Canada's CERF to Merge With Winalta's Oilfield Accommodation Rentals Business

CERF Incorporated and Winalta Inc. have entered into a definitive arm's-length agreement to combine CERF's oilfield rentals business, waste management, and construction rentals businesses 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".

A combination with Winalta will solidify CERF as a leading Canadian oilfield rentals provider with:

  • one of the largest and most diversified fleets of commercial, industrial and oilfield related rental equipment in Canada;
  • entry into the wellsite accommodations sector with size and scale resulting in critical mass in the high growth oilfield rentals sector in western Canada;
  • expanded geographic positioning and a more diverse suite of rental assets resulting in increased overall market penetration amongst a larger number of E&P clients; and
  • increased EBITDA margins and reduced cash flow volatility due to the contract backed nature of Winalta's integrated wellsite business.

In addition, the Combination should also provide strategic corporate benefits to CERF, including:

  • accretive to CERF shareholders on a net earnings and distributable cash flow per share basis, based on management estimates;
  • significant operational and marketing synergies among the combined oilfield rental divisions;
  • general and administrative cost saving synergies;
  • 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.

CERF continues to focus its efforts on three core business lines encompassing oilfield rentals, construction rentals and waste and environmental services. Winalta's assets, client base, personnel, safety and operational performance meet CERF's criteria and deliver the oilfield accommodation rentals service lines CERF has been seeking.

Wayne Wadley, CERF's president and CEO, said "Winalta has assembled a quality wellsite accommodation fleet in Canada with an operations team that consistently achieves industry leading utilization and margins. 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."

Artie Kos, Winalta's Executive Chairman, said "The combination combines two companies with best-in-class assets to create one of the top rental companies in western Canada. 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 CERF and Winalta have approved the Agreement. Officers and Directors holding approximately 5.9 million shares, options and warrants of CERF (approximately 26% of the fully diluted shares outstanding) and 25.3 million shares and options of Winalta (approximately 59% of the fully diluted shares outstanding) have signed lock-up agreements in support of the Combination. The proposed Combination is subject to customary stock exchange, regulatory and court approvals as well as the approval of the holders of at least 66 2/3% of the outstanding shares of Winalta and, if required by the TSXV, the approval of a majority of the shareholders of CERF voting in person or by proxy at their respective special meetings of shareholders expected to be held in late August 2014. An information circular pertaining to the Combination is expected to be mailed by CERF and Winalta to their respective shareholders in late July 2014.

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