Canadian Equipment Rental Fund has entered into a definitive agreement with Winalta Inc. to combine CERF’s oilfield rentals business, waste management and construction rentals business with Winalta’s oilfield accommodation rentals business. The combined company will operate under the name CERF and will continue to trade on the TSX Venture Exchange under the symbol CFL.
The combination with Winalta will solidify CERF as a leading Canadian oilfields rental provider with one of the largest and most diversified fleets of commercial, industrial and oilfield-related rental equipment in Canada. CERF will gain entry into the wellsite accommodations sector with size and scale resulting in critical mass in the high-growth oilfield rentals sector in western Canada. CERF will also gain expanded geographic positioning and a more diverse suite of rental assets resulting in increased overall market penetration among a larger number of customers.
CERF also expects increased EBITDA margins and reduced cash flow volatility because of contract-backed nature of Winalta’s integrated wellsite business.
Under the arrangement Winalta shareholders will receive 0.3352 of a common share of CERF for each Winalta common share resulting in more than 14 million CERF common shares being issued.
CERF said the merger will be accretive to CERF shareholders on a net earnings and distributable cashflow per share basis, based on management estimates. CERF adds that it will benefit from significant operational and marketing synergies among the combined oilfield rental divisions, as well as general and administrative cost-saving synergies. It will also provide increased opportunities for consolidation in the oilfield rentals and accommodations business and the creation of a geographic presence across the majority of the key oil and gas resource plays in Canada.
“Winalta has assembled a quality wellsite accommodation fleet in Canada with an operations team that consistently achieves industry-leading utilization and margins,” said Wayne Wadley, CERF president and CEO. “We are excited about the operational synergies with our TRAC Energy Services oilfield rentals division and the future growth opportunities that will come as a result of the increasing demand for oilfield accommodations in western Canada.”
“The combination combines two companies with best-in-class assets to create one of the top rental companies in western Canada,” said Artie Kos, Winalta executive chairman. “CERF provides Winalta shareholders with increased liquidity in a growing company that has a history of consistently paying a high dividend and acquiring quality businesses.”
The boards of directors of both companies have approved the agreement, which is still subject to customary stock exchange and regulatory approvals as well as the approval of the holders of at least two-thirds of the outstanding shares of Winalta and, if required by TSXV, the approval of a majority of CERF shareholders. The combined company will be led by Wadley as president and CEO; Ken Stephens, chief financial officer; Austin Fraser, executive vice president of corporate development, and Skip Kerr, chief operating officer.
Winalta has a leading wellsite accommodations fleet and is one of the largest wellsite providers in Western Canada, with locations in Stony Plain and Grande Prairie, Alberta, and Estevan, Saskatchewan.
CERF is based in Calgary, Alberta. Its 4-Way Equipment Rentals division is based in Edmonton, Alberta, and is No. 90 on the RER 100.