NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES OF
AMERICA OR TO ANY PERSON LOCATED OR RESIDENT IN THE UNITED STATES OF AMERICA,
ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES OR THE DISTRICT
OF COLUMBIA
WSP Global Inc. (TSX:WSP) ("WSP" or the "Corporation") is pleased to announce
that it has entered into an arrangement agreement (the "Arrangement Agreement")
in connection with the acquisition (the "Acquisition") of all of the issued and
outstanding shares (the "Focus Shares") of Focus Group Holding Inc. ("Focus"), a
1,700-employee well-established engineering and geomatics firm based in Alberta
principally serving the oil and gas industry in Western Canada. Focus offers a
diversified platform across four divisions: facilities engineering, geomatics,
pipeline and civil engineering. The Acquisition, which remains subject to
certain customary closing conditions, including court, shareholder and
applicable regulatory approvals, is expected to be completed through a plan of
arrangement. The special meeting of the shareholders of Focus to consider the
Acquisition and the Arrangement Agreement is expected to be held on or about
April 2, 2014 and the Acquisition is expected to become effective on or about
April 17, 2014 (the "Acquisition Closing Date"). Concurrently with the execution
of the Arrangement Agreement, shareholders holding approximately 80% of all the
issued and outstanding Focus Shares entered into voting support agreements with
WSP to support the Acquisition. In addition, CIBC has provided, in connection
with the Acquisition, a fairness opinion to the board of directors of WSP to the
effect that, as of the date hereof and subject to the assumptions, limitations
and qualifications contained therein, the consideration to be paid by WSP
pursuant to the Arrangement Agreement is fair, from a financial point of view,
to WSP.
TRANSACTION HIGHLIGHTS
-- Under the terms of the Arrangement Agreement, WSP will pay an aggregate
purchase price of $366.05 million (the "Purchase Price"), subject to
customary purchase price adjustments.
-- After the Acquisition, WSP is expected to have approximately 6,100
employees in Canada located in all provinces.
-- For the trailing 12-month period ended February 2014, Focus had revenues
of approximately $280 million. Based on the financial information of
Focus and WSP for the 12 months ended December 31, 2013 and assuming the
completion of the Offering (as described below) and the Concurrent
Private Placement (as described below) but without considering any
revenue and cost synergies nor any restructuring or integration
expenses, Management expects the Acquisition to be accretive to WSP's
earnings per share by approximately 10%.
-- The Purchase Price multiple is equivalent to approximately 8.3x the
trailing 12-month Adjusted EBITDA of Focus for the period ended February
2014 and using the preliminary information for the month of February
2014, excluding any revenue and cost synergies.
-- The Acquisition provides WSP with the opportunity to expand its services
into the geomatics segment and sets the foundation to build a leading
Canadian organization in that segment.
-- The Acquisition will allow WSP to establish an oil and gas center of
excellence based in Alberta, will help balance its Canadian platform and
will provide the Corporation with cross-selling opportunities.
-- The Corporation believes that Focus' core values of integrity,
excellence, safety and growth are well aligned and complementary with
WSP's corporate culture, philosophy and strategy.
TRANSACTION RATIONALE
Increase our Presence in the Oil and Gas Engineering Services Industry
-- Expands WSP's platform in oil & gas engineering services.
-- Complementary access to customer base focused on upstream, oil sands,
midstream, Steam Assisted Gravity Drainage (SAGD) and liquefied natural
gas (LNG) export infrastructure development projects.
Expansion of WSP's Canadian Platform
-- Focus operates in 21 locations throughout Western Canada, substantially
broadening WSP's exposure to this region.
-- Combined with Focus' 1,700 employees, WSP will have approximately 6,100
employees in Canada.
Cross-Selling Opportunities
-- Opportunity to leverage Focus' oil and gas expertise across WSP's
international platform.
-- WSP intends to offer its full range of professional services to Focus'
oil and gas clients.
Consistent with WSP's 2015 Corporate Strategy, the acquisition:
-- Capitalizes on an acquisition opportunity in a country where WSP is well
established.
-- Develops the energy and oil and gas sectors.
-- Adds recognized industry firm to its team.
-- Increases WSP's overall margin profiles.
