Target company has a solid operating profitability
DRUMMONDVILLE, QC, July 31, 2013 /CNW Telbec/ - CVTech Group Inc. ("CVTech" or "the Corporation") (TSX: CVT) today announced the signature of a letter of intent to acquire all the issued and outstanding shares of a U.S. company ("the Company") engaged in providing electrical services mainly to the utility industry. Given the nature of the prospective transaction, the Corporation intends to disclose the name of the Company only at the closing of the acquisition.
An initial payment of US$40.0 million will be made at the time of closing and the acquisition price will be adjusted upon approval of the audited financial statements of the Company for the fiscal year ending December 31, 2013. The Company's average earnings before interest, income taxes, depreciation and amortization ("EBITDA") for the 2011 and 2012 fiscal years was approximately US$10.0 million.
The letter of intent provides that approximately 90% of the transaction price will be paid in cash from the Corporation's current and available liquidity, and approximately 10% in common shares of the Corporation.
The letter of intent is subject to the customary closing conditions, including satisfactory due diligence, execution of a final purchase agreement, receipt of the necessary approvals and other customary merger and acquisition procedures. If all of these conditions are satisfied, the transaction could close in the fourth quarter of 2013. It is expected that the Company's key executives will ratify employment contracts with an initial term of three years, to ensure smooth continuity in day-to-day operations.
"The signature of this letter of intent clearly shows that CVTech is determined to become a leading player in its target markets," said André Laramée, President and Chief Executive Officer of CVTech. "The Company fits perfectly with our strict selection criteria and our strategic objectives. If this transaction materializes, it will significantly expand our geographic reach, our expertise and our service offering."
OVERVIEW OF THE CORPORATION
CVTech is a company operating in the energy sector. The Corporation is a leading provider of construction and maintenance services to the public utility and heavy industrial markets mainly in Quebec, Ontario and the eastern United States. Through its subsidiaries, the Corporation provides maintenance and construction services for electricity transmission and distribution networks, substations and electrical power houses, as well as the control of vegetation on rights-of-way for electrical lines.
NON-IFRS MEASURE
EBITDA is a measure that has no standardized meaning prescribed by IFRS and is thus considered to be a non-IFRS measure. Therefore, this measure may not be comparable to similar measures presented by other issuers. This measure is presented and described in this release in order to provide additional information regarding the Corporation's liquidity and its ability to generate funds to finance its operations.
FORWARD-LOOKING STATEMENTS
This document may contain forward-looking statements that reflect management's current expectations regarding future events. Forward-looking statements are based on a number of factors and include risks and uncertainties. Actual results may differ from forecast results. Management assumes no obligation beyond what is required under the law to update or revise forward-looking statements pursuant to new information or future events.
Further information regarding CVTech is available in the SEDAR database (www.sedar.com) and on the Corporation's website at www.cvtech.ca.
SOURCE: CVTECH GROUP INC.
André Laramée, MBA
President and Chief Executive Officer
819-479-7771
[email protected]
Mario Trahan, CPA, CMA
Chief Financial Officer
819-479-7771
[email protected]
MaisonBrison Communications
Martin Goulet, CFA
514-731-0000
[email protected]
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