Crossfire Holdings Inc.

Crossfire Holdings Inc.

April 25, 2007 18:41 ET

Crossfire Announces the Acquisition of Micoda Process Systems Inc. and Increases Fabrication Capacity

CALGARY, ALBERTA--(CCNMatthews - April 25, 2007) - Crossfire Holdings Inc. ("Crossfire" or the "Company") is pleased to announce that it has signed a definitive agreement to acquire Alberta-based Micoda Process Systems Inc. ("Micoda") along with a separately owned 107,000 square foot fabrication facility operated by Micoda in Medicine Hat, Alberta.

The combined purchase price paid for the transaction is $8.8 million comprised of Common Shares of Crossfire valued at $2.75 million, cash of $2.0 million and the assumption of debt including a $2.3 million mortgage secured by the Medicine Hat fabrication facility appraised at $4.6 million.

Micoda Process Systems Inc.

Crossfire has agreed to acquire all of the issued and outstanding shares of Micoda for total consideration of $4.17M payable in $2.75 million in Common Shares of Crossfire at a price equal to the weighted average trading price for five trading days prior to closing to a maximum of $1.05 per share, and $1.274 million in cash. In addition, Crossfire has agreed to assume shareholder loans, net of amounts due from affiliate companies of approximately $0.13 million.

Micoda is an Alberta based fabrication business focused upon the design and manufacture of process equipment to both the domestic and international oil and gas industry. Micoda was established in 2000 and has operated in Nisku, Alberta. In January 2007, Micoda relocated from its existing 12,500 sq. ft facility in Nisku to existing 107,000 sq. ft facilities in Medicine Hat, Alberta.

"Micoda is a leading provider of innovative solutions to the oil and gas industry both domestically and abroad," said Dean Bethune, Crossfire's President and CEO. "The addition of Micoda and its people enhance Crossfire's ability to expand the Fabrication Services division and establish the Company's international presence in the U.S. and overseas."

The following summary of financial information is taken from Micoda's unaudited financial statements for the fiscal years ended October 31, 2006, 2005 and 2004.

Summary Financial Information
Selected Information - Unaudited
($ thousands) 2006 2005 2004
Revenue 15,017 24,034 15,389
Net Income 396 881 183
Normalized Income(1) 1,004 2,404 1,569
EBITDA(2) 1,300 2,671 1,665

(1) Net of management fees of $704, $1,512 and $1,410 for fiscal years
2006, 2005 & 2004, respectively.
(2) EBITDA is calculated as earnings before interest, taxes, depreciation
and amortization. EBITDA is not a recognized measure under Generally
Accepted Accounting Principals and is unlikely to be comparable to
similar measures presented by other companies.

Manufacturing Facility

Crossfire has also entered into an agreement to acquire land and building located in Medicine Hat, Alberta for total consideration of $4.6 million payable $2.3 million in cash and through the assumption of $2.3 million in existing debt. The manufacturing facility comprised 13.31 acres of land in total and a 107,000 sq. foot manufacturing facility.

"The new facility in Medicine Hat enables Micoda to meet the manufacturing requirements of its customers in Canada, the United States and internationally," said Michael Boyd, Micoda's founder and President. "The Medicine Hat facility enables Micoda to expand its fabrication capacity. The availability of talented people in the Medicine Hat area was a key consideration in relocating the business to Medicine Hat."

Mr. Boyd has agreed to remain within Crossfire and will assume the role of Vice President, International Operations of Crossfire once the transactions are completed.

The transactions are subject to a number of conditions including the Company completing due diligence, obtaining adequate financing and subject to applicable regulatory approvals.


Crossfire business strategy involves merging complimentary service offerings together. As a result, it enables the Company to operate as a one-stop-shop for the fabrication, construction and maintenance relating to oilfield facilities. The strategy is guided by a focus to be recognized as a specialist in the fabrication of a wide scope of oilfield facility components, manufacturing subcontractor for major energy facilities projects, as well as the construction and maintenance of oilfield facilities and pipeline.

Crossfire is a full-service provider of design, fabrication and installation of oilfield facilities and carries on business under the name Crossfire Energy Services. The company's success is built upon a commitment to build long-term relationships with clients, employees and investors. Crossfire is a publicly traded company on the TSX - Venture Exchange, symbol CFE.

The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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