long-term agreements;
expiration of rights under licence and distribution arrangements; raw material
price volatility; product liability; intellectual property; reliance on key
personnel; environmental; collective bargaining; interest rates; uninsured and
underinsured losses; operating hazards; risks of future legal proceedings;
dependence on other Armtec entities; income tax matters; leverage and
restrictive covenants; credit facilities; nature of units; distribution of
securities on redemption or termination of Fund; restrictions on potential
growth; effect of market interest rates on price of Units; undiversified and
illiquid holdings in Armtec Operating Trust; potential dilution; and various
risks relating to the Con-Force acquisition, including risks relating to
integration and realization of expected synergies, Con-Force's reliance on key
personnel, potential undisclosed liabilities associated with the Con-Force
acquisition, and Armtec's limited recourse against the vendors of Con-Force.
You are cautioned that the foregoing list of factors is not exhaustive and
that when relying on forward-looking statements to make decisions with respect
to the Fund, investors and others should carefully consider these factors, as
well as other uncertainties and potential events, and the inherent uncertainty
of forward-looking statements.
    The forward-looking statements contained herein are expressly qualified
in their entirety by this cautionary statement. The Fund undertakes no
obligation to publicly update or revise any forward-looking statements except
as expressly required by applicable securities law.
    Risks related to the Fund have been summarized in the Fund's latest
Annual Information Form, Management's Discussion and Analysis included in the
Annual Report and quarterly financial reports available on or
the Fund's web site at


    "Con-Force" is a registered Canadian trademark of Con-Force Leasing Inc.

    (1) "EBITDA" is not a recognized measure and does not have a standardized
        meaning under Canadian generally accepted accounting principles
        ("GAAP"). With respect to the Fund and Con-Force, it is determined as
        earnings before interest, tax (other than capital tax), depreciation,
        and amortization of intangible expenses. Investors are cautioned that
        EBITDA should not be construed as an alternative to using net
        earnings for the year (as determined in accordance with GAAP) as an
        indicator of the Fund's or Con-Force's performance or as an
        alternative to cash flows from operating, financing and investing
        activities as a measure of the Fund's or Con-Force's liquidity and
        cash flows. Further, methods used by the Fund and Con-Force for
        calculating EBITDA may differ from the methods used by other issuers
        and, accordingly the Fund's and Con-Force's EBITDA may not be
        comparable to similar measures reported by other issuers.

    (2) Based on the 12 months ended May 31, 2007 for Con-Force.

    (3) Based on the 12 months ended July 31, 2007 for Con-Force.

For further information:

For further information: Charles M. Phillips, President & Chief
Executive Officer, Armtec Limited Partnership, Tel: (519) 822-0210, Fax: (519)
822-8894; Carrie Boutcher, VP, Finance & Interim Chief Financial Officer,
Armtec Limited Partnership, Tel: (519) 822-0210, Fax: (519) 822-8894

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