CALGARY, May 15, 2017 /CNW/ - SECURE Energy Services
Inc. ("SECURE") (TSX:SES) and Ceiba Energy Services Inc. ("Ceiba")
(TSXV:CEB) are pleased to announce that they have entered into an
arrangement agreement dated May 14,
2017 (the "Arrangement Agreement") pursuant to which SECURE
has agreed to acquire all of the issued and outstanding common
shares of Ceiba (the "Ceiba Shares"), a service provider of
stand-alone water disposal and oil treating facilities in the
Canadian energy sector (the "Transaction").
Under the terms of the Arrangement Agreement, SECURE will pay
approximately $26 million for all of
the issued and outstanding Ceiba Shares. Ceiba shareholders will
receive $0.205 for each share, to be
paid in cash or by the issuance of 0.02115 of a SECURE common
share, at their election, provided that a maximum of approximately
1.3 million SECURE common shares will be issued (representing
approximately 50% of the consideration to be paid to Ceiba
shareholders). The exchange ratio reflects a SECURE share price of
$9.6912, being SECURE's trailing
3-trading day volume weighted average trading price on the Toronto
Stock Exchange. The $0.205 per
share consideration represents a 64% premium over the closing price
of Ceiba Shares on the TSX Venture Exchange on May 12, 2017. The aggregate Transaction
value is approximately $37 million,
which includes the assumption of approximately $11 million in Ceiba debt.
As part of the Transaction, SECURE will acquire approximately
$1 million of net working capital
excluding debt and approximately $30
million of fixed assets consisting of tanks, pumps,
pipelines, treaters, disposal wells and various other
equipment.
"Adding Ceiba's stand-alone water disposal and oil treating
facilities to SECURE's expansive network of facilities provides our
customers with more options for their water, waste and oil handling
needs," said Rene Amirault, SECURE's
Chairman and Chief Executive Officer. "This Transaction will
add 10 new locations to our existing footprint of 39 facilities in
the Western Canadian Sedimentary Basin. There are numerous
opportunities at the Ceiba facilities to optimize and expand
existing services and throughput, thereby enhancing customer
value."
Ronald Sifton, Interim CEO of
Ceiba, stated, "We are very pleased with this outcome of our
strategic process review. The Transaction provides our shareholders
the opportunity to participate in the future potential of a well
capitalized leading North American energy services company which
has a track record of successful project execution and corporate
growth. The combined entity is much better positioned to
deploy capital and realize significant operating synergies to
maximize the value of Ceiba's operating assets."
TRANSACTION RATIONALE
- Expands SECURE's PRD network: The Transaction adds 10
facilities that fit within, and add capacity to, SECURE's PRD
network which provides multiple services for processing, recovery,
treatment, and disposal of oil and gas by-products. The additional
facilities will provide customers with more options to reduce their
overall transportation for custom treating of crude oil, crude oil
marketing, produced and waste water disposal and oilfield waste
processing;
- Accelerates growth and expansion opportunities: SECURE obtains
immediate access to areas of interest, including the opportunity to
add incremental capital to enhance throughput and service
capabilities;
- Significant operational and administration synergies: SECURE
will absorb and optimize the Ceiba facilities into its existing PRD
network, sharing resources related to senior management, sales and
general and administration;
- Utilization of Non-Capital Losses: SECURE anticipates being
able to utilize Ceiba's existing non-capital loss tax pools in
existing PRD operations. Ceiba has approximately $49 million in total tax pools including
approximately $27 million in
non-capital losses; and
- After the consideration of operational and administrative
synergies, and including an initial capital injection of
$5.0 to $6.0 million, SECURE expects
the contribution to consolidated adjusted EBITDA from the Ceiba
acquisition to be approximately $7.0 to $8.0
million on an annualized basis.
DETAILS OF THE TRANSACTION
The SECURE Board has unanimously approved the Transaction.
