Arcapita Completes Acquisition of Varel International

Varel International has completed the sale to an affiliate of Arcapita Inc., a leading private equity firm based in Atlanta. Varel was purchased from KRG Capital Partners, a Denver-based private equity firm, for approximately US$369 million. This transaction was completed to provide funding to further accelerate Varel's growth and product offering.

"This transaction with Arcapita is an important milestone in Varel's journey to be recognized as a leading global drill bit company," said Jim Nixon, President & CEO of Varel International. "In the past few years, Varel has achieved explosive growth. We want to continue this growth by delivering more product innovation, product performance and service to the industries we serve. Arcapita is fully committed to helping us achieve these objectives. We are proud to have them as our new partner."

The sale does not affect any of Varel's 1,100 employees working in 41 countries. The current Varel executive management team will continue to develop and manage the strategic direction and operations of the company.

Future Priorities: Continued Product Innovation, Performance and Service

During the past few years, Varel has invested heavily to achieve world-class performance from its polycrystalline diamond compact (PDC) and roller cone drill bits. Arcapita will support Varel with capital investments for product innovation and improved manufacturing capabilities, which will further enhance product reliability and performance. The company plans to expand its global PDC business so as to meet the growing demands of customers using these products. Additionally, new lean manufacturing initiatives for the company's 175,000 sq ft roller cone manufacturing facility will continue to be a priority, ensuring product quality and reducing cycle times for customers in the oil and gas, and mining and industrial industries. Varel will continue its global expansion efforts by employing service-oriented professionals who possess both local drilling and technical drill bit knowledge. The company will leverage Arcapita's significant Middle East resources and network to accelerate market penetration in this important region.

Arcapita's Stockton Croft, who led the deal for Arcapita, added, "We believe that Varel is well positioned for further growth, particularly in the important markets of the Middle East, where Arcapita's local knowledge and extensive contacts will be a major competitive advantage for Varel. We are looking forward to a close relationship with Varel's accomplished management team to fulfill this potential."