Armtec Infrastructure Income Fund
TSX : ARF.UN

Armtec Infrastructure Income Fund

October 10, 2006 15:35 ET

Armtec Announces Saskatchewan Acqusition and a $25 Million Unit Offering

GUELPH, ONTARIO--(CCNMatthews - Oct. 10, 2006) -

NOT FOR DISTRIBUTION TO US NEWSWIRE SERVICES OR FOR DISSEMINATION TO THE UNITED STATES

Armtec Infrastructure Income Fund ("the Fund") (TSX:ARF.UN) today announced an agreement to acquire the Culvert Division of Prairie Steel Products Ltd. and Prairie Steel Manufacturing Ltd. (collectively, "Prairie Steel") based in Clavet, Saskatchewan for approximately CDN$6.6 million, subject to working capital adjustments. Prairie Steel manufactures corrugated steel pipe and well cribbing and distributes guard rail throughout Saskatchewan, where it is a significant supplier to the rural municipality infrastructure market. The acquisition is expected to close on November 15, 2006. Following the acquisition, Armtec will consolidate the manufacturing activities with its existing Saskatoon operations and will be retaining key sales and production employees from Prairie Steel.

In order to finance the acquisition and provide additional capital to support its growth strategy, the Fund also announced that it has entered into an agreement with a syndicate of underwriters under which the underwriters have agreed to buy 1,289,000 trust units ("Trust Units") from Armtec for sale to the public at a price of $19.40 per Trust Unit, representing an aggregate issue of $25 million (the "Offering"). The syndicate will be co-led by Scotia Capital Inc. and BMO Capital Markets. Other participants in the Offering include TD Securities Inc., CIBC World Markets Inc. and M Partners Inc. The Offering is expected to close on or about October 26, 2006 and is subject to regulatory and stock exchange approvals.

Proceeds from the Offering will be used to finance the Prairie Steel acquisition and the remaining net proceeds will be used to reduce the Fund's term debt. It is expected that the transactions will be marginally accretive to distributable cash per unit on an annual basis.

"The new equity will provide further financial flexibility as we pursue our accretive growth strategy," said Charles Phillips, President and Chief Executive Officer of Armtec Limited Partnership. "The acquisition of Prairie Steel's Culvert Division, with its proud tradition of quality products and excellent customer service, will be an excellent fit with our team."

The market for corrugated steel in Saskatchewan is expected to grow due to the opportunities presented by the untapped mineral wealth. Resources such as proven oil reserves (including oil sands), uranium, and potash are expected to generate new investment in Saskatchewan in the coming years.

The securities to be offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful.

Please refer to the information set out under "Forward-Looking Statements" concerning the material factors and assumptions upon which such expectations regarding the accretion to cash flow and closing of the acquisition were based and the material factors that could cause actual results to differ materially.

About Armtec

Armtec is a leading manufacturer and marketer of drainage products and engineered solutions for infrastructure applications in a diverse cross-section of industries, including the public infrastructure market and private sector markets such as natural resources, residential drainage and agricultural drainage in Canada. Armtec is Canada's only national multi-material manufacturer specializing in corrugated high-density polyethylene pipe, corrugated steel pipe and related engineered products. Armtec also distributes a complete line of water control and geosynthetic products, and manufactures and distributes certain high value-added engineered products internationally.

Forward-Looking Statements

This news release contains forward-looking statements, including the statements concerning the expected closing of the acquisition of the Culvert Division of Prairie Steel and the expected accretion to cash flow available for distribution to unitholders of such acquisition. The statements concerning the expected closing of the acquisition of the Culvert Division of Prairie Steel and the expected accretion to cash flow available for distribution to unitholders of such acquisition are based on the following material factors or assumptions: satisfaction of conditions contained in the purchase agreement; continuity of customer relationships; consistent raw material pricing; and interest rates will not differ materially from current rates. The forward-looking statements, including the statements concerning the expected closing of the acquisition of the Culvert Division of Prairie Steel and the expected accretion to cash flow available for distribution to unitholders of such acquisition, are also based on current expectations, and are subject to a number of uncertainties and risks, and actual results may differ materially. These uncertainties and risks include, but are not limited to: reductions in demand for Armtec's products; relationships with suppliers; lack of long-term agreements; expiration of rights under license and distribution arrangements; raw material price volatility; product liability; intellectual property; reliance on key personnel; collective bargaining agreements; interest rates; uninsured and underinsured losses; environment, health and safety requirements; operating hazards; risk of future legal proceedings; absence of operating history as a public company; dependence of the Fund on Armtec Limited Partnership; and certain risks associated with the structure of the Fund including income tax matters; leverage and restrictive covenants; unitholder liability; restrictions on potential growth; and cash distributions are not guaranteed. Further information about these and other risks and uncertainties can be found in the disclosure documents filed by Armtec Infrastructure Income Fund with the securities regulatory authorities, available at www.sedar.com.

Contact Information

  • Armtec Limited Partnership
    Charles M. Phillips
    President and Chief Executive Officer
    (519) 822-0210
    or
    Armtec Limited Partnership
    R. John Slattery
    Senior Vice President, Finance and Chief Financial Officer
    (519) 822-0210
    Website: www.armtecincomefund.com