EDMONTON, ALBERTA -- (Marketwired) -- 06/11/13 -- North American Energy Partners Inc. ("NAEP" or "the Company") (TSX: NOA)(NYSE: NOA) today announced it has reached an agreement to sell its Piling businesses and announced its financial results for the year and three months ended March 31, 2013.
The Company has prepared its consolidated financial statements in accordance with accounting principles generally accepted in the United States (US GAAP). Except where otherwise specifically indicated, all dollar amounts are expressed in Canadian dollars.
Divestiture of Piling Related Assets and Liabilities
As part of its strategic initiative to improve operational focus, capital efficiency and financial strength, NAEP has reached an agreement with Keller Group plc (the "purchaser") to sell all piling-related assets and liabilities and exit the piling, foundation, pipeline anchor and tank services businesses. Under the terms of the agreement, NAEP will receive cash consideration of approximately $227.5 million less approximately $5.0 million for capital lease adjustments upon closing, plus or minus customary working capital adjustments, and up to $92.5 million in proceeds over the following three years, contingent on the purchaser achieving prescribed profit targets from the businesses sold. Net proceeds at closing, after also adjusting for transaction costs, are expected to be about $210 million. Upon closing, a portion of the net proceeds will be used to repay the outstanding balance of the Term A Facility which, at March 31, 2013, was $17.2 million.
"This sale is consistent with the broad strategy that I set out upon joining the company last year," said Martin Ferron, NAEP President and CEO. "The proceeds from the transaction will enable us to pay down a significant portion of our debt, providing a strong financial footing. Then moving forward as a pure play heavy construction and mining contractor, we will be entirely focused on our core business allowing us to extend further the productivity and cost efficiency progress we have already made, with the aim of delivering superior value to our clients and shareholders. We believe that our improved financial strength and capacity will be a competitive advantage as we continue to compete for heavy civil contracts on oil sands, resource mining and other industrial construction projects across Canada."
The contingent consideration of $92.5 million includes $57.5 million based on the purchaser generating annual Consolidated EBITDA in excess of $30.0 million for each of the years ended June 30, 2014 and June 30, 2015, with the full $57.5 million payable upon reaching $45.0 million of Consolidated EBITDA for each of those years. The upper end of this range is comparable to the Consolidated EBITDA achieved with the assets in fiscal 2013. The remaining $35.0 million of contingent consideration is available to NAEP based on the purchaser generating cumulative Consolidated EBITDA in excess of $135.0 million over the three-year period ended June 30, 2016, with the full $35.0 million payable upon the purchaser generating three-year cumulative Consolidated EBITDA of $205.0 million(1). NAEP expects that the purchaser will continue to grow the business during the three-year period resulting in the payment of some or all of the contingent proceeds.
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