CALGARY, March 21 /CNW/ - HSE Integrated Ltd. ("HSE" or the "Company") is pleased to announce that it has entered into a non-binding Letter of Intent ("LOI") to acquire the shares of Frontline Safety Ltd. ("Frontline") of Halifax, Nova Scotia. Frontline provides industrial safety services to refineries, petrochemical plants, offshore drilling and production operations and other industries in the areas of safety services, breathing air equipment services, air quality monitoring and related training services.
The total purchase consideration shall be comprised of $1,000,000 cash, 666,667 treasury shares of HSE and the assumption of up to $400,000 in long term debt. In addition, there will be a further cash consideration based on the financial performance of Frontline for the current fiscal year ended August 31, 2006.
The acquisition of Frontline is conditional upon several conditions precedent including completion of satisfactory due diligence, approval of the Board of Directors of HSE and the approval of the TSX Venture Exchange. It is anticipated the transaction will close early in the second quarter.
Frontline was founded in 1995 and is owned by Tom Hickey, P.Eng. Tom has agreed to join HSE in the position of Vice-President, Corporate Development. After executing an orderly integration of Frontline into HSE, Tom will work with government agencies, educational institutions and customers to help expand the industrial safety workforce. This will assist HSE in meeting the needs and expectations of its clients in Western Canada where the rapidly expanding conventional and non-conventional petroleum industry has placed significant strains on the available workforce.
Frontline has had a history of profitability. Based on financial statements for the past five fiscal years, the average normalized EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) has been approximately $787,000. Normalized EBITDA for the fiscal year ended August 31, 2005 rose to $1,152,000. Frontline believes that the financial performance in the current fiscal year will be comparable to fiscal 2005.
It is anticipated that all Frontline's staff will remain with HSE and that Frontline and HSE's other business in the Halifax area, Confined Space Rescue Services acquired in July 2005, will be combined. This will permit HSE to undertake more business in the Atlantic provinces region.
David Yager, Chairman and CEO of HSE, had the following comments.
"Although HSE has built a presence in Atlantic Canada since the CRS acquisition last year, the combination with Frontline really gives our company the immediate critical mass to meet the growing demands of industry in this region. Frontline also supports the natural gas production operations offshore Nova Scotia, giving HSE its first exposure to the offshore petroleum industry. As is the case with other acquisitions by HSE, Frontline supplies safety services to the same petroleum industry clients as HSE, only another aspect of their business such as offshore production and east coast refining. It's a great fit. Tom Hickey has built a very solid company and we believe he'll be a valuable asset in continuing to build HSE."
HSE is an integrated supplier of industrial Health, Safety and Environmental services. From its head office in Calgary, Alberta HSE serves its clients from field service locations in Alberta, British Columbia, Ontario, Nova Scotia and Michigan. HSE trades on the TSX Venture Exchange under the symbol "HSL".
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release.
%SEDAR: 00011733E
For further information: David Yager, Chairman & CEO, Telephone: (403) 266-1833, E-Mail: dyager@hseintegrated.com; James M. Hill, Executive Vice-President, Telephone: (519) 429-0080, E-Mail: jhill@hseintegrated.com
