Entrec Transportation Services Ltd.

September 12, 2011 08:00 ET

Entrec Completes Acquisition of KEM Enterprises Ltd.

SPRUCE GROVE, ALBERTA--(Marketwire - Sept. 12, 2011) - Entrec Transportation Services Ltd. (TSX VENTURE:ENT) ("ENTREC") is pleased to announce it has completed the acquisition of 100% of the issued and outstanding shares of KEM Enterprises Ltd. ("KEM"). KEM is based in Fort McMurray, Alberta and specializes in the transportation of oilfield equipment within the Alberta oil sands region. KEM's fleet consists of over 50 trucks and trailers, including low boys, high boys, winch trucks, tractors, and picker trucks.

"Operating since 1985, KEM has built a strong reputation as a leading oilfield equipment hauler in the Fort McMurray area," comments Rod Marlin, ENTREC's chairman and CEO. "We are very excited to have KEM's management team and employees joining ENTREC. KEM will provide us with a solid base right in the heart of the Alberta oil sands to further grow our services and become a leading provider of specialized transportation services in the Alberta oil sands region."

The aggregate purchase price paid on closing was $7.9 million less the value of long-term debt and was paid through a combination of: (i) the issuance of 2,000,000 common shares of ENTREC issued at a deemed price of $1.00 per share; and (ii) the remainder in cash. The aggregate purchase price included an amount equal to $0.4 million specifically for prepaid lease and leasehold improvement costs recently incurred to expand the KEM business. The final purchase price for KEM remains subject to certain adjustments related to KEM's working capital balances as at August 31, 2011.

During the twelve-month period ended July 31, 2011, KEM generated revenue of approximately $6.0 million and normalized earnings before interest, taxes, depreciation and amortization of $2.4 million.

Additional Debt Financing Completed

Concurrent with completion of the KEM acquisition, ENTREC also entered into additional debt financing arrangements with Canadian Western Bank ("CWB") pursuant to which CWB made available to ENTREC a demand loan equipment facility in the amount of $12.5 million to finance past and future equipment acquisitions. ENTREC has currently drawn approximately $7.0 million under this facility. In addition, ENTREC also increased its demand revolving credit facility to $7.0 million from $2.0 million.


ENTREC specializes in the transportation and rigging of overweight and oversized cargo for the oil and gas, construction, petrochemical, mining and power generation industries. The common shares of ENTREC trade on the TSX Venture Exchange under the trading symbol "ENT".

Forward-looking statements

This press release contains forward-looking statements which reflect ENTREC's current beliefs and are based on information currently available to ENTREC. These statements require ENTREC to make assumptions it believes are reasonable and are subject to inherent risks and uncertainties. Actual results and developments may differ materially from the results and developments discussed in the forward-looking statements as certain of these risks and uncertainties are beyond ENTREC's control.

Examples of such forward-looking statements in this press release relate to, but are not limited to, ENTREC's expectation that the KEM acquisition will meet its expectations and add shareholder value. These forward-looking statements rely on certain assumptions, including, among others, the KEM business meeting or exceeding ENTREC's internal revenue, net earnings, and cash flow forecasts for that business in the future. Such factors that may negatively impact ENTREC's ability to achieve these forecasts include, but are not limited to, fluctuations in the demand for specialized transportation services in the Alberta oil sands region, political and economic conditions, industry competition, and ENTREC's ability to attract and retain both customers and key personnel. The statements in this press release are made as of the date of this 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

  • Entrec Transportation Services Ltd.
    Rod Marlin
    Chairman & CEO
    (780) 960-5647

    Entrec Transportation Services Ltd.
    John M. Stevens
    President & COO
    (780) 960-5625

    Entrec Transportation Services Ltd.
    Jason Vandenberg
    (780) 960-5630