EIS Capital Corp.
TSX VENTURE : EIE.P

EIS Capital Corp.

May 12, 2011 16:46 ET

EIS Capital Corp. Completes Acquisition of Entrec Transportation Services Ltd., Private Placement and Debt Financing

CALGARY, ALBERTA--(Marketwire - May 12, 2011) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES.

EIS CAPITAL CORP. ("EIS") (TSX VENTURE:EIE.P) is pleased to announce that on May 12, 2011 (the "ClosingDate"), it completed its previously announced acquisition (the "Acquisition") of the business of Entrec Transportation Services Ltd. ("Entrec") via the purchase of all of the issued and outstanding shares of Entrec from Flint Energy Services Ltd. ("Flint") and the purchase of certain assets used to conduct the business of Entrec from a wholly-owned subsidiary of Flint named Conex Rentals Corporation ("Conex", and together with Flint, referred to collectively as the "Vendors").

Concurrent with the completion of the Acquisition, in order to fund a portion of the Purchase Price (as defined below), EIS also completed a private placement (the "Private Placement") of common shares of EIS (the "EIS Shares") with Stifel Nicolaus Canada Inc. acting as sole agent and arranged for a credit facility (with Canadian Western Bank) (the "Debt Financing", and together with the Private Placement and Acquisition, collectively referred to as the "Transactions").

The Transactions served as the "Qualifying Transaction" of EIS pursuant to the policies of the TSX Venture Exchange (the "Exchange") and remain subject to the final acceptance of the Exchange. In light of the completion of the Transactions, EIS will now, via Entrec, specialize in the transportation and rigging of overweight and oversized cargo for the oil and gas, construction, petrochemical, mining and power generation industries throughout Alberta, Saskatchewan, British Columbia and the Northwest Territories

The Transactions

The Acquisition

On the Closing Date:

(a) Flint did sell and convey, and EIS did purchase and pay for, the entire interest of Flint in the common shares of Entrec; and

(b) Conex did sell and convey, and EIS did purchase and pay for, the entire interest of Conex in certain assets used to conduct the business of Entrec (the "Assets");

for the purchase price of $23,126,508.40 plus applicable GST (the "Purchase Price"), subject to certain adjustments set out in the purchase agreement dated April 7, 2011, among the Vendors and EIS (the "PurchaseAgreement"), such Purchase Price having been paid in cash on the Closing Date and allocated between the Vendors in accordance with the terms of the Purchase Agreement. EIS also provided a deposit of $1,000,000 to apply towards the purchase amount of $5,401,000 for certain real estate assets (the "Real Estate Assets"). It is anticipated that EIS will complete the purchase of the Real Estate Assets in the near future.

The Private Placement

Concurrent with the Acquisition, EIS completed the Private Placement to raise gross proceeds of $26,000,000 via the issuance of 26,000,000 EIS Shares at a price of $1.00 per EIS Share (the "Private Placement Price").

Pursuant to the terms of an engagement letter (the "Engagement Letter"), Stifel Nicolaus Canada Inc. (the "Agent") received an aggregate fee consisting of (i) a cash fee equal to $1,256,000; and (ii) 1,256,000 broker warrants (the "Private Placement Broker Warrants"), each Private Placement Broker Warrant entitling the holder to buy one EIS Share at any time at the Private Placement Price exercisable for 24 months following the Closing Date of the Private Placement.

The Debt Financing

Concurrent with completion of the Acquisition and the Private Placement, EIS entered into debt financing arrangements with Canadian Western Bank ("CWB") pursuant to which CWB made available to EIS (i) a demand operating loan in the amount of $2,000,000 to finance the day-to-day operations of the Entrec business; (ii) a demand loan in the amount of $15,000,000 to finance the acquisition of the equipment included in the Assets; (iii) a term loan of $3,750,000 to finance the acquisition of the Real Estate Assets (which amount will be forwarded on the closing of that portion of the transaction); (iv) a corporate MasterCard with a maximum limit of $100,000 to provide a business credit card for use by EIS; and (v) a letter of credit with a maximum limit of $50,000 to provide a letter of credit to the benefit of the Minister of Transportation.

Options

Concurrent with the closing of the Acquisition and the Private Placement, EIS granted new options to acquire up to an aggregate of 1,125,000 EIS Shares at $1.00 per share to directors, officers and employees of EIS under EIS' stock option plan, which number includes options to acquire up to 875,000 EIS Shares granted to directors and officers. Such options will expire five years from the Closing Date.

About EIS

EIS is a capital pool company created to identify potential acquisitions of commercially viable businesses and assets that have the potential to generate profits and add shareholder value. The EIS Shares are listed for trading on the Exchange under the trading symbol "EIE.P".

Additional Information

For further details on the proposed Transactions, the business of EIS and other anticipated details with respect to EIS following completion of the Transactions, please see EIS' Filing Statement dated April 28, 2011 on SEDAR at www.sedar.com.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the Transactions and has neither approved nor disapproved of the contents of this press release. Neither the 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.

Contact Information

  • EIS Capital Corp.
    Rod Marlin
    CEO and a director
    (780) 940-1438