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NISKU, AB, April 3, 2017 /CNW/ - Hyduke Energy Services Inc. ("Hyduke" or the "Company") is pleased to announce that it has entered into a Share Purchase Agreement (the "Agreement") to purchase (the "Acquisition") all of the issued and outstanding shares of Avalanche Metal Industries Ltd. ("Avalanche"), a private corporation engaged in the business of structural steel manufacturing, including production tanks, steps and ladders for production tanks and other equipment for industries including the oilfield and forestry. Based in Kelowna, B.C., Avalanche is a low cost manufacturer of structural steel products ideally located in central B.C. to support Hyduke's expansion into new markets.
The Acquisition is expected to close on April 4, 2017, or such later date which may be agreed, with an outside date of April 30, 2017. The consideration is cash but immaterial, and further particulars of the Acquisition are available in the Corporation's Material Change Report filed today. The Acquisition supports Hyduke's stated strategy to expand beyond the fabrication and support of drilling and well servicing rigs and related oilfield services equipment to become a diversified designer, fabricator and manufacturer of equipment required for the drilling, completion, production and maintenance of upstream oil, natural gas and natural gas liquids.
Completion of the Acquisition is subject to the fulfillment of certain conditions typical to a transaction of this nature.
Patrick F. Ross, Director and Chief Executive Officer of the Corporation, is also a director and, through his wholly-owned corporation, 1017348 Alberta Ltd. ("1017348"), a shareholder of Avalanche, and therefore, the Acquisition constitutes a "Related Party Transaction" within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101") insofar as it relates to Mr. Ross only. 1017348 owns 40 Class "A" Voting Non-Participating and 40 Class "C" Non-Voting Common Shares of Avalanche. On closing of the Acquisition, 1017348 will be paid an aggregate of $75,000 for its Avalanche Shares. Subsequent to closing, the purchase price for the Avalanche Shares may be adjusted upward or downward based on a reconciliation of the net book value of the Avalanche assets. Based on information currently in the Corporation's possession, any upward increase in the purchase price is not anticipated to exceed 10% of the aggregate amount that 1017348 was paid for its Avalanche Shares on closing. There are no other "related parties" in connection with the Acquisition.
The Corporation is relying on the formal valuation and minority approval exemptions of subsections 5.5(a) and 5.7(1)(a) of MI 61-101 as neither the fair market value of the subject matter of, nor the fair market value of the consideration for, the Related Party Transaction exceeds 25% of the Corporation's market capitalization. The Acquisition was approved by the independent directors of the Corporation and Mr. Ross did not participate in the discussions or the vote of the board relating to such approval.
Note Respecting Material Change Report Filing
The Acquisition is expected to close on or about April 4, 2017. The material change report in respect of the Acquisition is being filed less than 21 days before the expected date of the closing of the Acquisition. Due to the simplicity of the Acquisition, there being no requirement for approval by the Corporation's shareholders, the business desire to rapidly integrate Avalanche into the Corporation's business, and the de minimis nature of the related party element of the Acquisition, the Corporation believes that such filing period is reasonable.
Forward looking information
This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this news release contains forward-looking statements and information relating to the expected completion of the Acquisition and the expected benefits accrued to the Corporation upon completion of the Acquisition. These forward-looking statements and information are based on certain key expectations and assumptions made by the Corporation. Completion of the Acquisition is subject to a number of conditions which are typical for transactions of this nature. Assumptions have been made with respect to the satisfaction of all conditions precedent under the Agreement and general assumptions respecting the business and operations of both the Corporation and Avalanche, including that Avalanche will continue to operate in a manner consistent with past practice and pursuant to certain industry and market conditions. Although the Corporation believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information as the Corporation cannot give any assurance that they will prove to be correct. Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the failure to satisfy any of the conditions to completion of the Acquisition, and the business, operational and/or financial performance of Avalanche may be materially different from that currently anticipated. Readers are cautioned that the foregoing list of risks and uncertainties is not exhaustive. Other risk factors that could affect the Corporation's operations or financial results are included in the Corporation's annual information form and may be accessed through the SEDAR website (www.sedar.com). The forward-looking statements and information contained in this news release are made as of the date hereof and the Corporation does not undertake any obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While the Company may elect to, the Company is under no obligation and does not undertake to update this information at any particular time, except as required by law.
The TSX has neither reviewed nor approved this release.
SOURCE Hyduke Energy Services Inc.
For further information: James Hill, Interim CFO, Tel (780) 955-0355