Commenting on the Acquisition, Pierre Shoiry, President and Chief Executive
Officer of WSP said, "We are pleased to join forces with Focus. We believe that
this Acquisition provides a unique opportunity for our clients, employees and
shareholders to benefit from Focus' deep experience in the oil and gas industry,
more specifically in upstream, oil sands, midstream, SAGD and liquefied natural
gas (LNG) export infrastructure development projects. Through this Acquisition,
not only are we expecting to become a more important player in the Canadian oil
and gas industry, but also to strengthen our presence in Western Canada. The
Acquisition will contribute significantly towards our targets to reach $500
million in top-line growth from acquisitions and 20,000 total employees before
the end of 2015."
David Ackert, President and Chief Executive Officer of Focus added, "This
transaction supports the realisation of both companies' strategic aims and
provides a strong platform for continued growth both in Canada and
internationally. Focus is a highly successful firm with stated strategic
ambitions to diversify and grow. While reviewing carefully our options to best
achieve this aim, an exceptional opportunity has arisen for us to join the WSP
team. We believe this transaction will provide our employees and our clients
with enhanced opportunities and we expect to achieve increased prominence
globally in the areas in which we aim to work. Having been immensely proud to
lead Focus for several years, my management team and I now look forward to start
working with the entire WSP team to deliver value to all stakeholders."
Upon closing of the Acquisition, David Ackert, currently President and Chief
Executive Officer of Focus, will become Chief Executive Officer of WSP Canada
Inc. and director of our global oil and gas network. As such, David will focus
his efforts on overall strategic and financial growth of the Canadian market.
Marc Rivard will continue as President and Chief Operating Officer of WSP Canada
Inc. and will concentrate his efforts on operational excellence, client
management and growth.
CONCURRENT FINANCING
Financing Highlights
Concurrently with the Acquisition, WSP intends to complete the following financings:
-- A $180 million bought deal public offering (the "Offering") of common
shares of the Corporation (the "Common Shares") at a price of $33.75 per
Common Share (the "Offering Price");
-- A $80 million private placement of Common Shares (collectively, the
"Concurrent Private Placement") at a price of $33.75 per Common Share
(the "Placement Common Shares") with two existing shareholders, Canada
Pension Plan Investment Board ("CPPIB") and the Caisse de depot et
placement du Quebec (the "Caisse"); and
-- The implementation of an additional commitment of $200 million under its
existing syndicated credit facility to increase such credit facility to
$600 million.
Alexandre L'Heureux, Chief Financial Officer of WSP commented: "The successful
completion of the Offering and the Concurrent Private Placement will allow us to
pursue our ambitious growth strategy as it will provide us with a flexible and
stronger balance sheet, one of the key elements of our 2015 strategic plan. With
our opportunities for mergers and acquisitions continuing to develop, we will be
well-positioned to capitalize on other potential opportunities in the United
States, Australia, the United Kingdom and Europe."
CIBC is acting as financial advisor to WSP and Harris Williams & Co is acting as
financial advisor to Focus in connection with the Acquisition.
Public Offering of Common Shares on a Bought Deal Basis
WSP has entered into an agreement with a syndicate of underwriters co-led by
CIBC, Raymond James Ltd., BMO Capital Markets and National Bank Financial Inc.,
with CIBC and Raymond James Ltd. acting as joint bookrunners (collectively, the
"Co-Lead Underwriters"), and including HSBC Securities (Canada) Inc., RBC
Capital Markets, TD Securities Inc., Desjardins Securities Inc., Dundee
Securities Corp., Scotiabank, Canaccord Genuity Corp. and Laurentian Bank
Securities Inc. (together with the Co-Lead Underwriters, collectively the
"Underwriters"), pursuant to which they have agreed to purchase, on a bought
deal basis by way of a short form prospectus, 5,333,000 Common Shares from
treasury at the Offering Price, for aggregate gross proceeds to WSP of
approximately $180 million.
In addition, the Underwriters have been granted an over-allotment option (the
"Over-Allotment Option"), exercisable in whole or in part at the Offering Price
for a period of 30 days from closing of the Offering, for additional gross
proceeds of up to approximately $27 million. The Common Shares will be offered
in all provinces of Canada pursuant to a short form prospectus to be filed in
each of the provinces of Canada by WSP in accordance with National Instrument
44-101 - Short Form Prospectus Distributions.
The issuance of Common Shares pursuant to the Offering is subject to customary
approvals of applicable securities regulatory authorities, including the Toronto
Stock Exchange. Closing of the Offering is expected to occur on March 31, 2014.
The Offering and the Concurrent Private Placement (described below) are
conditional upon each other. The Offering is also conditional upon there being
no termination of the Acquisition or announcement of such termination prior to
the closing of the Offering.
