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SHERWOOD PARK, AB and
CALGARY, AB, Feb. 25, 2022 /CNW/ - (TSXV: VTX) – Vertex
Resource Group Ltd. ("Vertex") and Cordy Oilfield Services
Inc. (TSXV: CKK) ("Cordy Oilfield") are pleased to
announce that they have entered into a definitive amalgamation
agreement (the "Amalgamation Agreement") pursuant to which
Vertex has agreed to acquire all of the issued and outstanding
shares of Cordy Oilfield. The acquisition of Cordy Oilfield
will increase the strength and service offerings of Vertex across
its operations.
"This strategic acquisition allows Vertex to compliment multiple
offerings within our group. We are excited to bring Cordy under our
umbrella, providing customers and employees with a next level
experience. Congratulations to the Cordy team on their successes
over the years, and we look forward to supporting that continued
success," said Mr. Terry Stephenson,
President and Chief Executive Officer of Vertex.
The acquisition is structured as a three-cornered amalgamation
(the "Amalgamation") under the Business Corporations
Act (Alberta) pursuant to
which the holders of common shares of Cordy Oilfield ("Cordy
Shares") will receive common shares of Vertex ("Vertex
Shares") and Vertex Energy Services Ltd., a wholly-owned
subsidiary of Vertex, will amalgamate with Cordy Oilfield resulting
in Vertex owning all of the issued and outstanding shares of the
amalgamated corporation following the Amalgamation. In
connection with signing the Amalgamation Agreement, a nominee of
Cordy (the "Cordy Nominee") is proposed to be appointed to
the board of directors of Vertex, subject to approval by the TSXV
(as defined below).
Under the terms of the Amalgamation Agreement, Cordy Oilfield
shareholders will receive 0.081818 Vertex Shares for every one
Cordy Share held (the "Exchange Ratio"), resulting in the
issuance of approximately 18,913,253 Vertex Shares to Cordy
Oilfield shareholders. If the Amalgamation were completed on
the date of this news release, it would result in the Cordy
Oilfield shareholders receiving, in the aggregate, that number of
Vertex Shares equal to approximately 17.2% of the issued and
outstanding Vertex Shares. Cordy Oilfield has no other
classes of issued securities to be considered or included in the
Amalgamation.
Vertex and Cordy anticipate the acquisition will create a
stronger environmental services business that is expected to
provide enhanced free cashflow generation through savings from
integration, duplicate head office costs and increased fleet and
personnel utilization. Benefits of the Amalgamation are
expected to include:
- Highly complementary environmental service lines which can
provide enhanced scale, utilization, and growth through
cross-selling services to Vertex and Cordy's customers.
- Estimated annual integration cost savings of approximately
$1 million are expected to be
realized within 12 – 18 months after closing of the
Amalgamation.
- Expected to be immediately accretive to cash flow from
operations and free cash flow per share for all shareholders of
Vertex with the anticipated synergies of the Amalgamation.
- Improved cost structure to serve a growing and consolidating
customer base.
- Strong pro forma financial position with attractive free cash
flow from operations that is expected to reduce senior debt and
help achieve Vertex's targeted senior debt to EBITDA ratio of less
than 2.0x, which is expected to be achieved within two years of
closing.
- Enhances Vertex and Cordy's position to advance and deliver on
environmental, social and governance initiatives for Vertex, Cordy
and its customers.
- Opportunity for Cordy shareholders to hold shares of a larger
more diversified organization with a history of growth and stronger
access to markets and capital to promote the development of Cordy's
operations.
"I am truly excited to have Cordy join the Vertex family," said
Stephenson. "Cordy is a specialized value-additive business with
quality people and equipment. This acquisition is a strong fit for
our company and shareholders. We expect joining Vertex will provide
Cordy the necessary backing and capital to fuel their continued
strong performance."
Completion of the Amalgamation is subject to, (i) the approval
of the shareholders of Cordy in accordance with applicable
corporate and securities laws at a special meeting of Cordy
Shareholders scheduled to be held on or about April 22, 2022; (ii) approval of the TSX Venture
Exchange Inc. ("TSXV"); (iii) the completion of the Private
Placement (as defined below); and (iii) certain other closing
conditions customary in transactions of this nature.
The Amalgamation Agreement includes customary deal protection
provisions in favour of Vertex including, among other things,
non-solicitation covenants, subject to "fiduciary out" provisions
that entitle Cordy to consider and accept a superior proposal and
a right in favour of Vertex to match any superior proposal. The
Agreement provides for a $500,000
termination fee payable by Cordy in certain circumstances if the
Amalgamation is not completed.
