Seacliff Construction Corp.
TSX : SDC

Seacliff Construction Corp.

November 17, 2009 16:01 ET

Seacliff Announces Acquisition of Leading Saskatchewan-Based Civil Construction Company

Conference Call and Webcast Today at 2:00 p.m. Pacific / 5:00 p.m. Eastern

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 17, 2009) - Seacliff Construction Corp. (Seacliff) (TSX:SDC) (www.seacliffconstruction.ca), one of Western Canada's largest and most diversified construction companies, today announced that it has entered into a binding agreement to purchase the Broda Construction Group (Broda), (www.brodaconstruction.com), for a total of $50 million payable in cash, shares and assumed liabilities. Broda is a leading, privately held earth moving and heavy civil construction company based in Prince Albert, Saskatchewan. The acquisition gives Seacliff a stronger presence in the civil construction industry and greater access to the institutional infrastructure sector, which is currently being fueled by substantial government investment and stimulus initiatives. This is the second acquisition Seacliff has made since its IPO in April 2008. The transaction is scheduled to complete on December 1, 2009 and is subject to certain closing adjustments and conditions, including receipt of stock exchange approval and required third-party consents.

"From the outset, our long-term vision focused on growing Seacliff's business both organically and through acquisition, with a specific emphasis on expanding our presence in the civil construction industry," said Bill Crarer, Seacliff's CEO. "This purchase achieves that goal. It also speaks to the confidence we have in the Canadian economy, particularly in Saskatchewan, where there is tremendous growth potential in uranium, potash, coal, diamonds, and the emerging oil and gas industry. Seacliff knows Broda well having worked closely together on a number of successful projects. Our strong working relationship, and first-hand knowledge of Broda's management team and corporate culture give us great confidence that this business combination will be immediately beneficial to all of our stakeholders," Bill Crarer continued.

Supported by a modern fleet comprising more than 500 pieces of construction and support equipment, well-defined operating systems and a core employee group of 80 people, Broda specializes in four main areas: aggregate processing, earthwork, civil construction and concrete production. The company serves a geographic market ranging from Prince George, BC to Dryden, Ontario and a large and growing base of loyal customers, including Canadian Pacific Railway, Canadian National Railway, Potash Corporation of Saskatchewan, Cameco and Agrium.

Broda is self-sufficient in terms of maintaining its equipment fleet, with service conducted either at its new 18,000 square foot facility in Prince Albert, Saskatchewan or via eight mobile service vehicles. This enables the company to significantly reduce its sub-contracting expenses and minimize project down time, positioning it to generate stronger margins throughout the business cycle. With a track record of 50 years of successful operations, Broda demonstrated compound annual growth of 26% in revenue and 27% in adjusted EBITDA between fiscal 2005 and fiscal 2009. For the year ended March 31, 2009, the company recorded revenue of $55 million and adjusted EBITDA of $13 million. In addition, it has a significant Work on Hand position that currently sits at $44 million, providing excellent visibility for the year ahead.

For the year ended December 31, 2008, Seacliff recorded revenue of $503.5 million and EBITDA of $35.3 million. The acquisition of Broda is expected to push annual revenue and EBITDA up by 10% and 30%, respectively.

Following the close, the Broda Construction Group will continue to operate under its current name and organizational structure and will form a third, independently operated division of Seacliff. Gord Broda, who has served 32 years with Broda and has been CEO since 1986, will continue to lead that company. He will also have a significant ownership position in Seacliff.

"We are very happy to be joining the Seacliff family," said Gord Broda. "In addition to securing the long-term future of our company and our people, this deal immediately positions Broda Construction Group to leverage our equipment fleet, pursue larger contracts and dramatically increase our market penetration, in Saskatchewan and throughout Western Canada. This is truly a win-win for both companies."

Moving forward, Seacliff's immediate priorities will include identifying and capitalizing on administrative synergies across its three divisions, increasing its market share in Saskatchewan and fully utilizing the available capacity of Broda's fleet, with the long-term objective of doubling the division's current revenues. Seacliff is also working to restructure and strengthen its financial reporting team and systems in response to the rapid growth of its operations and the increased workload required to facilitate the acquisition and prepare for IFRS reporting.

