EVEREADY INCOME FUND
TSX : EIS.UN

EVEREADY INCOME FUND

August 18, 2006 08:00 ET

Eveready Income Fund to Further Strengthen its Directional Boring and Punching Services Capabilities

EDMONTON, ALBERTA--(CCNMatthews - Aug. 18, 2006) - Eveready Income Fund ("Eveready" or the "Fund") (TSX:EIS.UN) announces that it has entered into a letter of intent to acquire an 80% interest in the business and assets of the Rodrigue's Directional Drilling group of companies ("Rodrigue's"). Based in Nisku, Alberta, Rodrigue's is a leading horizontal directional boring firm with many additional support services. Founded in 1967, Rodrigue's has grown to become a leader in the directional boring field with state of the art equipment and highly skilled operators.

The letter of intent contemplates a purchase price of approximately $8.4 million, and is payable through a combination, at Eveready's option, of Units of Eveready and cash consideration, but subject to a minimum of 80% of the consideration being in Units of Eveready. The Units are to be issued at a deemed price per Unit equal to the lower of: (i) the 10 day weighted average trading price of the Units as traded on the Toronto Stock Exchange on the 10 days prior to the signing of the letter of intent; and (ii) the 10 day weighted average trading price of the Units as traded on the Toronto Stock Exchange on the 10 days prior to the effective date of the acquisition.

Eveready estimates that Rodrigue's could generate EBITDA of approximately $2.2 to $3.0 million for their 12 month period ending December 31, 2006.

"This acquisition gives us a significant market presence in the directional boring and punching sector", comments Rod Marlin, Eveready's President and Chief Executive Officer, "and is another step in the consolidation of a fragmented market sector."

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 will also enter into a mutual option agreement with the vendor. This agreement will provide Eveready a call option to acquire the remaining 20% non-controlling interest and provide the vendor a put option to sell the remaining 20% non-controlling interest to Eveready exercisable at any time after March 31, 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.

Completion of the proposed acquisition is subject to a number of conditions, including but not limited to, the completion of satisfactory due diligence by Eveready. Completion of the proposed acquisition is also subject to the receipt of any required regulatory approvals, including but not limited to, the approval of the Toronto Stock Exchange. Assuming that all of the conditions are satisfied, it is anticipated that the effective date of the acquisition will be November 1, 2006.

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