Aveda Transportation and Energy Services Announces Signing of Definitive Agreement for a Transformational Acquisition and an Increase in the Company's Senior Lending Facility

CALGARY, ALBERTA--(Marketwired - Dec. 24, 2013) - Aveda Transportation and Energy Services Inc. (TSX VENTURE:AVE) ("Aveda" or the "Company"), a leading provider of oilfield hauling services and equipment rentals to the energy industry, today announced that, through its operating subsidiary in the US, it has signed an asset purchase agreement to acquire the operating assets of Williston, North Dakota-based M&K Hotshot & Trucking, Inc. and M&K Rig Service, Inc. (collectively "M&K"). Aveda expects to acquire approximately 170 pieces of oilfield hauling equipment, including 79 trailers, 15 conventional tractors, 14 winch trucks and three cranes, and approximately 395 pieces of rental equipment with an estimated total fair market value of US$22.0 million, working capital estimated at US$5.5 million and other intangible assets. The initial purchase price is expected to be between US$38.0 million and US$42.0 million or 3.18 times 2013 EBITDA (expected to fall in the range of US$12.0 million and US$13.0 million), which includes the issuance of US$5.0 million in equity of Aveda at a price of $3.60 per share. An estimated US$9.0 million in additional consideration may be payable on an earnout basis over a period of three years if certain EBITDA levels are generated.

"This transformational acquisition will provide Aveda with a strong presence in another established, oil-focused basin in the US," said Kevin Roycraft, President and CEO of Aveda. "We expect to realize a number of synergies through the combination of Aveda's brand and operational platform and M&K's high quality fleet and regional expertise that will help support future growth. This transaction also supports our entry into the US rentals business and will provide opportunities to re-deploy under-utilized assets from the Western Canadian Sedimentary Basin to areas of more stable activity in the Williston Basin."

Between 2010 and 2012, M&K nearly tripled revenue from US$11.6 million (unaudited) to US$33.5 million and grew EBITDA from US$3.1 million (unaudited) to US$12.4 million. EBITDA margins between 2010 and 2012 ranged between 26.8% and 40.2% (unaudited). Fiscal 2013 revenue is estimated to be between US$39.0 million and US$41.0 million and normalized EBITDA to fall in a range between US$12.0 million and US$13.0 million. Investors are cautioned that historical financial information is not indicative of either expected or actual future performance.

"Completing this acquisition essentially doubles the size of the Company on an EBITDA basis, adding valuable scale, stability and further geographic diversity to our US operations," said Bharat Mahajan, Vice-President, Finance and CFO of Aveda. "The assets being acquired have a demonstrated track record of supporting solid margins and creating value in a region with continued robust activity levels."

Upon the transaction closing, former owners Mark and Kelly Brunelle will join the Aveda team along with current M&K management and nearly 90 staff to support ongoing operations and relationship continuity with key customers in the region.

The transaction will have an effective date of January 1, 2014 with closing expected on or before January 31, 2014 unless mutually extended by the parties. The transaction is subject to a number of standard conditions precedent to close, including but not limited to receipt of applicable regulatory approvals, including approval of the TSX Venture Exchange, and receipt of consents from certain of M&K's customers to the transfer of their master service agreements to Aveda's US subsidiary.

With respect to Aveda's senior credit facility arrangements with PNC Bank Canada Branch, ("PNC"), the Company announces that it has entered into an agreement with PNC pursuant to which the availability under its current operating facility (the "Facility") will conditionally (i) be increased to $75.0 million effective December 31, 2013, $15.0 million of which will not be available to the Company unless and until the M&K acquisition closes; (ii) be extended to January 1, 2018; (iii) have the interest rate decreased by 50 basis points as long as Undrawn Availability (as defined in the Facility agreement) is greater than $10.0 million; and (iv) the removal of all financial covenants as long as Undrawn Availability is greater than $15.0 million. The Company will pay a facility increase fee to PNC (the "Initial Facility Fee"), which will be paid by the Company to PNC on December 31, 2013 and the balance (the "Facility Fee Balance") to be paid concurrently with the closing of the M&K acquisition. In the event that the M&K acquisition does not close (i) the availability under the Facility will be decreased back to the current amount of $50.0 million; (ii) the Initial Facility Fee will not be recovered; (iii) the Facility Fee Balance will not be payable; (iv) the interest rate will remain as is; and (v) the financial covenants will continue to apply as is.

