ST. ALBERT, ALBERTA--(Marketwired - Aug. 23, 2016) - Enterprise Group, Inc. ("Enterprise," or "the Company") (TSX:E) is pleased to provide an update on its business following the sale of substantially all of the assets of its utility construction business unit, T.C. Backhoe & Directional Drilling ("TCB"). The Company completed this transaction on July 7, 2016.
Gross proceeds from this transaction were approximately $20.3 million, subject to post-closing adjustments, including payment of $3.4 million of working capital. The net book value of TCB's capital assets was approximately $13.3 million. The gross proceeds were subsequently deployed against Enterprise's debt, resulting in a considerable improvement of the Company's financial position.
The sale of TCB will also create considerable improvements within Enterprise's cost structure. As a result of the sale and the subsequent reduction of total debt, the Company anticipates that it will retire $275,000 in monthly lease obligations, and reduce its monthly interest payments by $100,000 resulting in total annual reductions of $4.5 million. TCB also required annual insurance payment allocations equivalent to more than 20% of the Company's total insurance costs in 2015. Post transaction, Enterprise's capital assets total approximately $70 million.
"We are confident that this sale has helped to align Enterprise's business units with the company's larger strategy," stated Leonard Jaroszuk, the Company's Chief Executive Officer. "Since its acquisition in 2007, TCB served as a valuable contributor to Enterprise's overall operations. However, TCB not only generated a much lower operating margin than our other business units, but also retained the greatest number of employees. This created a risk profile that exceeded those of our other business units, within a segment that is experiencing greater competition and a commensurate narrowing of margins. As a result, we anticipate that the sale of this business will have little impact on Enterprise's earnings potential, while significantly improving our debt profile. Our offerings are now ideally suited to our clients' needs, and we look forward to taking advantage of the opportunities that will arise as a result of this agility."
About Enterprise Group, Inc.
Enterprise Group, Inc. is a consolidator of construction services companies operating in the energy, utility and transportation infrastructure industries. The Company's focus is primarily construction services and specialized equipment rental. The Company's strategy is to acquire complementary service companies in Western Canada, consolidating capital, management, and human resources to support continued growth. More information is available at the Company's website, www.enterprisegrp.ca - also, today's filings can be found on www.sedar.com
Forward Looking Information
Certain statements contained in this news release constitute forward-looking information. These statements relate to future events or the Company's future performance. The use of any of the words "could", "expect", "believe", "will", "projected", "estimated" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the Company's current belief or assumptions as to the outcome and timing of such future events. Actual future results may differ materially. The Company's Annual Information Form and other documents filed with securities regulatory authorities (accessible through the SEDAR website www.sedar.com) describe the risks, material assumptions and other factors that could influence actual results and which are incorporated herein by reference. The Company disclaims any intention or obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.
Enterprise Group, Inc.
President & CEO
Enterprise Group, Inc.