February 07, 2011 09:00 ET

TerraVest Announces Sale of Ezee-On

VEGREVILLE, ALBERTA--(Marketwire - Feb. 7, 2011) - TerraVest Income Fund ("TerraVest" or the "Fund") (TSX:TI.UN) announced today that TerraVest Industries Limited Partnership sold the assets and operations of Ezee-On Manufacturing ("Ezee-On") to a wholly-owned subsidiary of Buhler Industries Inc. ("Buhler"), an agricultural equipment manufacturer headquartered in Winnipeg, Manitoba. The purchase price for Ezee-On is $14.5 million, of which $7.25 million was paid on February 4, 2011 and $7.25 million is payable on or before March 31, 2011. The second payment is evidenced by an interest bearing promissory note and secured by a general security agreement granting a first charge over the Ezee-On assets and a mortgage granting a first charge over the Ezee-On land. In addition, Buhler will guarantee the obligations of the purchaser.

The sale of Ezee-On results from the Fund's previously announced and ongoing evaluation of each of its portfolio businesses in order to determine fair value and the related review of the future strategic direction of the Fund.

The Fund also announced that the Fund's portfolio business, Diamond Energy Services Limited Partnership ("Diamond"), and HSBC Bank Canada have entered into a credit agreement providing for a $5 million demand revolving operating facility and a $15 million 364 day committed revolving capital facility which is convertible into a two year term loan (the "Diamond Facility"). The Diamond Facility is secured by a general security agreement constituting a first ranking security interest over all of Diamond's assets.

Diamond has drawn down the Diamond Facility to repay $13.9 million that Diamond owed to the Fund, which amount had been advanced to Diamond in order to finance the acquisition of drilling rigs in 2009 and other capital expenditures. $9.8 million of this amount was used to repay in full the Fund's credit facility.

As a result of the reduction in the borrowing base of the Fund to secure the Diamond Facility and the sale of Ezee-On, the Fund's credit facility is effectively reduced to nil.

The board of trustees and management are currently assessing the optimal use of the proceeds from the sale of Ezee-On and the remaining funds received from Diamond.

The sale of Ezee-On will not affect the Fund-level tax profile.

About TerraVest Income Fund

The Fund has investments in four portfolio businesses:

  • RJV is one of the largest providers of wellhead processing equipment for the natural gas industry in western Canada.
  • Diamond is a market leader in providing well servicing to the oil and natural gas sector in south western Saskatchewan .
  • Beco is one of the largest Canadian designers and importers of home textile products.
  • Don Park USA is a local supplier of heating, ventilation and air condition (HVAC) products in the southeastern United States (the portion of the Don Park business retained after the sale of Don Park Canada).

Caution Regarding Forward-Looking Statements

This news release includes forward-looking statements. All statements, other than statements of historical fact, contained in this news release are forward-looking statements, including, without limitation, statements regarding our strategic direction and evaluation of the portfolio businesses, the sale of Ezee-On, the potential sale of other portfolio businesses or assets thereof, the credit facility, special distributions, tax horizon, capital investments, financial position and results, cash flow, operations, and other plans and objectives of or involving the Fund. Readers can identify many of these statements by looking for words such as "expects", "plans", "will", "anticipates", "continues" and similar words or the negative thereof. Although management believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. 

By their nature, forward-looking statements require us to make assumptions and, accordingly, forward-looking statements are subject to inherent risks and uncertainties. There is significant risk that the forward-looking statements concerning the sale of Ezee-On and other forward-looking statements will not prove to be accurate. We caution readers of this news release not to place undue reliance on our forward-looking statements because a number of factors may cause actual future circumstances, results, conditions, actions or events to differ materially from the plans, expectations or estimates expressed in the forward-looking statements and the assumptions underlying them.

Assumptions about payment for Ezee-On and assumptions and analysis about the performance of the Fund, as a whole, and the performance, prospects and value of the portfolio businesses and the markets in which they compete are considered in evaluating the portfolio businesses, the Fund's ability to pay distributions and the Fund's tax horizon, in setting the business plan for the Fund, in forecasting the Fund's expected future financial position and results, cash flow, operations, and other plans and objectives of or involving the Fund and in making related forward-looking statements. Should any of these factors or assumptions vary, actual results may differ materially from the forward-looking statements. 

The information set forth under "Risk Factors" in the Fund's annual information form dated March 23, 2010 and under "Financial Instruments" in the Fund's MD&A for the year ended December 31, 2010 identifies risk factors that could affect the operating results and performance of the Fund and its portfolio businesses. We caution that the lists of factors discussed in the Fund's annual information form and MD&A are not exhaustive and that, when relying on forward-looking statements to make decisions with respect to the Fund, investors and others should carefully consider the factors discussed, as well as other uncertainties and potential events, and the inherent risks and uncertainties of forward-looking statements. The forward-looking statements herein are made based on the assumption that the Fund will not be affected by such risks or other factors referred to above, but that, if the Fund is affected by any of such risks or factors, the forward-looking statements may become inaccurate.

The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this news release are made as of the date of this news release. Except as required by applicable securities laws, the Fund does not undertake to update any such forward-looking statements.  

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