No finders fees will be paid by Vertex or Cordy Oilfield in
connection with the Amalgamation. Other than the Cordy
Nominee, who will become an Insider (as defined in the policies of
the TSXV) of Vertex following appointment to the board of directors
of Vertex, no Control Person (as defined in the policies of the
TSXV) or Insider of Cordy Oilfield is currently or will be
following the Amalgamation, a Control Person or Insider of
Vertex. No Non Arm's Length Party (as defined in the policies
of the TSXV) of either Cordy or Vertex has any material interest in
the Amalgamation apart from the respective holdings of Cordy Shares
by the Insiders of Cordy .
Vertex is also pleased to announce that subject to the
approval of the TSXV it intends to complete a non-brokered
private placement (the "Private Placement") of $15,000,000 principal amount of a secured
subordinated convertible debenture ("Convertible
Debenture"). The completion of the Private Placement is a
condition precedent to the Amalgamation.
The Convertible Debenture will have a five (5) year term from
the date of issue (the "Term"). The Convertible
Debenture will bear interest at 8% per annum from the date of
issue, payable monthly in arrears in cash. At any time during
the Term, the holders of the Convertible Debenture may elect to
convert the outstanding net principal amount, or any portion
thereof, into common shares of Vertex ("Common Shares") at a
conversion price of $0.65 per share
(the "Conversion Price").
The Convertible Debenture and any Common
Shares issuable upon conversion thereof will be subject
to a statutory hold period lasting four months and one day
following the closing date of the Private Placement.
The proceeds of the Private Placement will used to satisfy
ongoing obligations post-Amalgamation, future acquisitions and
working capital. The Convertible Debentures will be
subordinated to Vertex's existing secured debt
facilities.
The Private Placement is subject to approval of the TSXV and
certain other commercial conditions customary in financings of this
nature.
ABOUT VERTEX
Headquartered in Sherwood Park,
Alberta, Vertex employs a staff of approximately 800
full-time and contract personnel that provide environmental
services across North America.
Vertex is a leading provider of environmental solutions, a unique
combination of environmental consulting and environmental field
services and equipment. Vertex's integrated environmental solutions
support asset development, operations, decommissioning, and
restoration for customers in five North American sectors: Energy,
Mining and Industrial, Utilities, Agriculture & Forestry, and
Government. Established in 1962, Vertex combines 60 years of
experience with an innovative, modern approach to provide
versatile, expert solutions to the market.
ABOUT CORDY OILFIELD
Cordy provides construction and environmental services in
western Canada. Cordy is
headquartered in Calgary, Alberta,
Canada, and is listed on the TSX Venture Exchange under the
trading symbol "CKK".
READER ADVISORY
This news release contains forward-looking statements, within
the meaning of applicable securities legislation, concerning the
proposed Amalgamation, the respective business and affairs of
Vertex and Cordy Oilfield and the Private Placement. In certain
cases, forward-looking statements can be identified by the use of
words such as ''plans'', ''expects'' or ''does not expect'',
"intends" ''budget'', ''scheduled'', ''estimates'', "forecasts'',
''intends'', ''anticipates'' or variations of such words and
phrases or state that certain actions, events or results ''may'',
''could'', ''would'', ''might'' or ''will be taken'', ''occur'' or
''be achieved''. Such forward-looking statements include
those with respect to: (i) the completion of the Amalgamation; (ii)
the percentage ownership of the issued and outstanding Vertex
Shares by Cordy Oilfield shareholders, (iii) the proposed issuance
of the Convertible Debentures and the use of proceeds arising
therefrom, and (iv) the use of proceeds from the private placement.
Forward-looking statements also include any other statements that
do not refer to historical facts.
By their nature, forward-looking statements are based on
assumptions and subject to inherent risks and uncertainties. There
is a risk that the Amalgamation and the offering of the Convertible
Debentures may be delayed, cancelled, suspended, or terminated.
This could cause future results to differ materially from the
forward-looking statements made in this news release.
Statements of past performance should not be construed as an
indication of future performance. Forward-looking statements
involve significant risks and uncertainties, should not be read as
guarantees of future performance or results, and will not
necessarily be accurate indications of whether or not such results
will be achieved. A number of factors, including those discussed
above, could cause actual results to differ materially from the
results discussed in the forward-looking statements. All of the
forward-looking statements made in this press release are qualified
in their entirety by these cautionary statements.
Readers are cautioned not to place undue reliance on such
forward-looking statements. Forward-looking information is
provided as of the date of this press release and except as
required by law, neither Vertex nor Cordy Oilfield undertakes no
obligation to publicly update or revise any forward-looking
statements. Forward-looking statements are provided herein for the
purpose of giving information about the proposed issuance of
Convertible Debentures and the use of proceeds. Readers are
cautioned that such information may not be appropriate for other
purposes.
Neither the TSXV nor its Regulation Services
Provider (as that term is defined in the policies of the TSXV)
accepts responsibility for the adequacy or accuracy of this
release.
SOURCE Vertex Resource Group Ltd.