ST. JOHN'S, NL, April 13 /CNW/ - Rutter Inc. (TSX: RUT), a global
technology, engineering and automation enterprise, announced today that it has
signed Share Purchase Agreements to acquire 100% of Western Canada
headquartered Hinz Automation Inc. (Hinz).
Hinz is a well respected, privately held company with a 35 year history
of leadership in delivering automation solutions. With offices in Saskatoon,
Calgary, Edmonton and Vancouver, Denver and San Diego, Hinz is very well
established in Western North America and a logical fit with Rutter's strategy
to grow organically and through acquisitions. With 225 employees, the company
is similar in size to Rutter Inc.'s subsidiary, Rutter Engineering &
Automation and for the year ended September 30, 2006 its Audited Financial
Statements reported revenues of $42.4 million. The normalized EBITDA(1) for
the same period is $6.8 million.
"As Hinz is a growing and profitable enterprise this investment is
accretive from day one," said Donald I. Clarke, Chairman and CEO of Rutter.
"This transaction enables us to merge two businesses with a shared vision to
build a truly global, vendor-independent, automation enterprise and achieve
significant integration savings. We see an excellent fit with Rutter's
experience and relationships in the international offshore oil and gas sector
and Hinz' onshore experience in a booming western oil and gas economy. The two
companies have no geographic overlap and over and above the obvious synergies
in oil and gas, there are complementary strengths in forestry, utilities,
heavy industrial, food and beverage and other sectors," Clarke added.
Ryan Hinz, MBA, P. Eng., CEO of Hinz Automation, will be named President
and CEO of Rutter Engineering & Automation and Glenn Willar, P. Eng., current
President of Rutter Engineering & Automation, will become its Chief Operating
Officer. "All Hinz senior management will remain with the combined entity and
are strongly committed to continuing to grow this business," said Ryan Hinz.
"There are obvious synergies in combining the two companies. We are extremely
excited about the opportunity to contribute to a team with global vision and
the experience and assets to act on that vision."
"The Hinz acquisition more than doubles the size of Rutter Engineering &
Automation and drives the Company into high growth markets in both Canada and
the United States. Looking at 2006 year end audited figures, combined revenues
for Rutter Inc. and Hinz are $116.7 million, surpassing a key threshold for
gaining customer confidence when competing for larger contracts," said Clarke.
"This strengthening of Rutter Engineering & Automation bodes well for the
entire Company," said Clarke. "As recent quarterly results show, Technologies
Division revenue and EBITDA from company-owned products have increased
substantially with voyage data recorder sales continuing to be brisk and our
high resolution radar processing capability gaining much attention. With
continued success from our company owned products and a strengthened Rutter
Engineering & Automation, both divisions are now well positioned to deliver
solid financial performance over the coming quarters," Clarke concluded.
Rutter Inc. will acquire Hinz for total consideration of $36,500,000;
payable in the form of $20,000,000 cash and 14,615,385 shares of the Company
issued at $0.65 due at closing and $7,000,000 in promissory notes bearing
interest at 10% due on or before April 30, 2008.
To facilitate this transaction, Rutter has signed a term sheet with
Crown Capital Partners Inc. (Crown) to provide a $15 million term loan for
18 months at an interest rate of 12% per annum and a $25 million term loan for
a period of 66 months from closing at interest rates varying up to 16%. Crown
will also receive 4.0 million warrants each warrant exercisable to purchase
one Rutter share at $0.65 for a period of 66 months.
As well, Rutter intends to raise between $10 million and $15 million
through an unbrokered private placement of units at $0.65 with each unit
comprised of one common share and 1/2 warrant. Each whole warrant would
entitle the holder to purchase one Rutter share at $0.80 for a period of
18 months. Insiders of Rutter may participate in the private placement for up
to 2,572,230 Units.
In conjunction with these transactions, Rutter also intends, subject to
the receipt of all required approvals, to redeem the existing $10 million
convertible debentures, 4 Million of which are held by insiders, which mature
in April 2008, consolidate short-term debt and eliminate bank lines for both
Rutter and Hinz.
Immediately prior to giving effect to the transaction Rutter will have
43,426,896 shares issued and outstanding and 57,555,496 on a fully diluted
The closing dates for all these transactions are anticipated to be on or
about April 30, 2007. Upon closing of all the transactions, the shares of
Rutter outstanding will: (i) based on a minimum offering of $10 million under
the private placement, increase by 30,000,000 shares representing 69% of the
current and issued outstanding shares (41,692,309 shares on a fully diluted
basis representing 96% of the current issued and outstanding shares); or (ii)
based on a maximum offering of $15 million under the private placement,
increase by 37,692,307 shares representing 87% of the current issued and
outstanding shares (53,230,768 shares on a fully diluted basis representing
123% of the current issued and outstanding shares).
The total number of shares issued to all former Hinz shareholders after
giving effect to all transactions would represent 19.9% of the issued and
outstanding (undiluted) assuming the minimum offering and 18.02% of the issued
and outstanding (undiluted) assuming the maximum offering. No former
shareholder of Hinz will own or exercise control or direction over more than
6% of the issued and outstanding shares of Rutter after giving effect to the
This transaction requires TSX and majority shareholder approval. To
complete the transaction and gain majority approval Rutter is availing itself
of the exemptions provided under section 604(d) of the TSX Company Manual
which allow for Rutter to achieve shareholder approval by a written resolution
from shareholders representing more than 50% of the issued and outstanding
About Rutter Inc. - Rutter Inc. is a global enterprise focused on
providing innovative, 21st century technologies and engineering solutions that
improve the efficiency and safety of operating assets in marine,
transportation, oil and gas and other industrial sectors. Key activities of
the enterprise include technology development and marketing, outsource
manufacturing of electronics and electronic subassemblies and automation and
control systems engineering. For more information see www.rutter.ca.
This press release may contain forward-looking statements that involve
risks and uncertainties. These forward-looking statements reflect our current
expectations and are subject to a number of risks and uncertainties including,
but not limited to, change in technology and general market conditions. Due to
the many risks and uncertainties, Rutter Inc. cannot assure that
forward-looking statements that may be contained in this press release will be
The TSX has not reviewed and does not accept responsibility for the
adequacy or accuracy of this release.
(1) "Normalized EBITDA" refers to net earnings before interest, income
taxes, depreciation and amortization, foreign exchange
gains (losses), and shareholder bonuses. EBITDA is not a measure of
financial performance under Canadian generally accepted accounting
principles ("GAAP") and may not be comparable to a similar measure
used by other companies.
For further information:
For further information: Paul Snow, Director of Communications &
Investor Relations, (709) 368-3174