Zedi Inc.

Zedi Inc.

January 05, 2011 08:00 ET

Zedi Inc. Announces Acquisition of Southern Flow Companies, Inc.

CALGARY, ALBERTA--(Marketwire - Jan. 5, 2011) - Zedi Inc. (the "Company" or "Zedi") (TSX VENTURE:ZED) today announces that it has entered into a Purchase and Sale Agreement for the acquisition of Southern Flow Companies, Inc. ("Southern Flow"), in an all cash deal. Established in 1953, Southern Flow is one of the largest independent service and supply companies in the United States.

Zedi will be acquiring 100% of the common shares of Southern Flow from PowerSecure International, Inc. The transaction is expected to close in January, 2011 with an effective date of January 1, 2011. The purchase price is US$15,550,000, payable in cash at closing. The acquisition includes positive working capital in Southern Flow of $3,727,000. Approximately US$10,000,000 of the purchase price will be funded out of cash on hand, with the US$5,550,000 balance of the purchase price being funded from a term debt facility with Zedi's primary banker.

"The acquisition of Southern Flow is a great fit with Zedi's current operations, bringing over 57 years of experience in both on-shore and off-shore measurement services. The management team, headquartered in Lafayette LA, brings a wealth of expertise in running a distributed organization having 12 locations across 6 states, providing Zedi access to all the major oil and gas producing regions of the US. With an office located in Pennsylvania, it will give us the ability to participate in the Marcellus play. The majority of locations are in the southern US providing the benefit of a stable revenue base that is built on a foundation of traditional oil and gas production. Southern Flow brings a suite of services that can be added to our existing offerings, helping diversify our revenue sources even further," says Matthew Heffernan, President and CEO of Zedi.

"We believe there are real opportunities and that our customers will truly benefit through the combination of our two organizations. The advanced technology used by Zedi for chart reading services will enhance what Southern Flow already offers, allowing us to offer all customers daily numbers and a single secure web portal to their measurement information. The full suite of Zedi's surveillance and optimization products gives us access to a broad range of solutions that will fit well with our existing services. There will be a very natural transition of technology and services between Zedi and Southern Flow, and our team is very excited to be working with Zedi and their visionary growth plans" says Gary Gray, President of Southern Flow.

Southern Flow is expected to be accretive immediately and will contribute approximately $20 million annually in revenues. For the 10 months ended October 31, 2010 Southern Flow generated $15,594,000 in revenue with $2,215,000 of EBITDA and $1,977,000 in net income before taxes. The company initiated some restructuring in the spring of 2010, which has resulted in improved financial performance in the later part of 2010. In the month of October, 2010 Southern Flow generated $1,709,000 in revenue with $362,000 of EBITDA and $337,000 net income before taxes. With Southern Flow's strong management team and efficiencies gained through compatible business operations, we expect this business will continue to achieve increasing levels of financial performance going forward.

Zedi Inc. (TSX VENTURE:ZED) specializes in the end-to-end management of oil and gas production operations. Zedi arms producers from the field to head office with accurate, timely and centralized data to help them make better business decisions. Using technology to gather highly accurate data from well sites, Zedi automatically moves it through critical work processes including web-based field data capture and production accounting systems. Zedi technology is continually evolving in the control and optimization of wells to ensure maximum production and cost reduction. Established in 1987, Zedi has enhanced the operational performance of more than 800 upstream, midstream and oilfield service customers.

Cautionary Statement Regarding Forward-Looking Information

Certain statements and information contained in this press release may constitute forward-looking information within the meaning of applicable Canadian securities legislation. Specifically, this press release contains statements regarding terms, expected closing and effective dates for a planned acquisition; Zedi's growth, integration and market penetration plans; and potential levels of revenue and earnings by the entity to be acquired with related expectations of sustainability. These statements are based on certain assumptions and analysis made by Zedi in light of its experience and its perception of historical trends, current market conditions and expected future market developments, as well as other factors it believes are appropriate in the circumstances. However, whether actual results, performance or achievements will conform to Zedi's expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results to differ materially from Zedi's expectations. Consequently, all of the forward-looking information and statements made in this press release are qualified by this cautionary statement and there can be no assurance that the actual results or developments anticipated by Zedi will be realized or, even if substantially realized, that they will have the expected consequences to or effects on Zedi or its business or operations. Except as may be required by law, Zedi assumes no obligation to publicly update any such forward-looking information and statements, whether as a result of new information, future events, or otherwise.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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