Enterprise Group, Inc. announces acquisition of Hart Oilfield Rentals Ltd. and concurrent financing

Accretive acquisition offers both growth potential and ideal complement to Enterprise's equipment rental division

/NOT FOR RELEASE IN THE UNITED STATES OR DISSEMINATION OF UNITED STATES NEWS WIRE SERVICES/

ST. ALBERT, AB, Dec. 4, 2013 /CNW/ - Enterprise Group, Inc. ("Enterprise," or the "Company") (TSX:E) is pleased to announce that it has entered into an agreement (the "Acquisition Agreement") to acquire Hart Oilfield Rentals Ltd. ("Hart"), one of Western Canada's most highly regarded oilfield service providers, for a purchase price of $22.6 million, which includes $2.0 million of working capital (the "Acquisition"). The purchase price will be satisfied through a combination of $1.0 million of common shares ("Common Shares") of Enterprise and $21.6 million in cash.

HIGHLIGHTS

• Complementary acquisition with significant customer overlap
• Expands the Company's specialized rental equipment segment and enhances growth potential
• Hart boasts an attractive track record of organic growth - realized Compound Annual Growth Rates ("CAGR") on revenue of 22% and EBITDAS of 37%, over the last four years
• Purchase price represents a trailing EBITDAS multiple of 3.1x (2.9x without working capital), based on Hart's fiscal 2013 EBITDAS of $7.2 million, and a trailing revenue multiple of approximately 1.0x, based on Hart's fiscal 2013 revenue of $22.7 million
• Purchase price is equivalent to 1.1x the fair market value of Hart's equipment, based upon an independent appraisal completed in May of 2013
• In order to finance the cost of the Acquisition, the Company intends to conduct a prospectus offering of subscription receipts for gross proceeds of $15 million
• Purchase will also be facilitated by recent $15 million increase in the Company's credit facility (See press release dated November 20, 2013)

Hart is a full service oilfield site infrastructure company that provides both site services and equipment rentals to its oil and gas customers, all of whom operate within the Western Canadian Sedimentary Basin. Hart's equipment fleet consists of approximately 1,500 owned pieces and an additional 500 pieces that have been rented in order to fulfill demand. This fleet provides on-site support for oilfield drilling and completion operations, and includes both traditional well site equipment (well site trailers, medical facilities, sewage treatment and fire suppression systems, scaffolding, etc.) and Hart's proprietary 'combo' equipment, innovative modular designs that are both easily portable and fulfill multiple functions, creating significant benefits for customers' operational efficiency.

Hart both designs and manufactures its 'combo' equipment, and currently possesses 14 pending patents on its industrial modular design assets. These offerings provide Hart with a unique competitive advantage. This advantage is further leveraged by Hart's commitment for exceptional service. Hart works with each of its customers throughout the order process, employing proprietary three-dimensional planning software to ensure that the correct equipment is located in the correct position for maximizing site efficiency. The combination of Hart's proprietary equipment designs and dedication to service have earned Hart a sterling reputation, and have allowed it to develop an enviable list of high-quality clients.

Hart generated $22.7 million of revenue and $7.2 million of EBITDAS in its most recent fiscal year, which concluded on April 30, 2013, and has grown revenue and EBITDAS at CAGRs of 22% and 37%, respectively, over the past four years. Contingent upon the successful completion of the acquisition, Enterprise anticipates increasing the 2014 capital expenditure budget of Hart by $9.4 million for the deployment new modular units. The Company estimates that a full year's deployment of these new units could increase Hart's annual revenue and EBITDAS to $29.9 million and $12.0 million, respectively.

Hart currently operates from six strategic locations - five in Alberta and one in British Columbia. Enterprise intends to complement these locations by opening up a new Hart office in Fort St. John, British Columbia, which will also house divisions of Artic Therm and Calgary Tunnelling & Horizontal Augering Ltd., the Company's existing businesses.  The vendors under the Acquisition Agreement will sign two-year management agreements with Enterprise. It will also be a condition of the Acquisition Agreement that Hart's key employees will sign five-year employment agreements.

"We are very pleased to announce this acquisition, which we believe will create both near and long-term benefits for our business," stated Leonard D. Jaroszuk, Enterprise's President and Chief Executive Officer. "We expect the addition of Hart will be immediately accretive. When taking into account the anticipated benefit of investing in new modular units, Enterprise expects that the acquisition will provide a benefit of approximately $0.07 to Enterprise's earnings per share in fiscal 2014, based upon Hart's trailing earnings."

"Moving forward, we believe that the equipment rentals market offers significant potential. Hart, in combination with our existing rental businesses, will allow us to take full advantage of this potential. Hart has witnessed rapid and encouraging returns on its recent investments. Its assets are long lived, operating from 10 to 20 years, and offer an average gross payback period of less than 18 months. As a result, new assets have returned an average of more than 60% EBITDAS to Hart's bottom line. Historically, Hart has seen demand for its services exceed its capacity, and has been forced to rent units in order to satisfy this excess demand. With the appropriate capital support, we believe we are capable of as much as doubling both Hart's revenue and EBITDAS over the next three years."

