Attractive acquisition provides access to Texas, a commercial platform, portfolio diversification and 200,000 RCEs
/NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES/
TORONTO, Feb. 17, 2015 /CNW/ - Crius Energy Trust (TSX: KWH.UN) ("Crius" or "the Trust") today announced that Crius Energy LLC ("Crius Energy") has entered into a binding share purchase agreement to acquire all of the outstanding equity interests in TriEagle Energy LP ("TriEagle"), a Houston-based energy retailer, for an aggregate purchase price of approximately US$22 million, subject to regulatory and other approvals. The acquisition adds a diverse portfolio of residential, commercial and municipal aggregation customers totaling approximately 200,000 residential customer equivalents (RCEs) in Texas, Pennsylvania, and New Jersey.
"We are pleased to welcome a pioneer in deregulated energy to the Crius family of brands," said Michael Fallquist, Chief Executive Officer of the Trust and Crius Energy. "This acquisition, our largest since IPO, is consistent with our strategy to act upon attractive opportunities to drive growth while diversifying our portfolio and is expected to be accretive in its first full year. We plan to leverage this acquisition for entry into Texas through multiple Crius distribution channels and will immediately begin to work with the talented TriEagle team to significantly expand our commercial business across all Crius markets."
This transaction accelerates the ongoing diversification of Crius Energy's customer portfolio by increasing the company's overall number of commercial customers, fixed rate accounts, and adding a significant customer base in Texas. In addition, the acquisition broadens Crius Energy's distribution capabilities through an expanded commercial broker network and a track record with municipal aggregations.
"Crius is committed to a smooth transition that will be seamless for our customers," explained Fallquist. "TriEagle customers will continue to benefit from the strong value propositions and innovative products offered by this well-respected leader in the Texas retail energy industry, now backed by the proven strategy and financial resources of Crius Energy."
The acquisition is expected to close early in the second quarter of 2015, and will be funded by cash and availability under the company's credit facility with Macquarie Energy LLC. The US$22.2 million purchase price is made up of US$18.8 million in cash and US$3.4 million in phantom unit rights which will be settled in cash based on future trading prices of Trust units on the Toronto Stock Exchange over a two-year vesting schedule. Crius expects the acquisition to provide revenue and operational synergies and be accretive to distributable cash flow per unit in 2015.
"This acquisition, combined with our strong recent results, firmly positions Crius to continue to deliver long-term sustainable distributions," added Fallquist. "We are proud to enter 2015 with a transaction that we believe will deliver accretive value for the company, and perhaps even more significant, it is with confidence and excitement that we look toward how this acquisition enhances our organic growth potential through an immediate entry into Texas, the largest deregulated market in the United States, and the addition of a highly successful commercial platform."
About Crius Energy
The Trust was established to provide investors with a distribution-producing investment through the acquisition of a 26.8% ownership interest in Crius Energy, LLC ("Crius Energy"). With more than 800,000 residential customer equivalents (expected as of the closing of the TriEagle acquisition), Crius Energy is a comprehensive energy solutions partner that provides electricity, natural gas and solar products to residential and commercial customers. Crius Energy connects with energy customers through an innovative family-of-brands strategy and multi-channel marketing approach. This unique combination creates multiple access points to a broad suite of energy products and services that make it easier for consumers to make informed decisions about their energy needs. Crius Energy sells energy products in 20 states and the District of Columbia (expected as of the closing of the TriEagle acquisition) with plans to continue expanding its geographic reach.
The Trust intends to qualify as a "mutual fund trust" under the Income Tax Act (Canada) (the "Tax Act"). The Trust will not be a "SIFT trust" (as defined in the Tax Act), provided that the Trust complies at all times with its investment restriction which precludes the Trust from holding any "non-portfolio property" (as defined in the Tax Act). Material information pertaining to the Trust may be found on SEDAR at www.sedar.com or on the Trust's website at www.criusenergytrust.ca.
Caution Regarding Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of applicable Canadian securities laws, including (but not limited to) statements regarding the belief or current expectations of Crius and its Board of Directors regarding the acquisition described in the press release, including that the acquisition will be accretive to earnings and gross margins in 2015 (or in the future) and that all necessary regulatory and other approvals will be obtained. A statement is forward-looking when it uses what Crius knows and expects today to make a statement about the future. Forward-looking statements may include words such as anticipate, assumption, believe, could, expect, goal, guidance, intend, may, objective, outlook, plan, seek, should, strive, target, will or other similar expressions. These statements relate to future events or future performance and reflect current assumptions, expectations and estimates of management regarding the business and operations of TriEagle, the expected closing date and the completion of the acquisition, the number of commercial and fixed rate accounts being acquired, the retail energy market in Texas, growth, results of operations, performance, business prospects and opportunities, Canadian economic environment and ability to attract and retain customers. Such forward-looking statements reflect current assumptions, expectations and estimates of management and are based on information currently available to Crius as at the date of this press release. Forward-looking statements are subject to certain risks and uncertainties, and should not be read as guarantees of future performance or results and actual results may differ materially from the conclusion, forecast or projection stated in such forward-looking statements. These risks, uncertainties and other factors include but are not limited to, the Trust's objectives and status as a mutual fund trust and not a SIFT trust, results of operations, financial position or cash flows, customer revenues and margins, customer additions and renewals, customer attrition, customer consumption levels, general and administrative expenses, treatment under governmental regulatory regimes, distributable cash and Crius expectations and estimates regarding the payment of distributions to unitholders. Such assumptions, expectations, estimates, risks and uncertainties are discussed under "Risk Factors" (beginning on page 18) and "Forward-Looking Statements and Risk Factors" (beginning on page 1) in Crius's Annual Information Form dated March 26, 2014 and in Crius's Management's Discussion and Analysis dated November 18, 2014. Consequently, we cannot guarantee that any forward-looking statements will materialize. Readers should not place any undue reliance on such forward-looking statements. Crius disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by law.
SOURCE Crius Energy Trust
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