Calgary 鈥� On March 1 publicly listed Newalta Corporation and privately-held Tervita Corporation announced announce that they have entered into an arrangement agreement to combine their businesses and create a leading publicly traded energy-focused environmental solutions provider in聽Canada聽providing waste processing, treating, recycling and disposal services to customers in the oil and gas, mining and industrial sectors.
Both companies have operations throughout the Saskatchewan oilpatch.
The transaction, which will result in the merger of Newalta and Tervita under the name Tervita Corporation, is expected to provide significant scale, resources and future growth opportunities, the companies stated in a press release. (The successor company in the press release is referred to as 鈥淣ew Tervita鈥� to differentiate before and after the merger.)
The combination will be completed by way of a plan of arrangement under the聽Business Corporations Act聽(Alberta) whereby Newalta shareholders will be entitled to receive: 0.1467 of one common share of New Tervita or each common share of Newalta; and 0.0307 of one warrant to purchase one New Tervita share 聽for each Newalta Share. Each New Tervita warrant will be exercisable for a period of two years from the closing of the arrangement at a price of聽$2.75聽per equivalent Newalta share.
Holders of Tervita common shares and Tervita preferred shares and together with the Tervita common shares, will receive one New Tervita Share for each Tervita share held. Upon completion of the arrangement, Newalta shareholders will own approximately 11 per cent of the New Tervita shares to be outstanding (or approximately 13 per cent of the New Tervita shares if all of the New Tervita warrants are exercised).
John Barkhouse, president and chief executive officer of Newalta, stated, 鈥淲e are pleased to announce this milestone transaction, which offers our shareholders a meaningful ownership position in a significantly larger entity that is the premier Canadian energy environmental solutions provider. Newalta shareholders will have the opportunity to participate and benefit in the success and growth of the combined businesses. Additionally, this transaction significantly improves our balance sheet, and the synergies and growth opportunities provide significant potential value creation for Newalta shareholders. We strongly believe that this combination is the most attractive path forward for Newalta, and we are committed to making the merger and ensuing integration a success.鈥�
鈥淓ach of our companies are industry leaders with a robust portfolio of attractive growth projects.鈥� said聽John Cooper, Tervita's chief executive officer. 鈥淲e are excited to combine with Newalta's high-quality assets and talented personnel, and we will continue to set the standard for service quality benefiting customers, employees and stakeholders. This combination also represents an excellent opportunity for Tervita to become a publicly traded company, and we look forward to building value for shareholders in a measured and disciplined manner in the years to come.鈥�
New Tervita will be led by the existing senior executive team of Tervita comprised of聽John Cooper as president and chief executive officer,聽Brad Dlouhy聽as chief operating officer and聽Rob Dawson as chief financial officer.
New Tervita is expected to have pro forma 2017 revenue of approximately聽$2.6 billion聽(based on the midpoint of Newalta's previously announced guidance range and Tervita internal estimates), over 115 operating locations, approximately 2,000 employees and approximately 1,000 customers.
New Tervita expects approximately聽$40-$45 million聽in annual synergies within two years, creating value and efficiency for customers and other stakeholders. It is anticipated there will be one-time costs of聽$15-$20 million聽in order to achieve the ongoing annual synergies.
The new company said it had an attractive portfolio of growth opportunitie and an unparalleled asset base. 鈥淣ew Tervita's operating assets were assembled, constructed and optimized over a period spanning more than 30 years, which management believes could not be replicated without an investment significantly exceeding the original cost and over a substantial time period.鈥�
Gordon Pridham, chairman of Newalta, stated that, "Having very carefully considered all of the potential ways that Newalta might create additional value for its shareholders, the board of Newalta came to the unanimous conclusion that a combination with Tervita was the best available alternative."
The board of directors of Newalta 聽has determined that the arrangement is fair to holders of Newalta Shares and in the best interests of Newalta and its shareholders. It unanimously recommends that Newalta securityholders vote in favour of the special resolution approving the arrangement.
鈥淭ervita is very pleased that Newalta has determined that a transaction with Tervita is its most attractive option for their shareholders," said聽Grant Billing, the chairman of Tervita. "We are looking forward to the opportunity to create further value for all stakeholders through this strategic combination.鈥�
