Toromont Industries Ltd.
TSX : TIH

Toromont Industries Ltd.

October 16, 2009 18:33 ET

Toromont Proposes Acquisition of Enerflex for $13.50 Per Unit

TORONTO, ONTARIO--(Marketwire - Oct. 16, 2009) - Toromont Industries Ltd. (TSX:TIH) today announced that it has made a proposal to Enerflex Systems Income Fund ("Enerflex") (TSX:EFX.UN) to enter into a business combination with Toromont whereby holders of the trust units of Enerflex (and the exchangeable units of Enerflex Holdings Limited Partnership) would receive cash and shares of Toromont representing total consideration of $13.50 per unit. The consideration would be comprised of at least 50% cash, with the balance in Toromont common shares. Unitholders could elect to receive either $13.50 in cash or a fixed number of Toromont common shares, within the limits of total cash and shares allocated to the transaction.

Toromont's proposal represents a premium of approximately 34% to the closing price of the Enerflex units on October 16, 2009 and an approximate 33% premium to the volume-weighted average trading price of Enerflex units in the 20 trading days up to and including October 16, 2009.

"We believe the combination of Enerflex and Toromont Energy Systems, our gas compression division, would create a stronger organization better able to compete against large competitors in the North American and international markets", said Robert M. Ogilvie, Chairman & Chief Executive Officer of Toromont. "We have been encouraged by our shareholders and Enerflex's unitholders to pursue this combination. As discussions with Enerflex over the past two and a half years have not resulted in an agreement, the time has come to make a definitive proposal to the Enerflex Board."

Unitholders of Enerflex holding an aggregate of 7,531,988 trust units (approximately 17% of units outstanding) have entered into lock-up agreements pursuant to which they have agreed to support Toromont's proposal, either by voting in favour of a transaction involving Toromont and Enerflex or by tendering their units to a take-over bid, subject to certain exceptions. As of October 16, 2009 Toromont owns 3,902,100 trust units of Enerflex. Including the units held by unitholders who have signed lock-up agreements, Toromont has the support of holders of a total of 11,434,088 trust units (approximately 25.8%).

Toromont has sent letters to each of the Chairman and the President & Chief Executive Officer of Enerflex, outlining its proposal. The full text of the letter follows:

October 16, 2009

Enerflex Income Fund
904 - 1331 Macleod Trail SE
Calgary, Alberta, T2G 0K3

Attention:

P. John Aldred
Chairman

J. Blair Goertzen
President & CEO

Dear John and Blair:

Over the last several years, we have had a number of discussions with you regarding the possibility and desirability of combining our gas compression businesses. We continue to believe that such a combination would bring benefits to both our companies given the complementary nature of our operations. We also understand that you share our view that this would create tangible value for our respective security holders. Furthermore we have been encouraged by certain of your large unitholders to pursue the combination of our compression businesses.

Unfortunately, despite our considerable efforts, we have been unable to make any meaningful progress in our discussions. In each instance, you and your Board's desire to maintain control has thwarted the successful advancement of a transaction that our respective security holders would enthusiastically embrace.

As a result of the foregoing, Toromont would like to propose a transaction whereby Toromont would acquire all of the outstanding trust units of Enerflex. We are prepared to offer consideration equal to $13.50 per unit (the "Consideration") on a basis which would allow

Enerflex unitholders to elect to receive either cash and/or Toromont common shares. Our current thinking is that the Consideration, in aggregate, would be comprised of at least 50% in cash and the balance in Toromont common shares.

Based on today's closing price of $10.07, the proposed Consideration represents a premium of approximately 34.0% to the Enerflex unit price and a 33.0% premium to the 20 day volume weighted average trading price of the Enerflex units. We believe the proposed Consideration not only represents an attractive premium but will also allow your unitholders to participate in the on-going success of the combined business if they so choose.

Our preferred structure for the proposed transaction would be a unitholder approved business combination which should help facilitate appropriate tax structuring for the resulting entity and for your unitholders. Completion of the transaction would be subject to the usual terms and conditions for transactions of this nature, including satisfactory receipt of regulatory approvals.

