Superior Plus Corp.
TSX : SPB

Superior Plus Corp.

February 13, 2017 07:57 ET

Superior Plus Corp. to Acquire Gibson Energy's Industrial Propane Business, Enhancing and Expanding the Energy Distribution Platform

- Aligns with Superior's strategy of investing in its core businesses that generate strong free cash flow

- Acquiring the Industrial Propane Business during a low cycle in western Canadian oil and gas activity

- Expected to provide annual synergies of at least $20 million

- Double digit accretion to AOCF per share including expected synergies

- Allows for better and more efficient service to retail propane customers

TORONTO, ONTARIO--(Marketwired - Feb. 13, 2017) - Superior Plus Corp. ("Superior") (TSX:SPB) is pleased to announce that it has entered into an agreement with Gibson Energy Inc. ("Gibson") to ultimately acquire all of the outstanding shares and units of the entities that carry on the retail propane business of Canwest Propane ("Canwest") for a total transaction value of $412 million subject to certain customary adjustments (the "Transaction"). Superior anticipates that the acquisition of the Canwest Securities will occur in the second half of 2017.

The acquisition of Canwest will significantly enhance Superior's current Energy Distribution business in support of Superior's traditional business model, while positioning the business for oilfield activity recovery and improved demand in Western Canada. Completion of the Transaction will allow the Energy Distribution business to better serve its customers and is aligned with Superior's strategy of investing in its core businesses that generate strong free cash flow.

Closing of the Transaction is subject to certain conditions and receipt of customary regulatory approvals.

Transaction Summary

Superior has entered into an option purchase agreement (the "Option Purchase Agreement") agreeing to purchase an option (the "Option") to acquire all of the shares and units (the "Canwest Securities") of the entities that carry on the retail propane business of Canwest for $412 million. The acquisition of the Option is expected to occur no later than April 3, 2017.

The Option provides Superior with the rights (which are transferrable to a third party) to acquire the Canwest Securities for the payment of a nominal amount and upon satisfaction of certain conditions, including the receipt of customary regulatory approvals. Superior will, upon acquiring the Option, be entitled to the benefit of the net profits of Canwest from the date of acquisition of the Option.

Transaction Highlights

Canwest was founded in 1987 and is a leading propane supply and distribution franchise in Western Canada, serving a diverse customer base of oil and gas, commercial and industrial, residential and construction under the brands of Canwest and Stittco. Canwest has over 50,000 customers and has established long-term relationships with a customer base that includes international, national and large regional companies.

The asset base of over 60 locations in six provinces/territories had average annual propane sales volumes of approximately 470 million litres over the past two years.

With expected run-rate pre-tax synergies of at least $20 million, the Transaction is expected to provide double digit run-rate accretion. On a pro forma basis, the transaction would result in an approximate 20% increase in the EBITDA of Superior's Energy Distribution business. The annual run rate synergies are expected to be fully realized within 24 to 36 months from the closing of the transaction.

"This transaction is a strong strategic fit on all fronts including operations, culture, employees and management. It will allow us to more efficiently supply propane to customers in Western Canada," said Luc Desjardins, President and CEO of Superior. "Canwest enhances Superior's Energy Distribution business and allows for a better business position in Western Canada."

Benefits to Customers

  • Technologies and services: Enhances Superior's ability to serve customers with technologies and services, including better optimization of fleet and improved logistics resulting in consistent, reliable delivery of products.
  • Cost reductions: Allows the companies to operate more efficiently to reduce costs at all levels.
  • Greater operational expertise: Combines the technical strengths of both companies, including customer service and delivery efficiency.

Financing Summary

Superior has the ability to finance 100% of the purchase price with the available room on its credit facility and additional commitments received from the Bank of Nova Scotia and the Canadian Imperial Bank of Commerce. Depending on market conditions, Superior may consider additional long-term debt financing alternatives to reduce the draw on its credit facilities.

Advisors and Counsel

CIBC Capital Markets is acting as financial advisor and Blake, Cassels & Graydon LLP is acting as legal counsel to Superior.

2016 Fourth Quarter and Year-End Results and Conference Call

Superior expects to release its 2016 fourth quarter and year-end results on Thursday, February 16, 2017. A conference call and webcast for investors, analysts, brokers and media representatives to discuss the 2016 Fourth Quarter and Year-End Results and provide a strategic update is scheduled for 10:30 a.m. EST on Friday, February 17, 2017. To participate in the call, dial: 1-844-389-8661. An archived recording of the call will be available for replay until midnight, Monday, March 20, 2017. To access the recording, dial: 1-855-859-2056 and enter pass code 49265097. Internet users can listen to the call live, or as an archived call, on Superior's website at: www.superiorplus.com under the Events section.

About the Corporation

Superior consists of two primary operating businesses: Energy Distribution includes the distribution of propane and distillates, and supply portfolio management; and Specialty Chemicals includes the manufacture and sale of specialty chemicals.

