McCoy Corporation
TSX : MCB

McCoy Corporation

June 01, 2005 12:25 ET

McCoy Announces Closing of Acquisition of Rebel Metal Fabricators Ltd.

EDMONTON, ALBERTA--(CCNMatthews - June 1, 2005) - McCoy Bros. Inc. (TSX:MCB) ("McCoy" or "the Company") today announced that it has completed the cash transaction to acquire all of the shares of Rebel Metal Fabricators Ltd. ("Rebel") of Red Deer, Alberta.

Rebel was established in 2000 in response to industry demand for a well-built truck and trailer mounted hydrovac and vacuum tanks. These units are used by oilfield, liquid waste disposal and utilities companies. Other types of vacuum tanks produced by Rebel are primarily used for liquid waste disposal and have applications in the oil and gas, commercial and residential sectors. The majority of Rebel's customers operate in the oil and gas industry.

Rebel operates under strictly-regulated permits and licenses and must comply with all federal and provincial government safety regulations. The business occupies approximately 13,000 square feet of manufacturing space and employs 22 individuals.

Mr. Rakievich, McCoy President and CEO, said Rebel appears to have excellent growth potential based on its current backlog of orders. Synergies with existing McCoy service operations are anticipated through the addition of vacuum tank recertifications and repairs to their product offerings. The new Real McCoy Service Centre in Fort St. John, British Columbia is in a particularly strong vacuum tank market. Mr. Rakievich also commented that the tank manufacturer's strong ties to Alberta's oil and gas industry has opened another avenue for McCoy to exploit the heavy demand for oilfield related products by adding a new, high-quality product to its manufacturing activities. In the fiscal year of 2004, Rebel experienced revenues in excess of $8 million and the business is expected to be accretive to earnings.

Mr. Tom O'Hare, Rebel President and Mr. Dan Spears, Shop Manager, two of three Rebel vendors, entered into three-year employment agreements in their current capacities concurrently with the closing of the transaction. The third former shareholder was not active in the business but leases the land and building to Rebel for its operations.

McCoy paid cash consideration for the shares of $3.5 million. The purchase price is subject to adjustments pending the completion of change of control financial statements. McCoy also committed to "earn out" consideration for Messrs. O'Hare and Spears. The earn out amount will be equal to 17.5% of the pre-tax net income earned by Rebel in each of the four years following the acquisition calculated on the anniversaries of the closing, and will be split equally between Messrs. O'Hare and Spears. McCoy funded the acquisition through an increase in its operating line of credit with a Canadian Chartered Bank.

McCoy's main operating segments are: Truck & Trailer Products & Services, Trailer Manufacturing and Oilfield Products Manufacturing. Approximately 400 individuals are employed by the Company in Alberta and British Columbia. The Company's shares are traded on the TSX under the symbol "MCB". More information can be found on the Company's web site at http://www.mccoybros.com.

Contact Information

  • McCoy Bros. Inc.
    Jim Rakievich
    President and Chief Executive Officer
    (780) 453-8707