The board of directors of Ceiba (the "Ceiba Board") has unanimously
approved the Transaction and recommends that holders of Ceiba
Shares vote in favour of the special resolution approving the
Transaction. Peters & Co. Limited is acting as financial
advisor to Ceiba in respect of the Transaction and has provided the
Ceiba Board with its verbal opinion that, subject to the
assumptions, qualifications and limitations contained therein, the
consideration to be received by holders of Ceiba Shares pursuant to
the terms of the Arrangement Agreement is fair, from a financial
point of view, to the holders of Ceiba Shares.
Securityholders holding approximately 40% of the combined
outstanding shares and warrants of Ceiba have signed lock up
agreements in support of the Arrangement.
Under the terms of the Arrangement Agreement, the Transaction
will be effected by way of a plan of arrangement of Ceiba under
the Business Corporations Act (Alberta). The
SECURE shares to be issued on the exchange of Ceiba Shares pursuant
to the Arrangement Agreement will be available to Ceiba
shareholders on a tax deferred basis for Canadian tax purposes.
The Transaction will require approval by at least 66 2/3
percent of holders of the Ceiba Shares and Ceiba warrants, voting
together as a single class, at a special meeting to be called to
consider the Transaction. The Transaction is expected to be
completed in the third quarter of 2017 and is subject to TSX, TSX
Venture Exchange and Alberta Court
of Queen's Bench approval, regulatory approvals and the
satisfaction of other customary closing conditions. The Transaction
is an arm's length transaction for the purposes of the policies of
the TSX Venture Exchange.
The Arrangement Agreement contains customary terms and
conditions for a transaction of this nature, including a
prohibition upon Ceiba from soliciting or initiating any discussion
concerning any other business combination or similar transaction,
subject to compliance with fiduciary duties, the right of SECURE to
match any unsolicited superior proposal received by Ceiba, and a
termination fee of $1.0 million
payable to SECURE in certain circumstances.
ABOUT SECURE ENERGY SERVICES INC.
SECURE is a TSX publicly traded energy services company that
provides safe, innovative, efficient and environmentally
responsible fluids and solids solutions to the oil and gas
industry. The Corporation owns and operates midstream
infrastructure and provides environmental services and innovative
products to upstream oil and natural gas companies operating in
western Canada and certain regions
in the United States
("U.S.").
The Corporation operates three divisions:
Processing, Recovery and Disposal Division ("PRD"): The PRD
division owns and operates midstream infrastructure that provides
processing, storing, shipping and marketing of crude oil, oilfield
waste disposal and recycling. More specifically these services are
clean oil terminalling and rail transloading, custom treating of
crude oil, crude oil marketing, produced and waste water disposal,
oilfield waste processing, landfill disposal, and oil
purchase/resale service. SECURE currently operates a network
of facilities throughout Western
Canada and in North Dakota,
providing these services at its full service terminals ("FST"),
landfills, stand-alone water disposal facilities ("SWD") and full
service rail facilities ("FSR").
Drilling and Production Services Division ("DPS"): The DPS
division provides equipment and product solutions for drilling,
completion and production operations for oil and gas producers in
Western Canada. The drilling
service line comprises the majority of the revenue for the division
which includes the design and implementation of drilling fluid
systems for producers drilling for oil, bitumen and natural gas.
The drilling service line focuses on providing products and systems
that are designed for more complex wells, such as medium to deep
wells, horizontal wells and horizontal wells drilled into the oil
sands. The production services line focuses on providing equipment
and chemical solutions that optimize production, provide flow
assurance and maintain the integrity of production
assets.
Onsite Services Division ("OS"): The operations of the OS
division include Projects which include pipeline integrity
(inspection, excavation, repair, replacement and rehabilitation),
demolition and decommissioning, and reclamation and remediation of
former wellsites, facilities, commercial and industrial properties,
and environmental construction projects (landfills, containment
ponds, subsurface containment walls, etc.); Environmental services
which provide pre-drilling assessment planning, drilling waste
management, remediation and reclamation assessment services,
Naturally Occurring Radioactive Material ("NORM") management, waste
container services, and emergency response services; and Integrated
Fluid Solutions ("IFS") which include water management, recycling,
pumping and storage solutions.
ABOUT CEIBA ENERGY SERVICES INC.
