News Column

Northern Frontier Announces Closing of Central Water Acquisition, New Senior Credit Facilities and $20 Million Bought Deal Equity Offering

August 28, 2014

/THIS NEWS RELEASE IS INTENDED FOR DISTRIBUTION IN CANADA ONLY AND IS NOT AUTHORIZED FOR DISTRIBUTION TO THE UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/

CALGARY, Aug. 28, 2014 /CNW/ - Northern Frontier Corp. (TSXV: FFF) (the "Corporation" or "NorthernFrontier") is pleased to provide an update to the Corporation's news release dated August 11, 2014, announcing that Northern Frontier has completed the Acquisition (as defined below) of Central Water & Equipment Services Ltd. ("Central Water"), has entered into New Senior Credit Facilities (as defined below) and closed a $20.0 million bought deal equity offering (the "Offering"). "Northern Frontier is very pleased it has successfully completed these transactions and looks forward to the inclusion of Central Water's talented team and excellent service offering to anchor our logistics business" noted Chris Yellowega, President and CEO.

Acquisition of Central Water

Northern Frontier completed the acquisition (the "Acquisition") of Central Water, pursuant to the terms and conditions of a share purchase agreement, as previously disclosed. Central Water is a leading logistics service provider in the bulk water and fluids transfer sector in western Canada. Central Water's primary business is providing services for the bulk movement of water used in the testing of large infrastructure storage tanks and pipelines as well as dewatering and other services for industrial sites.

Aggregate consideration paid on closing was $27.0 million, comprised of a cash payment of $22.1 million and the issuance of 1.86 million Units (as defined below) with an aggregate value of approximately $4.0 million. An additional $0.6 million in cash was also paid for current year growth capital expenditures. Furthermore, $4.9 million in cash was placed in escrow, for contingent earn-out consideration, which is payable at a 3.6x multiple to the extent that Central Water's trailing 12 month EBITDA (as defined below under the heading "Advisories - Non-GAAP Measures") exceeds $7.1 million, to a maximum amount payable of $4.9 million.

New Senior Credit Facilities

The Corporation has established new senior credit facilities ("New Senior Credit Facilities"), in conjunction with and as a condition of, the closing of the Acquisition and the Offering. On closing, Northern Frontier drew down $44.6 million on the New Senior Credit Facilities, plus an additional $4.9million that was placed in escrow for the earn-out provision noted above. The principal terms of the New Senior Credit Facilities are as disclosed in the Corporation's new release dated August 11, 2014. Furthermore, Northern Frontier obtained waivers from its existing lenders for its June 30, 2014 covenant breach, as disclosed in a news release dated August 18, 2014, and concurrently repaid and terminated all of its existing credit facilities, exclusive of existing finance leases of which approximately $3.6 million is currently outstanding. As of August 28, 2014, the Corporation is in compliance with all of its credit facilities.

Bought Deal Equity Offering

Northern Frontier has issued 9,303,000 units(the "Units") to the syndicate of investment dealers co-led by Cormark Securities Inc., Acumen Capital Finance Partners Limited and GMP Securities L.P. and including M Partners Inc. (the "Underwriters") comprised of one common share of the Corporation ("Common Shares") and onewarrant of the Corporation("Warrants") at a price of $2.15 per Unit(the "Offering Price")for gross proceeds to the Corporation of approximately $20.0 million. Each Warrant entitles the holder to acquire one common share of the Corporation at a price of $3.40 per Warrant Share until February 28, 2016.

In addition, the Company has granted the Underwriters an option to purchase up to an additional 1,395,450 Unitsfrom the treasury of the Corporation at the Offering Price for additional gross proceeds to the Corporation of up to approximately $3.0 million, exercisable at any time up to September 26, 2014, for market stabilization purposes and to cover over-allotments, if any.

The Unitsissued under the Offering were offered by way of a short form prospectus filed with the securities regulatory authorities in each of the provinces of British Columbia, Alberta, Saskatchewan, Manitoba and Ontario, and offered in the United States on a private placement basis pursuant to an exemption from the registration requirements of the United States Securities Act of 1933, as amended, and certain other jurisdictions.

Reader Advisory

Securities Law Matters

This news release does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale of any securities in any jurisdiction in which such offering, solicitation or sale would be unlawful.

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

Non-GAAP Measure

EBITDA, which is defined by the Corporation as earnings before finance costs, taxes, depreciation and amortization, gain/loss on disposal of property and equipment, share-based compensation and other specified items, is a non-GAAP measure that does not have a standardized meaning prescribed by GAAP. Therefore, this financial measure may not be comparable to similar measures presented by other issuers. Investors are cautioned that this measure should not be construed as an alternative to profit or cash flow from operating activities determined in accordance with GAAP as an indicator of the Corporation's performance. The Corporation's Management believes that EBITDA is a useful supplemental measure as it provides an indication of the results generated by the principal business activities prior to consideration of how these activities are financed or how the results are taxed in various jurisdictions.

Additional disclosure regarding EBITDA is included within the Corporation's Fiscal 2013 and Q2 2014 Management's Discussion and Analysis and other required disclosure documents which are available and filed under the Corporation's profile on SEDAR at www.sedar.com.

Forward-Looking Statements

This news release includes certain statements that constitute forward-looking statements under applicable securities legislation. All statements other than statements of historical fact are forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue", or the negative of these terms or other comparable terminology.  These forward-looking statements include, among other things, statements in respect of:

anticipated use of net proceeds from the New Credit Facilities and the Offering;anticipated benefits of completing the Acquisition, New Credit Facilities and the Offering;expectations of future financial performance of the Corporation; andthe diversification of the Corporation's operations.

These statements are only predictions and are based upon current expectations, estimates, projections and assumptions, which the Corporation believes are reasonable but which may prove to be incorrect and therefore such forward-looking statements should not be unduly relied upon. In making such forward-looking statements, assumptions have been made regarding, among other things, industry activity, the state of financial markets, business conditions, continued availability of capital and financing and future oil and natural gas prices. Although the Corporation believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements.

By its nature, forward-looking information involves numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur. These risks and uncertainties include: that the Corporation's financial performance does not transpire as expected, that the Corporation declares any future dividends or the form of payment thereof and regulatory changes. Investors are cautioned that forward-looking statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements.  The Corporation has no obligation to update any forward-looking statements set out in this news release, except as required by applicable law.

About Northern Frontier Corp.

Northern Frontier's strategic objective is to create a substantial industrial and environmental services business through a buy and build growth strategy. Currently, the Corporation provides civil construction and excavation services to the industrial energy industry, primarily in the in situ Oilsands region south of Fort McMurray, Alberta and on closing of the Acquisition, now provides bulk water and fluids transfer logistic services in western Canada.

The Corporation's common shares and common share purchase warrants are listed on the TSX Venture Exchange under the trading symbol "FFF" and "FFF.WT", respectively.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Northern Frontier Corp.


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