Concurrent Private Placement of Common Shares
In addition, WSP is pleased to announce that CPPIB and the Caisse, the
Corporation's two largest shareholders, have entered into subscription
agreements which contemplate that the Corporation will complete the Concurrent
Private Placement with CPPIB and the Caisse, pursuant to which CPPIB and the
Caisse will purchase, on a private placement basis, an aggregate of 2,370,000
Placement Common Shares at a price of $33.75 per Placement Common Share, for
aggregate gross proceeds to WSP of approximately $80 million.
The issuance of Placement Common Shares pursuant to the Concurrent Private
Placement is subject to customary approvals of applicable securities regulatory
authorities, including the Toronto Stock Exchange. Closing of the Concurrent
Private Placement is expected to occur on March 31, 2014. The Concurrent Private
Placement and the Offering are conditional upon each other. The Concurrent
Private Placement is also conditional upon there being no termination of the
Acquisition or announcement of such termination prior to the closing of the
Concurrent Private Placement. Finally, subject to receipt by the Corporation of
any necessary regulatory approval, CPPIB and the Caisse have also been granted
an option to purchase a number of additional Common Shares representing up to
15% of the number of Common Shares subscribed by them on closing subject to the
Over-Allotment Option being exercised by the Underwriters (the "Additional
Subscription Option"). The number of additional Common Shares to be purchased by
CPPIB and the Caisse pursuant to such option will be in the same proportion as
the Common Shares that are purchased by the Underwriters pursuant to the
Over-Allotment Option, if any, and will represent additional maximum gross
proceeds of approximately $12 million. To the extent it is exercised, the
closing of the Additional Subscription Option will be conditional upon the
closing of the Over-Allotment Option.
Assuming completion of the Concurrent Private Placement and the Offering, but
not the exercise of the Over-Allotment Option or the Additional Subscription
Option, CPPIB and the Caisse will each beneficially own, or exercise control or
direction over, directly or indirectly, an aggregate of 9,407,044 and 9,398,450
Common Shares, respectively (which includes the 8,222,044 and 8,213,450 Common
Shares which CPPIB and the Caisse, respectively, currently beneficially own, or
exercise control or direction over, directly or indirectly), representing
approximately 15.6% and 15.6%, respectively, of the issued and outstanding
Common Shares. No commission or other fees will be paid to the Underwriters or
any other underwriter or agent in connection with the Concurrent Private
Placement. Upon the closing of the Concurrent Private Placement and of any
exercise of the Additional Subscription Option, each of CPPIB and the Caisse
will be entitled to a non-refundable capital commitment payment equal to 3% of
the aggregate purchase price for the Placement Common Shares for which each of
them has subscribed (and the additional Common Shares each of them has
subscribed pursuant to the Additional Subscription Option, as applicable).
Aggregate gross proceeds from the Offering and the Concurrent Private Placement
will total approximately $260 million, prior to the exercise of the
Over-Allotment Option and the Additional Subscription Option.
Moreover, CPPIB and the Caisse have undertaken to have substantially all of the
Common Shares held by them, including the Placement Common Shares (and the
additional Common Shares subscribed pursuant to the Additional Subscription
Option, as applicable), participate in the Corporation's dividend reinvestment
plan (the "DRIP") and to have such shares enrolled in the DRIP for all dividends
with a record date on or prior to September 30, 2014. In addition, the
Corporation has undertaken in favour of CPPIB and the Caisse that any Common
Shares to be issued to any participant under the DRIP will be issued from
treasury at a minimum discount of 2% up to and including the first investment
period under the DRIP following September 30, 2014.
Dividend Equivalent Receipt
As announced, the board of directors of the Corporation has declared a dividend
of $0.375 per Common Share on the date hereof that will be payable on or about
April 15, 2014 (the "Dividend Payment Date") to holders of Common Shares of
record at the close of business on March 31, 2014.
If the closing of the Offering and the Concurrent Private Placement occurs after
4:00 p.m. on March 31, 2014, the holders of newly issued Common Shares pursuant
to the Offering and CPPIB and the Caisse will receive a dividend equivalent
receipt giving them the right to receive an amount equal to the dividend to be
paid on April 15, 2014 in respect of the Common Shares acquired by them pursuant
to the Offering and the Concurrent Private Placement, respectively.