"We are extremely excited about the positive impact this acquisition will have on Seacliff," said Bill Crarer. "We are acquiring a finely tuned, well-established and respected company that strengthens the diversity of Seacliff's operations, and positions us to increase market share in the civil construction sector, both in Saskatchewan and across Western Canada. In addition, we are confident that Broda's committed, well-trained and experienced management and employee team will fit well within the Seacliff culture."

"This is a great time for Seacliff," Bill Crarer added. "Our financial position is strong, enabling us to continue pursuing our growth strategy. Our two existing business units, Dominion and Canem, are both achieving their EBITDA targets, even in these difficult times. We have a large work on hand position with a growing institutional focus and there are tremendous opportunities in the pipeline. The Broda acquisition will strengthen our competitive position and enable us to pursue a broader range of projects."

About Seacliff Construction Corp.

Seacliff is one of the largest and most diversified construction companies in Western Canada. The company provides general contracting construction services and electrical contracting services to a wide array of clients in both the public and private sectors. The majority of Seacliff's business is derived from institutional, commercial and light industrial construction projects. It operates primarily in Western Canada, with 15 locations in British Columbia, Alberta, Saskatchewan and Manitoba, as well as one location in Northwestern Ontario. With headquarters in Vancouver, B.C., Seacliff's business is currently conducted through two business units: Dominion Construction, a general contractor; and Canem Systems, an electrical contractor.

As a general contractor, Dominion offers diversified general contracting, construction management and design-build services in Western Canada primarily to institutional, commercial and light industrial clients. Dominion's services include preconstruction planning and comprehensive project management services. These services include the planning and scheduling of the manpower, equipment, materials and subcontractors required for a project. Dominion subcontracts out the vast majority of trade work on its projects; however, some construction services, including site work, concrete forming and placement, are self-performed.

Canem provides a broad range of services including designing, building, maintaining and servicing electrical and data communication systems for institutional, commercial, light industrial and multi-family residential customers. Canem's electrical contracting services include: designing electrical distribution systems within a building or complex; procuring and installing electrical equipment and materials; on-call service for electrical maintenance and troubleshooting; preventative and scheduled maintenance for critical component installations; budgeting and pre-construction services; and management of regional and national contracts for multi-site installations. Substantially all of Canem's work is self-performed.

Conference Call Details
Seacliff will host a conference call for the investment community at 2:00 p.m. Pacific / 5:00 p.m. Eastern today. Participants may access the call by dialing 1-866-223-7781 or 416-340-8018 approximately five minutes prior to the start time. This call will also be available via webcast at http://www.investorcalendar.com/IC/CEPage.asp?ID=152439 or on the corporation's website at http://www.seacliffconstruction.ca. Supporting presentation materials will be available online at both addresses at the time of the call. Members of the media are welcome to listen to the call and ask questions after the investment community portion is completed.

For those unable to attend the live conference call, an instant replay will be available until December 1, 2009 at 1-800-408-3053 or 416-695-5800, Passcode: 3675672.

Forward-Looking Statements

This press release includes statements that constitute forward-looking statements or information under applicable securities legislation, including, in particular, statements regarding the anticipated completion of Seacliff's acquisition of Broda and the synergies and growth to Seacliff's EBITDA and revenue which Seacliff expects to realize from the acquisition. Such forward-looking statements or information are based on a number of assumptions which may prove to be incorrect. Assumptions have been made regarding, among other things, the satisfaction of the conditions precedent to completion of the acquisition, the successful implementation of Seacliff's business plan including the successful integration of Broda's operations and personnel, the continued availability to Seacliff of qualified personnel, the continuation and completion of the projects forming Seacliff's Total Work on Hand, and general economic, business and market conditions. Although Seacliff believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because Seacliff can give no assurance that such expectations will prove to be correct. The forward-looking statements are based on Seacliff's current expectations, estimates and projections, and are subject to a number of significant risks and uncertainties that could cause actual results to differ materially from those anticipated. Such risks and uncertainties include, among others, Seacliff's ability to capitalize on the anticipated synergies from the acquisition and successfully integrate Broda's operations and key personnel, Seacliff's ability to be retained for existing and new project work by existing and new clients, Seacliff's ability to retain and hire the qualified personnel required, the delay or cancellation of projects forming Seacliff's Total Work on Hand, general economic, business and market conditions, and other risks as are detailed from time to time in continuous disclosure filings of Seacliff. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated or expected. These forward-looking statements are made as of the date of this press release, and Seacliff assumes no obligation to update or revise them to reflect new events or circumstances, except as required by applicable laws.

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