No approval of this transaction by Toromont shareholders is required and neither we nor our counsel expect any regulatory or other impediments will prevent the successful completion of this transaction. We have had extensive discussions with our principal bankers, who are also acting as our financial advisors, and any required financing is expected to be readily available to us.

We also recently have had confidential discussions with several large institutional unitholders of Enerflex regarding the possibility of pursuing this proposed transaction. As a result, we currently have signed lock-up agreements in-hand from unitholders representing, in the aggregate, approximately 17 % of the outstanding units of Enerflex. Taken together with the 8.8% of the outstanding units currently beneficially owned by Toromont, a total of approximately 25.8% of Enerflex units are now committed to the successful completion of this proposed transaction on the basis described.

It is our strong preference to work together with you to immediately negotiate a definitive business combination agreement that would form the basis of the unitholder approved business combination. From our perspective, the benefits to your stakeholders should provide a meaningful impetus for you to seriously consider this valuable opportunity.

We are prepared to deliver to you shortly a draft business combination agreement if you wish to pursue this proposal.

In light of the significance of this proposal to your unitholders and our strong desire to avoid selective disclosure issues, we will shortly release publicly the text of this letter.

Our proposal represents a very attractive opportunity for Enerflex unitholders and we sincerely hope that we can work together to ensure that your unitholders and employees will have the opportunity to take advantage of this proposed transaction. I would ask that you contact either me or our advisors to schedule a meeting to discuss the details of our proposal and to develop a timetable to advance this proposed transaction.

I look forward to hearing from you.

Yours respectfully,

Robert M. Ogilvie
Chairman and Chief Executive Officer
Toromont Industries Ltd.

ABOUT TOROMONT

Toromont Industries Ltd. operates through two business segments: The Equipment Group and the Compression Group. The Equipment Group includes one of the larger Caterpillar dealerships by revenue and geographic territory in addition to industry leading rental operations. The Compression Group is a North American leader specializing in the design, engineering, fabrication, and installation of compression systems for natural gas, coal-bed methane, fuel gas and carbon dioxide in addition to process systems and industrial and recreational refrigeration systems. Both Groups offer comprehensive product support capabilities. This press release and more information about Toromont Industries can be found on the Web at www.toromont.com.

A copy of the lock-up agreements can be found on Toromont's website at www.toromont.com.

ADVISORY

Statements and information herein that are not historical facts are "forward-looking information". Words such as "plans", "intends", "outlook", "expects", "anticipates", "estimates", "believes", "likely", "should", "could", "will", "may" and similar expressions are intended to identify forward-looking information and statements. By their nature, forward-looking information and statements are subject to risks and uncertainties which may be beyond Toromont's ability to control or predict. Actual results or events could differ materially from those expressed or implied by forward-looking information and statements as a result of a number of factors, risks and uncertainties including those found in the "Risks and Risk Management" and "Outlook" section of Toromont's management discussion and analysis of financial results for the six months ended June 30, 2009 and the "Risks and Risk Management" and "Outlook" sections of

Toromont's management's discussion and analysis of financial results for the year ended December 31, 2008, as well as factors, risks and uncertainties not presently known to Toromont or that Toromont currently believes are not material.

Readers are cautioned not to place undue reliance on the forward-looking information and statements contained herein, which are given as of the date of this document, and not to use such information and statements for anything other than their intended purpose. Toromont disclaims any obligation or intention to update or revise any forward-looking information or statement, whether the result of new information, future events or otherwise, except as required by applicable law.

This press release does not constitute an offer to buy any securities or a solicitation of any vote or approval or a solicitation of an offer to sell any securities.

For more information or to request a copy of the early warning report to be filed by Toromont today, please contact:

Robert M. Ogilvie        Paul R. Jewer
Chairman and Chief Executive Officer        Vice President Finance and Chief Financial Officer
Toromont Industries Ltd.        Toromont Industries Ltd.
3131 Highway 7 West        3131 Highway 7 West
Concord, ON        Concord, ON
T: (416) 667-5554        T: (416) 667-5638

Contact Information

  • Toromont Industries Ltd.
    Robert M. Ogilvie
    Chairman and Chief Executive Officer
    (416) 667-5554

    or

    Toromont Industries Ltd.
    Paul R. Jewer
    Vice President Finance and Chief Financial Officer
    (416) 667-5638
    www.toromont.com