Algeco Scotsman and Modular Space to Merge North American Modular Space Businesses

BALTIMORE, MD--(Marketwired - Mar 16, 2016) - Algeco Scotsman Global Sarl ("Algeco Scotsman") and Modular Space Corporation ("ModSpace") today announced that they, or their related affiliates, have entered into a conditional agreement to merge their North American modular space operations. This merger of equals will create a new company with a fleet of approximately 150,000 units and 1,800 employees across the United States, Canada and Mexico.

The merger will be effected through the contribution of the North American modular space business of Algeco Scotsman into ModSpace. Algeco Scotsman's European, Asian and remote accommodation businesses are not part of the merger transaction and will remain part of Algeco Scotsman.

The combined company will be led by Chairman Gerry Holthaus and CEO Charles Paquin. Mr. Holthaus is the Chairman of Algeco Scotsman and was previously CEO and President of Williams Scotsman, Algeco Scotsman's North America business, for more than a decade. Mr. Paquin is the CEO of ModSpace with 20 years of executive leadership experience including 15 years in the modular building industry.

The transaction is subject to a number of conditions including minimum financing conditions, applicable regulatory clearances and other customary closing conditions. The parties are currently evaluating various capital structure alternatives (as part of the financing requirement) which would significantly improve the financial strength of the new company. Failure to satisfy any of the conditions could result in the transaction not being completed on a timely basis, or at all. 

Under the terms of the conditional merger agreement, which has been approved by both companies' relevant Boards of Directors, ModSpace and Algeco Scotsman will, prior to any dilution which may result from the contemplated financing, each own approximately half of the equity in the merged business and Algeco Scotsman will receive additional cash consideration in connection with its contribution of its North American modular space business.

Pursuant to the terms of the agreement, a significant portion or all of the consideration will be used to repay borrowings under Algeco Scotsman's existing asset-based loan facility. Any surplus cash received by Algeco Scotsman will primarily be used to reinvest into targeted project capital expenditures in its remaining businesses. There is not expected to be any prepayment event under Algeco Scotsman's Senior Secured Notes in relation to the closing of the transaction. 

Immediately following the merger it is expected that the entities comprising Algeco Scotsman's North American modular space business that are being merged with ModSpace will no longer be subsidiaries of Algeco Scotsman. Accordingly, such entities would no longer be obligors under or guarantee any of Algeco Scotsman's outstanding indebtedness and the liens on the stock and assets of such entities securing Algeco Scotsman's outstanding indebtedness will be released. Pro forma for the transaction the total leverage on Algeco Scotsman is expected to increase to 6.0x through the Senior Secured Notes and 8.8x through its Senior Unsecured Notes with cash interest cover reducing to 1.3x.¹

Cautionary Notice Regarding Forward Looking Statements

This press release and other oral and written statements by representatives of Algeco Scotsman regarding matters such as the completion of the merger and the financings and the achievement of the expected benefits of any such transactions, including the combined company's expected cost synergies and future operational and financial performance, may be forward-looking statements. These statements are identified by words such as "future," "anticipate", "intend,", "plan," "estimate," "believe," "expect," "project," "forecast," "could," "would," "should," "will," "may," and similar expressions of future intent or the negative of such terms. Although any such forward-looking statements reflect management's current beliefs based upon information currently available to management and upon assumptions which management believes to be reasonable, actual results may differ materially from those stated in or implied by these forward-looking statements. A number of factors could cause actual results, performance or achievements to differ materially from the results expressed or implied in any forward-looking statements, including: the ability to complete the merger and related transactions; the ability of management to integrate and realize synergies from the merger; the terms of any financings related to the merger; the condition of the global capital markets; global economic conditions, including in the oil and gas industry; changes in demand within key industry end-markets and geographic regions; the competitive environment in which the companies operate; changes in federal, state and local laws and regulations, including in state building codes; ability to tend to the combined companies' modular assets; changes in raw material and labor costs; ability to engage with manufacturers if existing relationships are discontinued; and ability to retain and recruit key personnel. These factors should be considered carefully and readers should not place undue reliance on any forward-looking statements. Except as required by law, Algeco Scotsman undertakes no obligation, and specifically declines any obligation, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

About Algeco Scotsman

Algeco Scotsman is the leading global business services provider focused on modular space, secure portable storage solutions, and remote workforce accommodation management. Algeco Scotsman has operations in 24 countries with a modular fleet of approximately 280,000 units. For more information visit www.algecoscotsman.com

About ModSpace

Modular Space Corporation, based in Berwyn, Pa., is the leading U.S.-owned provider of office trailers, portable storage units and modular buildings for temporary or permanent space needs. Building on nearly 50 years of experience, ModSpace serves a diverse set of customers and markets -- including commercial, construction, education, government, healthcare, industrial, energy, disaster relief, franchise and special events -- through an extensive branch network across the United States and Canada. For more information, visit www.ModSpace.com or http://blog.modspace.com

¹ Figures stated herein are pro-forma for the envisaged transaction. Total Leverage defined as Total Debt / Adjusted EBITDA and Cash Interest Cover defined as Adjusted EBITDA / Cash interest, both with reference to the respective Q3 2015 financial information, with EBITDA calculated on a constant currency basis.