"Enterprise's recent third quarter results provided encouraging evidence of our Company's ability to quickly and successfully integrate acquisitions," concluded Mr. Jaroszuk. "Our acquisition of Hart will continue this trend. Since our inception, Enterprise has sought to establish itself as the largest construction services and specialized equipment rental provider in Western Canada. Today's announcement is a significant step towards achieving that objective."

The Acquisition is expected to close January 3, 2014, subject to customary conditions and all regulatory approvals, including the approval of the Toronto Stock Exchange.

Canaccord Genuity Corp. acted as exclusive financial advisor to Enterprise in connection with the Acquisition.

Offering

Enterprise also announces that it has filed and received a receipt for a preliminary short form prospectus in connection with a $15,000,000 overnight marketed public offering (the "Offering") of subscription receipts of the Company (the "Subscription Receipts"). The Offering will be conducted through a syndicate of underwriters led by Canaccord Genuity Corp. (the "Underwriters").  The definitive price of the Offering will be determined in the context of the market with the final terms to be agreed at the time of entering into of an underwriting agreement.  The gross proceeds from the sale of the Subscription Receipts will be held in escrow pending the completion of the Acquisition.  If all outstanding conditions to the completion of the Acquisition (other than payment of the purchase price) are met, the net proceeds from the sale of the Subscription Receipts will be released to Enterprise to finance, in part, the purchase price of the Acquisition, and each Subscription Receipt will be exchanged for one Common Share and one half of a Common Share purchase warrant of Enterprise for no additional consideration.

The Subscription Receipts will be offered for distribution in all provinces of Canada, except Quebec, by short form prospectus.  The Subscription Receipts may also be placed privately in the United States with certain qualified institutional buyers in transactions in accordance with Rule 144A under the United States Securities Act of 1933.  The net proceeds from the Offering will be used to finance the Acquisition.  Additional capital required to finance the Acquisition will be drawn from cash on hand and the Company's line of credit.

The Offering is expected to close on or before December 23, 2013, subject to customary conditions and all regulatory approvals including the approval of the Toronto Stock Exchange and of applicable securities regulatory authorities.

The securities being offered have not, nor will they be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States absent U.S. registration or an applicable exemption from such registration requirements. This release does not constitute an offer for sale or the solicitation of an offer to buy securities in the United States or in any jurisdiction in which such offer, solicitation or sale would be unlawful.

About Enterprise Group, Inc.
Enterprise Group, Inc. is a consolidator of construction services companies operating in the energy, utility and transportation infrastructure industries. The Company's focus is primarily construction services and specialized equipment rental. The Company's strategy is to acquire complementary service companies in Western Canada, consolidating capital, management and human resources to support continued growth. Enterprise became a Western Canadian leader in flameless heat technology in September 2012 with its acquisition of Artic Therm International Ltd. and became a technological leader in underground infrastructure construction by the closing of Calgary Tunnelling & Horizontal Augering Ltd. In June 2013.

Forward Looking Information
Certain statements contained in this news release constitute forward-looking information. These statements relate to future events or the Company's future performance. The use of any of the words "could", "expect", "believe", "will", "projected", "estimated" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the Company's current belief or assumptions as to the outcome and timing of such future events.  In particular, forward-looking statements contained in this press release include, but are not limited to: the expected approvals for, and the closing of, the Offering, the expected closing of the Acquisition, the anticipated benefits of the Acquisition and the resultant operational synergies, expected capital expenditures, expected results, expected location expansions, the benefits and timing of investing in new modular units and the cost of doing so and earnings forecasts and revenue expectations.  These forward-looking statements are based on assumptions and are subject to numerous risks and uncertainties, certain of which are beyond the Company's control, including the impact of general economic conditions, the satisfaction of the conditions precedent to the Acquisition, the satisfaction of the escrow release conditions pursuant to the Offering, industry conditions, volatility of commodity prices, competition, stock market volatility and the ability to access sufficient capital.  Actual future results may differ materially. The Company's annual information form for the year ended December 31, 2012 and other documents filed with securities regulatory authorities (accessible through the SEDAR website www.sedar.com) describe the risks, material assumptions and other factors that could influence actual results and which are incorporated herein by reference. The Company disclaims any intention or obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.

Forward-looking information relating to Hart's annual revenue and EBITDAS and Enterprise's earnings per share are included herein to provide information relating to the anticipated financial impact of the Acquisition and may not be appropriate for other purposes.

Non-IFRS Measures
The Company uses International Financial Reporting Standards ("IFRS").  EBITDAS is not a measure that has any standardized meaning prescribed by IFRS and is therefore referred to as a non-IFRS measure.  This news release contains references to EBITDAS.  This non-IFRS measure used by the Company may not be comparable to a similar measure used by other companies.  Management believes that in addition to net income, EBITDAS is a useful supplemental measure as it provides an indication of the results generated by the Company's principal business activities prior to consideration of how those activities are financed or how the results are taxed.  EBITDAS is calculated as net income excluding depreciation, amortization, interest, taxes and stock based compensation.

SOURCE: Enterprise Group, Inc.

Leonard D. Jaroszuk - President & CEO, or
Desmond O'Kell - Senior Vice President
PH: 780-418-4400
E: [email protected]
Web: www.EnterpriseGRP.ca