Trinidad Energy Services Acquires Axxis Drilling
The purchase price of US $139,000,000 represents a purchase multiple of approximately 4.7 times EV/EBITDA based on normalized historical EBITDA. The Axxis Acquisition is anticipated to be accretive to the Trust given that the Trust's trust units are currently trading at an enterprise value to consensus EBITDA of multiple of 6.9x 2007 EBITDA. The Axxis Acquisition will be financed with approximately $145,300,000 CDN of cash and approximately $29,500,000 CDN of convertible debentures of the Trust to be issued to Axxis on the same terms as the Financing (as described below). Closing of the Acquisition and the Financing are conditional upon the satisfaction of various conditions typical to transactions of this nature, including the concurrent closing of the Axxis Acquisition and the Financing and the receipt of all required regulatory approvals.
Bought Deal Financing
In connection with the Axxis Acquisition, Trinidad has entered into an agreement with a syndicate of underwriters co-led by TD Securities Inc. and Raymond James Ltd., and including BMO Capital Markets, Canaccord Adams, RBC Capital Markets, Scotia Capital Inc, CIBC World Markets Inc., Blackmont Capital Inc., Wellington West Capital Markets Inc., and Haywood Securities Inc. (collectively, the "Underwriters"), to sell, on a bought deal basis, $325,000,000 aggregate principal amount of 7.75% convertible unsecured subordinated debentures. The net proceeds of the Financing will be used to fund the cash portion of the purchase price of the Axxis Acquisition, to repay outstanding debt of the Trust and its affiliates and for general working capital purposes.
The Debentures will have a face value of $1,000 per Debenture, a coupon of 7.75%, a maturity date of July 31, 2012, and will be convertible at any time prior to maturity or the date fixed for redemption at the option of the holder, into trust units of Trinidad at a price of $19.30 per trust unit. The Debentures will pay interest semi-annually on June 30 and December 31, with the initial interest payment to be made on December 31, 2007. Closing of the Debenture Offering is expected to occur on or about July 5th, 2007 and will be conditional on the contemporaneous closing of the Axxis Acquisition.
Additional Acquisition Information
The Axxis Acquisition is anticipated to:
Utilization and Contract Information
Trinidad's management is excited about having the Axxis employees join Trinidad and is looking forward to making the transition for each employee as easy and as effortless as possible.
Trinidad Energy Services Income Trust is a growth oriented income trust that trades on the TSX under the symbol TDG.UN. Trinidad's divisions operate in the drilling and well servicing sectors of the North American oil and gas industry. With the completion of the current rig construction programs, the Trust will have 106 drilling rigs ranging in depths from 1,000 - 6,500 meters. In addition to its drilling rigs, Trinidad has 20 service rigs that have been completely retrofitted or are new within the past five years and 17 pre-set and coring rigs. Trinidad is focused on providing modern, reliable, expertly designed equipment operated by well-trained and experienced personnel. Trinidad's drilling fleet is one of the most adaptable and competitive in the industry.
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