Additional commitment of $200 million under syndicated credit facility
WSP currently has in place a $400 million credit facility (the "Credit
Facility") with a syndicate of financial institutions (the "Lenders"). On
February 28, 2014, the Lenders confirmed to WSP their commitment to increase
such Credit Facility by an additional $200 million for a total amount of $600
million. The increase becomes effective today concurrently with the announcement
of the Acquisition.
The net proceeds of the Offering, the Concurrent Private Placement and the funds
drawn on the Credit Facility, will be used by WSP to (i) finance the Purchase
Price on the Acquisition Closing Date; and (ii) finance the costs of the
Acquisition. Alternatively, in the event the Acquisition is not completed
following the closing of the Offering and the Concurrent Private Placement, the
net proceeds from the Offering and the Concurrent Private Placement will be used
to pay down amounts outstanding under the Credit Facility and for general
corporate purposes. WSP intends to make acquisitions from time to time as part
of its strategy to grow its business. The Corporation is currently in the
process of evaluating several potential acquisitions but has not entered into
any definitive agreements with respect to such acquisitions. At their current
stage of evaluation, it is difficult to determine whether any acquisitions will
be completed, or if completed, the terms and timing of such acquisitions. If the
proposed Acquisition is not completed following the closing of the Offering and
the Concurrent Private Placement and the Corporation ultimately proceeds with
another acquisition, a portion of the net proceeds of the Offering and the
Concurrent Private Placement may be used for the purposes of financing the
purchase price of such acquisition.
CONFERENCE CALL INFORMATION
As a result of today's announcement, WSP's conference call previously scheduled
to be held on March 13, 2014 has been advanced. WSP will host a conference call
to discuss the Acquisition, the Offering and the Concurrent Private Placement on
March 12, 2014 at 4:00 p.m. (Eastern Daylight Time). The call will be accessible
by telephone at 1-877-223-4471 (Toll-Free dial-in number) or 1-647-788-4922
(International dial-in number), pass code: 6846257. An audio replay of the
conference call will be available until March 19, 2014 at 11:59 (Eastern
Daylight Time). To access the replay, dial 1-800-585-8367 or 1-416-621-4642, and
enter the pass code: 6846257.
AVAILABILITY OF DOCUMENTS
Copies of related documents, such as the preliminary short form prospectus,
underwriting agreement, subscription agreements and the Arrangement Agreement
will be available on SEDAR (www.sedar.com) as part of the public filings of WSP
and on WSP's website at www.wspgroup.com.
FORWARD-LOOKING INFORMATION
This press release contains forward-looking information within the meaning of
applicable securities laws. All information and statements other than statements
of historical facts contained in this press release are forward-looking
information. These statements are "forward-looking" because they are based on
current expectations, estimates, assumptions, risks and uncertainties. These
forward-looking statements are typically identified by future or conditional
verbs or words such as "may", "could", "will", "outlook", "believe",
"anticipate", "estimate", "project", "expect", "intend", "plan" and terms and
expressions of similar import. Such forward-looking information may include,
without limitation, statements with respect to: the use of proceeds of the
Offering, the Concurrent Private Placement and the Credit Facility, WSP's
expected financial performance, WSP's business model and acquisition strategy,
the completion of the Offering, the Concurrent Private Placement and the
Acquisition, the anticipated indebtedness to be incurred under the Credit
Facility, the expected Acquisition Closing Date and the anticipated benefits of
the Acquisition.
The forward-looking information is based on certain key expectations and
assumptions made by the Corporation, including expectations and assumptions
concerning availability of capital resources, performance of operating
facilities, strength of market conditions, customer demand, satisfaction of all
conditions of closing of the Acquisition, absence of exercise of any termination
right and the timing and receipt of regulatory approval with respect to the
Offering. Although the Corporation believes that the expectations and
assumptions on which such forward-looking information is based are reasonable,
undue reliance should not be placed on the forward-looking information since no
assurance can be given that they will prove to be correct.
Since forward-looking information addresses future events and conditions, by its
very nature it involves inherent risks and uncertainties. Actual results could
differ materially from those currently anticipated due to a number of factors
and risks. These include, but are not limited to, possible failure to realize
anticipated benefits of the Acquisition, possible failure to complete the
Acquisition, integration of Focus's business, change of control, potential
undisclosed cost or liabilities associated with the Acquisition, increased
indebtedness, availability of borrowings, volatile market price, dilutive
effects on holders of Common Shares, payment of dividends, organic business
growth, joint venture partners, current economic environment, anti-bribery laws
and anti-corruption practices.
