Toromont Proposes Acquisition of Enerflex for $13.50 Per Unit

Oct. 23, 2009
Toronto-based Toromont Industries Ltd. last week announced that it has made a proposal to Enerflex Systems Income Fund to enter into a business combination with Toromont whereby holders of the trust units of Enerflex (and the exchangeable units of Enerflex Holdings Limited Partnership) would receive cash and shares of Toromont representing total consideration of $13.50 per unit. The consideration would be comprised of at least 50-percent cash, with the balance in Toromont common shares. Unitholders could elect to receive either $13.50 in cash or a fixed number of Toromont common shares, within the limits of total cash and shares allocated to the transaction.

Toronto-based Toromont Industries Ltd. last week announced that it has made a proposal to Enerflex Systems Income Fund to enter into a business combination with Toromont whereby holders of the trust units of Enerflex (and the exchangeable units of Enerflex Holdings Limited Partnership) would receive cash and shares of Toromont representing total consideration of $13.50 per unit. The consideration would be comprised of at least 50-percent cash, with the balance in Toromont common shares. Unitholders could elect to receive either $13.50 in cash or a fixed number of Toromont common shares, within the limits of total cash and shares allocated to the transaction.

Toromont’s proposal represents a premium of approximately 34 percent to the closing price of the Enerflex units on Oct. 16, and an approximate 33-percent premium to the volume-weighted average trading price of Enerflex units in the 20 trading days up to and including Oct. 16.

“We believe the combination of Enerflex and Toromont Energy Systems, our gas compression division, would create a stronger organization better able to compete against large competitors in the North American and international markets,” said Robert Ogilvie, chairman and CEO of Toromont. “We have been encouraged by our shareholders and Enerflex’s unitholders to pursue this combination. As discussions with Enerflex over the past two and a half years have not resulted in an agreement, the time has come to make a definitive proposal to the Enerflex board.”

Unitholders of Enerflex holding an aggregate of 7,531,988 trust units (approximately 17 percent of units outstanding) have entered into lock-up agreements pursuant to which they have agreed to support Toromont’s proposal, either by voting in favor of a transaction involving Toromont and Enerflex or by tendering their units to a take-over bid, subject to certain exceptions. As of Oct. 16, Toromont owns 3,902,100 trust units of Enerflex. Including the units held by unitholders who have signed lock-up agreements, Toromont has the support of holders of a total of 11,434,088 trust units (approximately 25.8 percent).

Toromont has sent letters to each of the chairman, and the president and CEO of Enerflex, outlining its proposal.

Enerflex is a supplier of oil and natural gas compression, production and processing, and power generation equipment, plus in-house engineering and mechanical expertise. Its integrated solutions cover a full range of needs from initial design and engineering, through construction and installation to long-term optimization and maintenance.

Toromont Industries Ltd. operates through two business segments: The Equipment Group and the Compression Group. The Equipment Group includes one of the larger Caterpillar dealerships by revenue and geographic territory in addition to Battlefield Equipment Rentals, which is No. 24 on the RER 100. The Compression Group is a North American leader specializing in the design, engineering, fabrication, and installation of compression systems for natural gas, coal-bed methane, fuel gas and carbon dioxide in addition to process systems and industrial and recreational refrigeration systems.