Wajax Limited

Wajax Limited

March 23, 2005 13:17 ET

Wajax Announces Proposal To Convert To An Income Fund With A Secondary Offering By Empire Company Limited




MARCH 23, 2005 - 13:17 ET

Wajax Announces Proposal To Convert To An Income Fund
With A Secondary Offering By Empire Company Limited

TORONTO, ONTARIO--(CCNMatthews - March 23, 2005) -

Not for distribution to US Newswire Services or for distribution in the
United States. Any failure to comply with this restriction may
constitute a violation of US securities laws.

Wajax Limited (TSX:WJX) announced today that its board of directors has
approved a process for the conversion of Wajax into an income fund by
way of a plan of arrangement (the "Conversion"). Pursuant to the
Conversion, the current shareholders of Wajax will exchange their common
shares for units in the new income trust structure, to be known as the
Wajax Income Fund (the "Fund"), and will continue to indirectly own,
through the Fund, the same pro rata economic interest in Wajax's
businesses. The exchange of common shares for Fund units by shareholders
will be a taxable transaction.

Shareholders Meeting

Wajax intends to hold a Special Meeting of Shareholders to consider the
proposed Conversion on June 6, 2005 in Toronto. The Annual General
Meeting of Shareholders previously scheduled for May 6, 2005, will be
deferred and combined with the Special Meeting. A Management Proxy
Circular for this Annual and Special Meeting of Shareholders, which will
provide full details of the proposed Conversion, is expected to be
mailed to shareholders on or about May 16, 2005. It will also be
available at www.sedar.com.

Distributable Cash

Based on actual results for the fiscal year ended December 31, 2004,
Wajax estimates that, organized as an income fund, it will initially
generate annual distributions of approximately $2.04 per unit on a
proforma basis after adjustments, assuming that a total of 16.7 million
units are outstanding.

Holders of Fund units will be entitled to receive monthly payments of
distributable cash from the Fund.

New Credit Facilities

As part of this Conversion, Wajax expects to retire US$ 50 million of
senior notes and approximately Cdn$ 15 million of debentures using cash
on hand and drawing down approximately Cdn$ 60 million under new bank
credit facilities totaling Cdn$ 95 million.

Reasons for the Conversion

Wajax's board of directors believes that an income trust structure will
benefit its shareholders as it is anticipated that the income fund
structure will result in units being valued more favourably than Wajax's
common shares.

In making its recommendation, the Board considered the following factors:

1. Wajax's businesses, broadly diversified by geography, industries
served, customers and suppliers, are suited to the income trust
structure as they have low ongoing capital requirements relative to
their abilities to generate cash flow.

2. The income fund structure is expected to result in a higher level of
cash distributions to Fund unitholders than would be available to
shareholders under the current corporate structure.

3. It is expected that monthly cash distributions to Fund unitholders
will provide an attractive return without impairing Wajax's ability to
finance capital expenditures and working capital requirements.

The business and operations of Wajax will continue to be managed by the
current senior executives and employees of Wajax.

Financial Advisor

Wajax has retained Scotia Capital Inc. to act as its financial advisor
in connection with the proposed Conversion.

Secondary Offering

Empire Company Limited, the holder of approximately 47% of the
outstanding shares of Wajax, has advised the board that it will be
voting in favour of the Conversion. In addition, subject to market
conditions, Empire intends to sell approximately 2.5 to 3.0 million Fund
units through a secondary offering. Empire's ownership would be reduced
to approximately 26 to 30 percent of the 16.7 million units anticipated
to be outstanding immediately subsequent to conversion. This Secondary
Offering will be led by Scotia Capital Inc. and is anticipated to
enhance liquidity for unitholders of the Fund. Completion of this
Secondary Offering is conditional upon the completion of the Conversion.


This Conversion is subject to certain approvals, including approval of
the Ontario Superior Court of Justice, a favourable vote of Wajax
shareholders at the Annual and Special Meeting, receipt of a fairness
opinion, finalization of the new credit facilities and approval of the
TSX to list the Fund units.

Conference call

Wajax will webcast a conference call on Thursday, March 24, 2005 at
11:00 a.m. EST to discuss the Conversion. To access the webcast, enter
www.wajax.com and click on the link for the Webcast on the Investor
Relations page. The archived Webcast will be available at the above
mentioned website within 24 hours after the conference call.

Wajax Limited

Wajax is a diversified company that has three core distribution
businesses engaged in the sale and after-sales parts and service support
of mobile equipment, diesel engines and industrial components, through a
network of over 100 branches across Canada and the western United
States. Its customer base spans natural resources, construction,
transportation, manufacturing, industrial processing and utilities.

Forward Looking Information

This news release contains forward-looking information. These statements
relate to future events or future performance and reflect management's
current expectations and assumptions. Such forward-looking statements
reflect management's current beliefs and are based on information
currently available to management of Wajax. A number of factors could
cause actual events, performance or results to differ materially from
the events, performance and results discussed in the forward-looking
statements. These forward-looking statements are made as of the date
hereof and Wajax does not assume any obligation to update or revise them
to reflect new events or circumstances.


Contact Information

    Wajax Limited
    Neil Manning
    President and CEO
    (905) 212-3300
    Wajax Limited
    John Hamilton
    Chief Financial Officer
    (905) 212-3300