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."
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.").
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.
SOURCE: SECURE Energy Services Inc.
The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.