Lonestar West Inc.
TSX VENTURE : LSI

Lonestar West Inc.
Clean Harbors, Inc.
NYSE : CLH

Clean Harbors, Inc.

May 11, 2017 09:11 ET

Clean Harbors Signs Definitive Agreement to Acquire Lonestar West Inc.

- Acquisition Strengthens Clean Harbors' Daylighting and Hydro Excavation Expertise and Service Offerings

- Lonestar Shareholders to Receive CAD $0.72 per Share

- Transaction Valued at CAD $44.1 Million, Including Equity Payout and Assumption of Debt

- Transaction Expected to Close in July, 2017

NORWELL, MASSACHUSETTS and SYLVAN LAKE, ALBERTA--(Marketwired - May 11, 2017) - Clean Harbors, Inc. ("Clean Harbors") (NYSE:CLH) and Lonestar West Inc. ("Lonestar") (TSX VENTURE:LSI) today announced a definitive agreement whereby Clean Harbors will acquire the outstanding shares of Lonestar in an all-cash transaction valued at CAD $44.1 million.

Under the terms of the agreement, Lonestar shareholders will receive CAD $0.72 per share and Clean Harbors will assume CAD $22.3 million in outstanding debt. The purchase price represents an 84.6% premium over the closing price of the Lonestar shares on the TSX Venture Exchange ("TSXV") for May 10, 2017, and an 82.2% premium over the weighted average trading price of the Lonestar shares on the TSXV for the 20 trading days ending May 10, 2017.

The transaction will enable Clean Harbors to:

  • Broaden its daylighting and hydro excavation capabilities
  • Capitalize on the growing demand for these services
  • Expand into new geographies, while accelerating growth in existing regions
  • Add economies of scale and achieve operating efficiencies
  • Maximize cross-selling opportunities
  • Acquire a business with the potential for strong cash flow generation

Daylighting and hydro excavation are non-destructive methods of excavation that use pressurized water to agitate the earth and a powerful vacuum to remove debris and safely expose underground utilities, pipelines and other infrastructure.

"Daylighting and hydro excavation services are markets that we believe offer strong growth prospects," said Alan S. McKim, Chairman, President and Chief Executive Officer. "With the addition of Lonestar, we see an opportunity to accelerate our position in that marketplace and double our scale. Given the versatility of hydrovacs, we can leverage these highly desirable assets across a number of our lines of business. Geographically, this transaction aligns well with our existing footprint, as Lonestar serves key markets across Canada and the United States. We look forward to adding James Horvath and his talented team to our Daylighting services group."

James P. Horvath, Lonestar's President and Chief Executive Officer, said, "This transaction, which has the full support of our Board of Directors and management team, will deliver fair value to our shareholders with a significant premium to recent trading prices. It will also directly benefit our employees and customers. With its exceptional reputation for quality and service, Clean Harbors is an ideal partner that strategically enhances our ability to grow. The company has a proven track record in the hydro excavation space, deep customer relationships across key industries and an expansive network of North American locations. We are excited to join such an established leader."

Lonestar has more than 160 employees and maintains a network of 12 operating centers in key areas throughout Canada and the United States. The company generated CAD $43 million of revenues in 2016. Lonestar provides services for drilling operations, oil sands projects, plant maintenance, as well as commercial, municipal and civil projects. Clean Harbors expects the acquisition will be accretive in 2017, excluding one-time fees and acquisition-related expenses.

Under the terms of the definitive agreement, the acquisition will be accomplished by way of an amalgamation (the "Amalgamation") pursuant to the Canada Business Corporations Act. The proposed Amalgamation is subject to certain conditions including, without limitation, the approval by: the holders of Lonestar shares representing at least two-thirds of votes cast in person or by proxy at the meeting of Lonestar shareholders to be held to approve the Amalgamation and appropriate regulatory and other authorities. There is no financing condition to completion of the transaction. The Lonestar shareholders' meeting to approve the Amalgamation is expected to be held on July 12, 2017 and the closing of the Amalgamation is anticipated to be on July 14, 2017. An information circular in respect of the meeting is expected to be mailed to Lonestar shareholders at the beginning of June, 2017. Each of the directors and officers of Lonestar and certain other principal shareholders, collectively holding approximately 35.7% of the issued and outstanding Lonestar shares, have entered into agreements with Clean Harbors pursuant to which such holders have agreed to vote such Lonestar shares in favor of the Amalgamation at the Lonestar shareholders' meeting.

The Board of Directors of Lonestar has unanimously approved the Amalgamation and determined that the Amalgamation is in the best interests of Lonestar and the Lonestar shareholders and recommends that the Lonestar shareholders vote in favor of the Amalgamation.

Industrial Alliance Securities Inc. is acting as exclusive financial advisor to Lonestar in connection with the Amalgamation and has provided the Board of Directors of Lonestar with its verbal opinion that, as of the date hereof, subject to receipt and review of the final documentation relating to such opinion and the Amalgamation, and certain assumptions, limitations and qualifications, the consideration to be received by the Lonestar shareholders pursuant to the Amalgamation is fair, from a financial point of view, to the Lonestar shareholders.

The definitive agreement contains provisions that, among other things: prohibit Lonestar from soliciting or initiating discussions regarding any other business combination or sale of material assets, subject to certain conditions; grant Clean Harbors the right to match competing unsolicited proposals; provide for a non-completion fee of CAD $1.1 million, plus reimbursement of expenses, payable to Clean Harbors in certain circumstances if the Amalgamation is not completed.

About Clean Harbors

Clean Harbors (NYSE:CLH) is North America's leading provider of environmental, energy and industrial services. The Company serves a diverse customer base, including a majority of the Fortune 500, across the chemical, energy, manufacturing and additional markets, as well as numerous government agencies. These customers rely on Clean Harbors to deliver a broad range of services such as end-to-end hazardous waste management, emergency spill response, industrial cleaning and maintenance, and recycling services. Through its Safety-Kleen subsidiary, Clean Harbors also is North America's largest re-refiner and recycler of used oil and a leading provider of parts washers and environmental services to commercial, industrial and automotive customers. Founded in 1980 and based in Massachusetts, Clean Harbors operates throughout the United States, Canada, Mexico and Puerto Rico. For more information, visit www.cleanharbors.com.

About Lonestar West

Based in Sylvan Lake, Alberta, Lonestar West Inc. operates a fleet of 140 Hydrovac, Vacuum and Auxiliary units throughout Western Canada, Ontario, California, and the southern United States. It is focused on profitably growing its HVAC services to become a major competitor in the North American market. For more information please visit the Lonestar West website at www.lonestarwest.com.

Safe Harbor Statement

Any statements contained herein that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are generally identifiable by use of the words "believes," "expects," "intends," "anticipates," "plans to," "estimates," "projects," or similar expressions. Such statements may include, but are not limited to, statements about future financial and operating results, the Company's planned carve-out and other statements that are not historical facts. Such statements are based upon the beliefs and expectations of Clean Harbors' management as of this date only and are subject to certain risks and uncertainties that could cause actual results to differ materially including, without limitation, those items identified as "risk factors" in Clean Harbors' most recently filed Form 10-K and Form 10-Q. Therefore, readers are cautioned not to place undue reliance on these forward-looking statements. Clean Harbors undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements other than through its filings with the Securities and Exchange Commission, which may be viewed in the "Investors" section of Clean Harbors' website at www.cleanharbors.com.

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