Forward-Looking Statements

Certain information included in this press release is forward-looking, within the meaning of applicable Canadian securities laws. Forward-looking information is often, but not always, identified by the use of words such as "anticipate", "believe", "could", "estimate", "expect", "plan", "intend", "forecast", "future", "guidance", "may", "predict", "project", "should", "strategy", "target", "will" or similar words or phrases suggesting future outcomes or language suggesting an outlook. Forward-looking information in this press release includes: completion and timing of the proposed Transaction, anticipated adjusted operating cash flow ("AOCF") and future growth rates; expected accretion in respect of AOCF; forecasted operating expenses; expected synergies and financial benefits to be derived in respect of such synergies; financial and acquisition metrics; dividend strategy; growth opportunities in respect of Superior's Specialty Chemicals and Energy Distribution businesses; and future growth initiatives. Superior believes the expectations reflected in such forward-looking information are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon.

Forward-looking information herein is based on various assumptions and expectations that Superior believes are reasonable in the circumstances. No assurance can be given that these assumptions and expectations will prove to be correct. Those assumptions and expectations are based on information currently available to Superior, including information obtained from third party industry analysts and other third party sources, and the historic performance of Superior's businesses. Such assumptions include anticipated financial performance, current business and economic trends, the amount of future dividends paid by Superior, business prospects, availability and utilization of tax basis, regulatory developments, currency, exchange and interest rates, trading data, cost estimates and Superior's ability to obtain financing on acceptable terms, and are subject to the risks and uncertainties set forth below. Readers are cautioned that the preceding list of assumptions is not exhaustive.

Forward-looking information is not a guarantee of future performance. By its very nature, forward-looking information involves inherent assumptions, risks and uncertainties, both general and specific, and risks that predictions, forecasts, projections and other forward looking information will not be achieved, including risks relating to satisfaction of the conditions to, and completion of, the Transaction. Should one or more of these risks and uncertainties materialize, or should assumptions described above prove incorrect, Superior's actual performance and results in future periods may differ materially from any projections of future performance or results expressed or implied by such forward-looking information. We caution readers not to place undue reliance on this information as a number of important factors could cause the actual results to differ materially from the beliefs, plans, objectives, expectations and anticipations, estimates and intentions expressed in such forward-looking information. Forward-looking information contained in this news release is provided for the purpose of providing information about management's goals, plans and range of expectations for the future and may not be appropriate for other purposes. Any forward-looking information is made as of the date hereof and, except as required by law, Superior does not undertake any obligation to publicly update or revise such information to reflect new information, subsequent or otherwise.

Non-GAAP Financial Measures

Superior has used the following terms that are not defined by GAAP, but are used by management to evaluate performance of Superior and its business. Since Non-GAAP financial measures do not have standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other companies, securities regulations require that Non-GAAP financial measures are clearly defined, qualified and reconciled to their nearest GAAP financial measures. Except as otherwise indicated, these Non-GAAP financial measures are calculated and disclosed on a consistent basis from period to period. Specific adjusting items may only be relevant in certain periods.

The intent of Non-GAAP financial measures is to provide additional useful information to investors and analysts and the measures do not have any standardized meaning under IFRS. The measures should not, therefore, be considered in isolation or used in substitute for measures of performance prepared in accordance with IFRS. Other issuers may calculate Non-GAAP financial measures differently.

Investors should be cautioned that EBITDA and AOCF should not be construed as alternatives to net earnings, cash flow from operating activities or other measures of financial results determined in accordance with GAAP as an indicator of Superior's performance.

Adjusted Operating Cash Flow

Adjusted operating cash flow is equal to cash flow from operating activities as defined by IFRS, adjusted for changes in non-cash working capital, other expenses, non-cash interest expense, current income taxes and finance costs. Superior may deduct or include additional items to its calculation of adjusted operating cash flow; these items would generally, but not necessarily, be items of a non-recurring nature. Adjusted operating cash flow is the main performance measure used by management of Superior and investors to evaluate the performance of Superior. Adjusted operating cash flow represents cash flow generated by Superior that is available for, but not necessarily limited to, changes in working capital requirements, investing activities and financing activities of Superior.

The seasonality of Superior's individual quarterly results must be assessed in the context of annualized adjusted operating cash flow. Adjustments recorded by Superior as part of its calculation of adjusted operating cash flow include, but are not limited to, the impact of the seasonality of Superior LP's businesses, principally Superior Propane and U.S. refined fuels, by adjusting for non-cash working capital items, thereby eliminating the impact of the timing between the recognition and collection/payment of Superior LP's revenues and expense, which can differ significantly from quarter to quarter. Adjustments are also made to reclassify the cash flows related to natural gas and electricity customer acquisition costs in a manner consistent with the income statement recognition of these costs.

EBITDA

EBITDA represents earnings before interest, taxes, depreciation, amortization, finance expense and other non-cash expenses, and is used by Superior to assess its consolidated results and the results of its operating divisions. EBITDA of Superior LP's operating businesses may be referred to as EBITDA from operations.

Contact Information

  • Superior Plus Corp.
    Beth Summers
    Senior Vice President and Chief Financial Officer
    (416) 340-6015
    (416) 340-6030 (FAX)
    bsummers@superiorplus.com

    Superior Plus Corp.
    Rob Dorran
    Vice President, Investor Relations and Treasurer
    (416) 340-6003 / Toll Free: 1-866-490-PLUS (7587)
    (416) 340-6030 (FAX)
    rdorran@superiorplus.com