NISKU, AB, Oct. 25, 2012 /CNW/ - Hyduke Energy Services Inc. ("Hyduke" or the "Company") (TSX:HYD) reports today that the Board of Directors of Hyduke has unanimously recommended rejection of the offer from Do All Industries Ltd. ("Do All") for all of the issued and outstanding common shares of the Company for $0.83 per share (the "Offer"). The Board of Directors of Hyduke recommends that shareholders reject the offer and not tender their shares to the bid as the Offer is inadequate and not in the best interests of shareholders or Hyduke. The Board has prepared a Directors' Circular dated October 17, 2012 which has been mailed to shareholders and filed on SEDAR.
The Board of Directors took into account numerous factors in reaching its unanimous recommendation including the following:
- The Do All Offer substantially undervalues Hyduke and does not recognize the shareholder value present in the fair market value of Hyduke's net assets, the strong revenue growth achieved over the past three years, the successful international market development, the Texas expansion reducing manufacturing costs, and the substantial goodwill present in Hyduke;
- The written opinion of Sequeira Partners Inc. Hyduke's financial advisor, is that the Offer is inadequate to Hyduke shareholders from a financial point of view;
- Superior proposals providing greater value to Shareholders may emerge as a result of the Special Committee's active value maximization process;
- The timing of the Do All Offer is highly opportunistic and disadvantageous to Shareholders and the Offer is highly conditional for the benefit of DoAll shareholders;
- Market sentiment supports the financial inadequacy of the Do All Offer, including the fact that, as of the date the Directors' Circular was prepared, the Offer represents an 8% discount to the current market price of the Shares;
- Hyduke's directors and officers who own or exercise control or direction over an aggregate of 5,646,961 Shares, representing approximately 23% of the issued and outstanding Shares, intend to reject the Do All Offer.
Hyduke's Chairman, Myron Yurko, explained, "The Board determined that the Offer is grossly undervalued and fails to compensate shareholders for Hyduke's current fair value, and fails to recognize factors supporting future value such as revenue growth and international market development, and is highly opportunistic and conditional to the benefit of Do All. The Directors' Circular details all of the reasons supporting the Board's conclusion. In fairness to our shareholders, the Board unanimously recommends rejection."
Mr. Yurko confirmed that the Board has been solicited by and has initiated contact with numerous third parties who have expressed an interest in pursuing an alternative transaction with Hyduke. Among other initiatives, Hyduke has entered into numerous confidentiality agreements and has established a data room for the purpose of providing confidential information to third parties. "We are currently assessing and negotiating a number of alternative transactions, any one of which will likely result in greater value to our shareholders than they would realize under the terms of the Do All Industries offer", said Mr. Yurko.
The Board of Directors is also actively evaluating the process of implementing a Shareholder Rights Plan prior to the Offer expiry date.
There is no need for Hyduke shareholders to do anything immediately. The offer is currently open until November 12, 2012 and it is possible that one or more extensions may be required to deal with regulatory issues. Shareholders are urged to read the Directors' Circular which is available for download on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com. The Board intends to fully communicate with Hyduke's shareholders should there be any other alternative offers prior to the expiry of the offer.
Hyduke is an integrated oilfield services company with over thirty years experience in the manufacture, repair and distribution of oilfield equipment and supplies in Canada and worldwide. Hyduke specializes in providing customized, integrated solutions to the drilling and well service industries including:
- Turn-Key Equipment - drilling rig and service rig packages including in-house design, engineering and drafting, major component procurement and overall project management;
- Life Cycle Management - inspection, certification, service, repair and supply services throughout the operating life of the drilling or well service rig; and
- Single Source Supply - providing new capital equipment, repair and maintenance on existing capital equipment and supply of operating consumables.
Hyduke is headquartered in Nisku, Alberta and has facilities in Edmonton, Calgary, Nisku, Leduc, Red Deer and Lloydminster, Alberta and Houston, Texas, USA.
Hyduke operates in three operating segments. The Drilling Equipment segment includes manufacture and repair of land based drilling rigs and drilling rig structures, supply and repair of drilling rig equipment, procurement and distribution of drilling supplies, supply and service of pneumatic controls, engineering and design of drilling rigs and inspection and certification of drilling rig equipment. The Well Service Equipment segment includes manufacture and repair of well service rigs, mobile and skid mounted pump units and other well service equipment, procurement and distribution of well servicing supplies, supply and service of pneumatic controls, engineering and design of well service rigs and inspection and certification of well service equipment. The Other Oilfield Services segment includes manufacture and distribution of cased hole and overburden drill bits and drilling systems, custom and production machining services, distribution and repair of truck-mounted equipment including cranes, winches and dump boxes and industrial sandblasting, painting and collision repair.
The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this News Release.
Forward Looking Statements
This report contains certain forward-looking statements under the heading "Outlook" and elsewhere concerning future events or the Company's operations, anticipated financial performance, business prospects and strategies of Hyduke. Forward-looking information typically contains statements with words such as "anticipate", "believe", "estimate", "expect", "plan", "intend" or similar words suggesting future outcomes or outlooks on, without limitation, estimates of business activity, supply and demand for the Company's products, the estimated amounts and timing of capital expenditures, anticipated future debt levels, or other expectations, beliefs, plans, objectives, assumptions or statements about future events or performance. Readers are cautioned not to place undue reliance on forward-looking information. By its nature, forward-looking information involves numerous assumptions, inherent risks and uncertainties both general and specific that may cause actual future results to differ materially from those contemplated and contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur. These factors may affect anticipated earnings or assets and include, but are not limited to: industry activity levels, market liquidity, customer credit risk, competition, oil and gas prices, product liability, fixed price contracts, development of new products, uninsured and underinsured losses, access to additional financing, source of supply of raw material and third party components, availability of key personnel, agreements and contracts, government regulations, foreign exchange exposure, interest rate risk, international scope of operations, environmental health and safety regulations and Hyduke's anticipation of and success in managing the risks implied by the foregoing. The Company cautions that the foregoing list of important factors is not exhaustive. The Company believes that the expectations reflected in the forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this report should not be unduly relied upon. The forward-looking statements in this report speak only as of the date of this report. Hyduke undertakes no obligation to update publicly or otherwise revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required pursuant to applicable securities legislation.
SOURCE: Hyduke Energy Services Inc.
For further information:
Chair of the Board
Gordon R. McCormack
President and Chief Executive Officer