Investors: 2005 Press Release Archive
HSE Closes CRS Acquisition, Opens Fort McMurray Location, Creates New Industrial Services Division
NEWS RELEASE - July 11 , 2005
HSE Integrated Ltd. ("HSE" or the "Company") is pleased to announce that it has completed the previously announced (April 18, 2005) acquisition of the shares of CRS Technologies (1990) Inc. and Confined Space Response Services Inc. ( collectively, "CRS"), industrial safety companies headquartered in Sarnia, Ontario. In addition to servicing the Sarnia industrial market, CRS has service locations in Windsor, Brockville, Dartmouth, and Detroit, Michigan. The transaction provides HSE with its initial entry into the United States industrial safety marketplace.
The total transaction consideration was $1.5 million. At closing, the shareholders of CRS received $1,000,000, comprised of $500,000 in cash and $500,000 in common shares of HSE at a deemed price of $1.70 per share (or 294,118 shares). Should CRS meet certain business continuity conditions - which include the founder and principal shareholder remaining with CRS and/or HSE - a further $500,000 in HSE common shares at a deemed price of $1.70 per share (or 294,118 shares) will be released from escrow at a rate of one third on each of the first, second and third anniversaries of the closing of the transaction.
The founder of CRS, Paul Tessier, has entered into a three-year employment and non-competition agreement with HSE. Mr. Tessier will continue to operate the CRS businesses on behalf of HSE and will work with HSE to help expand the business in the large industrial markets of eastern Canada and the northeast and mid-west United States.
For the past 15 years, CRS has been a growing supplier of industrial safety services in the industrial markets of southern Ontario, and provides safety consulting, training, air breathing equipment, air quality monitoring technologies and safety supervision services primarily in the area of refinery, petrochemical and processing plant shutdowns. CRS has expanded into other markets such as power generation, mining processing and auto assembly. Over the past four years, revenues have been stable, averaging $2.7 million per year, and CRS has been consistently profitable during this period.
Fort McMurray Location
Effective June 1, 2005 HSE has opened a new field service location in Fort McMurray to serve the large and growing oilsands mining and heavy oil thermal extraction markets under development in northeast Alberta. Although HSE already has ongoing field-based medical services contracts in this region, and has provided equipment and services to the oil companies in this area in the past, this new location provides a permanent local operation and base for expansion to meet rapidly growing demand.
The Fort McMurray expansion is complementary to the CRS acquisition, since the type of industrial safety services provided by CRS in plant and processing environments are very similar to the requirements of the companies developing and exploiting Alberta's Athabasca oilsands. The safety requirements in the oilsands marketplace are significantly different from
those traditionally required in the oil and gas sector, and through the capabilities and insight gained via the CRS acquisition, HSE will be well-positioned to capture market share in this sector.
New Industrial Services Division
Effective immediately, HSE has created a dedicated industrial safety services division to provide operators of heavy oil extraction plants, petrochemical facilities, refineries and other major processing and manufacturing facilities with the unique and specialized services and expertise required to operate their businesses in a safe and cost-effective manner. This "fixed" safety service offering complements HSE's traditional business in upstream oil and gas exploration and development - primarily drilling, completion, well servicing, construction and pipeline operations - since it targets large facilities that are permanent in nature, operate continually year-round and are subject to less variability in activity levels. While the equipment and manpower used in fixed and "portable" safety are similar, the application, execution and seasonality of the business vary significantly with portable safety typically busier in the first and fourth quarters of the calendar year, while activity in the fixed industrial safety market tends to be oriented towards the second and third quarters.
The industrial safety services division will have its operations based in Sarnia, Ontario, Fort Saskatchewan, Alberta and Fort McMurray, Alberta. These three industrial centers are alike in that the vast majority of Canada's oil sands processing, heavy oil upgrading, petrochemical plants and other value-added operations associated with petroleum and natural gas operate near these communities. HSE will now have dedicated sales and senior operations personnel in each of these locations.
A Platform For Growth
David Yager, Chairman and CEO of HSE, had the following comments on the three initiatives undertaken by the Company.
"A major thrust of our 2005 expansion has been to diversify into counter-cyclical markets in which we can utilize the same people, equipment and field locations and - for the most part - service the same customers we already work for in the wellhead safety business in western Canada. The CRS acquisition provides significantly more experience and know-how in industrial safety, which is what is needed to service the oilsands. The Ft. McMurray expansion puts HSE in the heart of one of the largest and most capital-intensive industrial development projects in the world. Stabilizing our business on a seasonal basis will also allow us to stabilize our workforce, which will provide HSE with a significant competitive advantage in both markets. We're very optimistic that the three initiatives announced by HSE today will provide a second major platform for growth in addition to our base business in conventional oil and gas."
HSE is an integrated supplier of industrial Health, Safety and Environmental services. From its head office in Calgary, Alberta, it serves its clients from numerous field service locations in Alberta, British Columbia, Ontario, Nova Scotia and Michigan. HSE trades on the TSX Venture Exchange under the symbol "HSL".
Forward Looking Statements
Statements in this document that may be considered forward-looking are based on management's current expectations that involve a number of risks and uncertainties, which could cause actual results to differ from those anticipated.
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
For more information please contact:
David Yager, Chairman & CEO
Telephone: (403) 266-1833
E-Mail:
Tony Hidalgo, Chief Financial Officer
Telephone: (403) 266-1833
E-Mail: