December 04, 2006 08:00 ET

Eveready Income Fund Completes Acquisition of Rodrigue's Directional Drilling Group of Companies

EDMONTON, ALBERTA--(CCNMatthews - Dec. 4, 2006) - Eveready Income Fund (TSX:EIS.UN) ("Eveready" or the "Fund") announces that it has completed its previously announced acquisition of an 80% interest in the business and assets of the Rodrigue's Directional Drilling group of companies ("Rodrigue's"). This acquisition was originally announced on August 18, 2006. Based in Nisku, Alberta, Rodrigue's is a leading horizontal directional boring firm with many additional support services.

The purchase price of approximately $8.4 million was paid via (i) $1.7 million in cash and (ii) $6.7 million through the issuance of 1,085,046 Units of Eveready issued at a deemed price of $6.21 per Unit. The final purchase price for Rodrigue's may be subject to adjustment based on Rodrigue's net equity as of December 1, 2006.

Eveready estimates that Rodrigue's could generate EBITDA of approximately $2.2 to $3.0 million (before non-controlling interest share) on an annual basis.

The vendors have also agreed to participate 50% of their Units in Eveready's Principal Unitholder Agreement. Under this agreement, each Principal Unitholder has agreed to not sell more than 10% of such Principal Unitholder's Units in any one year and to reinvest in the distribution reinvestment plan of the Fund 100% of the distributions received on such Principal Unitholder's Units until March 31, 2010. Approximately 33% of the Fund's outstanding Units are currently subject to the Principal Unitholder Agreement.

In connection with the acquisition, Eveready also entered into a mutual option agreement with the vendor. This agreement provides Eveready a call option to acquire the remaining 20% non-controlling interest and provides the vendor a put option to sell the remaining 20% non-controlling interest to Eveready exercisable at any time after November 30, 2009. The exercise price for each option is based on a formula that is designed to estimate the fair value of the non-controlling interest at the time the option is exercised.

Eveready is a growth oriented income fund that provides industrial and oilfield services; health, safety, and environmental services; and oilfield equipment rental services to the energy, resource, and manufacturing sectors. The Units of Eveready trade on the Toronto Stock Exchange under the trading symbol "EIS.UN".

EBITDA is a supplemental earnings measure that does not have any standardized meaning prescribed by Canadian GAAP and may not be comparable to EBITDA calculated by other funds or entities. EBITDA is a useful supplemental measure as it provides an indication of the financial results generated by the Fund's principal business activities prior to consideration of how these activities are financed or how the results are taxed in various jurisdictions and before non-cash amortization expense. EBITDA is defined as earnings before interest, taxes, depreciation and amortization.

This press release contains forward-looking statements subject to various risk factors and uncertainties, which may cause the actual results, performances or achievements of Eveready to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, fluctuations in the market for oil and gas and related products and services, political and economic conditions, the demand for services provided by Eveready, industry competition and Eveready's ability to attract and retain both customers and key personnel.

Contact Information

  • Eveready Income Fund
    Rod Marlin
    President & CEO
    (780) 451-6075
    (780) 451-2142 (FAX)
    Eveready Income Fund
    John M. Stevens
    Senior Vice President & CFO
    (780) 451-6075
    (780) 451-2142 (FAX)
    Website: www.evereadyincomefund.com