"Securing an increase in our senior credit facility offers us the financial flexibility to pursue additional acquisition opportunities in high activity jurisdictions on both sides of the border, leveraging the expanded scale of our operations," said Bharat Mahajan, Vice-President, Finance and CFO of Aveda. "We continue to evaluate a range of acquisition and organic growth opportunities that will help drive long term shareholder value."

The Company is actively pursuing a number of other acquisition opportunities along with several organic growth initiatives. Investors are cautioned that the ability of the Company to execute on any of these growth initiatives are subject to the risk factors outlined below.

About Aveda Transportation and Energy Services

Aveda provides specialized transportation services and equipment required for the exploration, development and production of petroleum resources in the Western Canadian Sedimentary Basin and in the United States of America principally in and around the states of Texas and Pennsylvania. Transportation services include both the equipment necessary to move the load as well as a trained, professional driver capable of securing, moving and manipulating the load at its origin and destination. Aveda's rental operations include the rental of tanks, mats, pickers, light towers and other equipment necessary for oilfield operations.

Aveda was incorporated in 1994 as a private company to serve the oil and gas industry. In the spring of 2006 the Company went public on the TSX Venture Exchange. Aveda has major operations in Calgary, AB, Slave Lake, AB, Leduc, AB, Sylvan Lake, AB, Edson, AB, Mineral Wells, TX, Pleasanton, TX, Midland, TX, Williamsport, PA and Buckhannon, WV. Aveda is publicly traded on the TSX Venture Exchange under the symbol AVE. For more information on Aveda please visit www.avedaenergy.com.

This News Release contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "achieve", "could", "believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate", "outlook", "expect", "may", "will", "project", "should" or similar words, including negatives thereof, suggesting future outcomes. In particular, this News Release contains forward-looking statements relating to: demand for the Company's services and general industry activity level; the Company's growth opportunities; and expectation to maintain revenue and equipment utilization. Aveda believes the expectations reflected in such forward-looking statements are reasonable as of the date hereof but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon.

Various material factors and assumptions are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking statements. Those material factors and assumptions are based on information currently available to Aveda, including information obtained from third party industry analysts and other third party sources. In some instances, material assumptions and material factors are presented elsewhere in this News Release in connection with the forward-looking statements. Readers are cautioned that the following list of material factors and assumptions is not exhaustive. Specific material factors and assumptions include, but are not limited to:

• obtaining customer consents for the transfer of the master services agreements in respect of the M&K acquisition;
• the final approval of the TSX Venture Exchange for the M&K acquisition;
• the completion of the M&K acquisition;
• the performance of Aveda's businesses, including M&K, current business and economic trends;
• oil and natural gas commodity prices and production levels;
• capital expenditure programs and other expenditures by Aveda and its customers;
• the ability of Aveda to retain and hire qualified personnel;
• the ability of Aveda to obtain parts, consumables, equipment, technology, and supplies in a timely manner to carry out its activities;
• the ability of Aveda to maintain good working relationships with key suppliers;
• the ability of Aveda to market its services successfully to existing and new customers;
• the ability of Aveda to obtain timely financing on acceptable terms;
• currency exchange and interest rates;
• risks associated with foreign operations;
• changes under governmental regulatory regimes and tax, environmental and other laws in Canada and the United States; and
• a stable competitive environment.

Forward-looking statements are not a guarantee of future performance and involve a number of risks and uncertainties, some of which are described herein. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause Aveda's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the risks identified in Aveda's annual information form and management discussion and analysis for the year ended December 31, 2012 (the "MD&A"). Any forward-looking statements are made as of the date hereof and, except as required by law, Aveda assumes no obligation to publicly update or revise such statements to reflect new information, subsequent or otherwise.

This News Release contains the terms EBITDA and normalized EBITDA. EBITDA is defined in the MD&A. Normalized EBITDA is EBITDA adjusted for one-time costs as agreed to in the definitive agreement for the M&K acquisition. EBITDA and normalized EBITDA as discussed do not have any standardized meaning prescribed by international financial reporting standards (IFRS) and therefore may not be comparable with the calculation of similar measures for other entities. Management uses normalized EBITDA to analyze the operating performance of the M&K acquisition. Normalized EBITDA as discussed is not intended to represent cash provided by operating activities, net earnings or other measures of financial performance calculated in accordance with IFRS.

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