To the extent any forward-looking information in this press release constitutes
future-oriented financial information or financial outlooks, within the meaning
of securities laws, such information is being provided to demonstrate the
potential benefits of the Offering, the Acquisition, the Concurrent Private
Placement and the Credit Facility and readers are cautioned that this
information may not be appropriate for any other purpose. Future-oriented
financial information and financial outlooks, as with forward-looking
information generally, are, without limitation, based on the assumptions and
subject to the risks set out above.
The forward-looking information contained herein is expressly qualified in its
entirety by this cautionary statement. The forward-looking information contained
herein is made as of the date of this press release, and the Corporation
undertakes no obligation to publicly update such forward-looking information to
reflect new information, subsequent or otherwise, unless required by applicable
securities laws.
THIS NEWS RELEASE IS NOT AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES
AND IS NOT AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OF
WSP, NOR SHALL IT FORM THE BASIS OF, OR BE RELIED UPON IN CONNECTION WITH ANY
CONTRACT FOR PURCHASE OR SUBSCRIPTION. THE COMMON SHARES OF WSP WILL ONLY BE
OFFERED IN CERTAIN PROVINCES OF CANADA BY MEANS OF THE PROSPECTUS REFERRED TO
ABOVE. SECURITIES MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT
REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR AN
EXEMPTION FROM REGISTRATION THEREUNDER. THESE SECURITIES HAVE NOT BEEN AND WILL
NOT BE REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
APPLICABLE EXEMPTION THEREFROM.
NON-GAAP MEASURES
The Corporation and Focus use non-GAAP measures that are considered by companies
as indicators of financial performance measures which are not recognized under
International Financial Reporting Standards (IFRS) and Accounting Standards for
private enterprises (ASPE) and may differ from similar computations as reported
by other similar entities and, accordingly, may not be comparable. The
Corporation believes these measures provide useful supplemental information that
may assist investors in assessing an investment in the Common Shares.
In this press release, Adjusted EBITDA of Focus is defined as EBITDA excluding
the effects of unusual items as identified by the Management of Focus as
non-recurring costs. EBITDA of Focus is defined as earnings before financial
expenses, income tax expenses, depreciation and amortization. This measure is
not a recognized measure under ASPE nor under IFRS and does not have
standardized definition within ASPE or IFRS. A reconciliation of Adjusted EBITDA
to the closest ASPE measure will be included in the short form prospectus to be
filed in all provinces of Canada by WSP.
ABOUT FOCUS
Focus is a well-established engineering and geomatics firm based in Alberta
principally serving the oil and gas industry throughout Western Canada. Since
its inception in 1977, Focus has evolved to offer a comprehensive range of
services and expertise and now offers a diversified platform across four
divisions: facilities engineering, geomatics, pipeline and civil engineering.
Focus also benefits from a deep experience in the Canadian energy industry, with
expertise in upstream, oil sands, midstream, SAGD and liquefied natural gas
export infrastructure development projects. Focus has approximately 1,700
employees located in 21 strategically placed locations across Western Canada and
one in Eastern Canada.
ABOUT WSP
WSP is one of the world's leading professional services firms, working with
governments, businesses, architects and planners and providing integrated
solutions across many disciplines. The firm provides services to transform the
built environment and restore the natural environment, and its expertise ranges
from environmental remediation to urban planning, from engineering iconic
buildings to designing sustainable transport networks, and from developing the
energy sources of the future to enabling new ways of extracting essential
resources. It has approximately 15,000 employees, mainly engineers, technicians,
scientists, architects, planners, surveyors, other design professionals, as well
as various environmental experts, based in more than 300 offices, across 30
countries, on 5 continents. www.wspgroup.com
FOR FURTHER INFORMATION PLEASE CONTACT:
Pierre Shoiry
President and Chief Executive Officer
WSP Global Inc.
514-340-0046, ext. 5104
pierre.shoiry@wspgroup.com
Isabelle Adjahi
Director, Communications and
Investor Relations
WSP Global Inc.
514-340-0046, ext. 5648
isabelle.adjahi@wspgroup.com
Alexandre L'Heureux
Chief Financial Officer
WSP Global Inc.
514-340-0046, ext. 5310
alexandre.lheureux@wspgroup.com
David Ackert
Chief Executive Officer
Focus Corporation
403-263-8200
David.ackert@focus.ca
WSP Global (TSX:WSP)
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