Ceiba provides specialized services to the energy sector,
specifically to companies involved in the exploration, extraction
and production of oil and natural gas in Western Canada.
Ceiba develops and constructs facilities in proximity to its
customers to provide treatment of crude oil emulsion, terminalling,
storage and marketing of oil and disposal of production water.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this new release constitute
"forward-looking statements" and/or "forward-looking information"
within the meaning of applicable securities laws (collectively
referred to as forward-looking statements). When used in this
document, the words "may", "would", "could", "will", "intend",
"plan", "anticipate", "believe", "estimate", "expect", and similar
expressions, as they relate to SECURE, or its management, are
intended to identify forward-looking statements. Such statements
reflect the current views of SECURE with respect to future events
and operating performance and speak only as of the date of this
document. In particular, this document contains or implies
forward-looking statements pertaining to: anticipated benefits of
the Transaction, expected synergies with SECURE's business,
services expansion and optimization, EBITDA contribution from the
Transaction and anticipated Transaction timing.
Forward-looking statements concerning expected operating and
economic conditions are based upon prior year results as well as
the assumption that levels of market activity and growth will be
consistent with industry activity in Canada and the U.S. and similar phases of
previous economic cycles. Forward-looking statements concerning the
relative future competitive position of the Corporation are based
upon the assumption that economic and operating conditions,
including commodity prices, crude oil and natural gas storage
levels, interest and foreign exchange rates, the regulatory
framework regarding oil and natural gas royalties, environmental
regulatory matters, the ability of the Corporation and its
subsidiaries to successfully market their services and drilling and
production activity in North
America will lead to sufficient demand for the Corporation's
services and its subsidiaries' services including demand for
oilfield services for drilling and completion of oil and natural
gas wells, that the current business environment will remain
substantially unchanged, and that present and anticipated programs
and expansion plans of other organizations operating in the energy
industry may change the demand for the Corporation's services and
its subsidiaries' services. Forward-looking statements concerning
the nature and timing of growth are based on past factors affecting
the growth of the Corporation, past sources of growth and
expectations relating to future economic and operating
conditions.
Forward-looking statements involve significant risks and
uncertainties, should not be read as guarantees of future
performance or results, and will not necessarily be accurate
indications of whether such results will be achieved. Readers are
cautioned not to place undue reliance on these statements as a
number of factors could cause actual results to differ materially
from the results discussed in these forward-looking statements,
including but not limited to those factors referred to and under
the heading "Business Risks" in SECURE's latest Management's
Discussion and Analysis and under the heading "Risk Factors"
in the Corporation's Annual Information Form (for the year ended
December 31, 2016 and also includes the risks associated
with the possible failure to realize the anticipated synergies in
integrating the assets acquired in the Acquisition with the
operations of SECURE. Although forward-looking statements contained
in this document are based upon what the Corporation believes are
reasonable assumptions, the Corporation cannot assure investors
that actual results will be consistent with these forward-looking
statements. The forward-looking statements in this document are
expressly qualified by this cautionary statement. Unless otherwise
required by law, SECURE does not intend, or assume any obligation,
to update these forward-looking statements.
NON-GAAP MEASURES, OPERATIONAL DEFINITIONS AND ADDITIONAL
SUBTOTALS
The Corporation uses accounting principles that are generally
accepted in Canada (the issuer's
"GAAP"), which includes International Financial Reporting Standards
("IFRS"). Certain supplementary measures in this document do
not have any standardized meaning as prescribed by IFRS, including
the non-GAAP measure adjusted EBITDA. These non-GAAP measures,
operational definitions and additional subtotals used by the
Corporation may not be comparable to similar measures presented by
other reporting issuers. These non-GAAP financial measures,
operational definitions and additional subtotals are included
because management uses the information to analyze operating
performance, leverage and liquidity. Therefore, these non-GAAP
financial measures, operational definitions and additional
subtotals should not be considered in isolation or as a substitute
for measures of performance prepared in accordance with GAAP. See
the management's discussion and analysis available at
www.sedar.com for a reconciliation of the Non-GAAP financial
measures, operational definitions and additional subtotals.
SOURCE SECURE Energy Services Inc.