Senior management of Riggs Distler will remain with CVTech for at least three years
Drummondville, Québec, July 24, 2009 – CVTech Group Inc. (“CVTech” or the “Corporation”) (TSX: CVT) today announced it has successfully completed the acquisition of Riggs Distler & Company Inc. (“Riggs Distler”), a company providing maintenance and construction services to the utility and heavy industrial markets. This acquisition firmly positions CVTech as a leading provider of electrical services to the North American industrial and utility markets and strongly complements the operations of Thirau ltée (“Thirau”) (formerly “Thiro ltée”), the Corporation’s subsidiary in the electrical services industry. The transaction is effective retroactively to July 1, 2009.
Riggs Distler’s senior management team, led by Leo Sniger, President and Chief Executive Officer, is remaining with CVTech and has signed employment agreements with initial terms of three years. All senior managers have been with Riggs Distler for at least four years and will continue to act in their respective duties.
“This acquisition provides significant operational leverage and synergies to our current activities in the electricity sector,” said André Laramée, President and Chief Executive Officer of CVTech Group. “The high degree of operational and geographical complementarity between Thirau and Riggs Distler broadens services offered to their respective customers and the entire North American industry. Confirming the overall market strength, Thirau has been awarded four large-scale contracts since May 1, 2009, and its customers plan to invest at least $8.0 billion annually in maintaining and improving their electricity transmission and distribution networks over the next three years. Since our services also play an integral role in the major infrastructure projects that governments frequently launch during economic downturns, the combination of these two leaders strongly positions CVTech to benefit from these stimulus programs”.
On a consolidated basis, pro-forma revenues and EBITDA would have been CDN$288.4 million and CDN$30.9 million, respectively, for the fiscal year ended December 31, 2008.
Financing of the acquisition, which was in part facilitated by Laurentian Bank Securities Inc. (“LBS”), included an investment of CDN$3,460,000 by the Solidarity Fund (QFL) through the subscription of 2,162,500 Subscription Receipts issued by CVTech as well as through the subscription of a US$6.0-million debenture issued by CVTech, while FONDACTION, the development fund for cooperation and job creation of the Confédération des syndicats nationaux, subscribed for a US$4.0- million debenture issued by CVTech.
As part of the financing, three institutional investors also subscribed, through LBS, for an aggregate of 3,412,500 common shares of the Corporation at a price of CDN$1.60 per common share, representing gross proceeds of CDN$5,460,000.
As announced on June 22 and July 3, 2009, and given the closing of the transaction, 5,962,500 Subscription Receipts issued by the Corporation for total proceeds of CDN$9,540,000 were exchanged for 5,962,500 common shares of CVTech without any additional consideration.
OVERVIEW OF THE CORPORATION
CVTech is a management corporation that operates in two major sectors. Through Thirau, and its subsidiary, Thirau LLC (formerly “Thiro USA Inc.”), the Corporation services the electrical utility industry with the construction and maintenance of transmission and distribution lines primarily in Quebec and the Northeast of the United States. Thirau’s subsidiary, J.J.L. Déboisement inc., specializes in vegetation control surrounding the lines and clearing the lines’ rights of way. Through CVTech-IBC Inc., the Corporation services the vehicle industry through the design, manufacture and sale of continuously variable power transmission systems, or CVTs. CVTech-AAB specializes in rebuilding crankshafts and cylinders, as well as distributing engine parts. CVTech currently has 715 employees, distributed as follows: 555 in the electricity segment and 160 in the CVT systems and related products segment.
FORWARD-LOOKING STATEMENTS
This document may contain forward-looking statements that reflect management’s current beliefs regarding future events. Forward-looking statements are based on a number of factors and include risks and uncertainties. Actual results may differ from forecast results. Management has no obligation beyond what is required under the law to update or revise forwardlooking statements pursuant to new information or future events.
For further information regarding CVTech, the reader may consult the SEDAR database as well as the Corporation’s web site at: www.groupecvtech.com.
- 30 -
Contacts:
André Laramée, MBA
President and Chief Executive Officer
CVTech Group Inc.
Tel.: (819) 479-7771
Mario Trahan, CMA
Chief Financial Officer
CVTech Group Inc.
Tel.: (819) 479-7771