-Complements strategic focus on end markets related to energy transition and sustainability-
-Strengthens balance sheet-
-Go-forward strategic cooperation agreement with GIP-
Toronto, Ontario 鈥 March 1, 2023: Aecon Group Inc. (TSX: ARE) (鈥淎econ鈥 or the 鈥淐ompany鈥) announced today that it has entered into a definitive purchase agreement with Green Infrastructure Partners Inc. (鈥淕IP鈥) under which Aecon has agreed to sell its Aecon Transportation East (鈥淎TE鈥) roadbuilding, aggregates and materials businesses in Ontario for $235 million in cash.
ATE provides roadbuilding infrastructure solutions throughout Ontario to the provincial government, municipalities, and private clients through a workforce of approximately 1,000 employees.
In 2022, ATE鈥檚 revenue represented approximately 7% of 础别肠辞苍鈥檚 consolidated revenue as part of the Construction segment.
鈥湸”鸪Υ遣遭檚 efforts are increasingly focused on helping meet its clients鈥 sustainable infrastructure needs and harnessing the opportunities that are expected to come from the transition to a net zero economy through decarbonization,鈥 said Jean-Louis Servranckx, President and Chief Executive Officer, Aecon Group Inc. 鈥淭his transaction is consistent with Aecon's goal of targeting prudent balance sheet leverage and liquidity and also reduces the overall capital intensity of 础别肠辞苍鈥檚 business.鈥
Strategic Cooperation Agreement
Upon closing of the sale, Aecon and GIP will enter into a strategic cooperation agreement for certain major projects and pursuits in Ontario that leverage both 础别肠辞苍鈥檚 heavy civil construction services and GIP鈥檚 roadbuilding capabilities.
Use of Proceeds
Upon closing, Aecon expects to use the net proceeds from the transaction to pay down debt on its revolving credit facility. Aecon plans to maintain a disciplined capital allocation approach focused on long-term shareholder value.
Approvals and Time to Close
The Aecon Board of Directors and the GIP Board of Directors have each approved the transaction. ATE will continue to operate in the normal course pending closing of the sale transaction which is expected in the first half of 2023 and is subject to customary adjustments and closing conditions, including obtaining all necessary regulatory approvals. In the event the transaction does not close as a result of GIP鈥檚 failure to obtain financing for the acquisition, GIP has agreed to pay a reverse break-fee to Aecon of $15 million.
Advisors
CIBC Capital Markets is serving as exclusive financial advisor to Aecon, and Davies Ward Phillips & Vineberg LLP is serving as legal counsel.
About Aecon
Aecon Group Inc. (TSX: ARE) is a national Canadian construction and infrastructure development company with global experience and is proud to be recognized as one of the Best 50 Corporate Citizens in Canada. Aecon delivers integrated solutions to private and public-sector clients through its Construction segment in the Civil, Urban Transportation, Nuclear, Utility and Industrial sectors, and provides project development, financing, investment and management services through its Concessions segment. Join our online community on Twitter, LinkedIn, Facebook, Instagram and TikTok @AeconGroupInc.
Statement on Forward-Looking Information
The information in this press release includes certain forward-looking statements which may constitute forward-looking information under applicable securities laws. These forward-looking statements are based on currently available competitive, financial and economic data and operating plans but are subject to risks and uncertainties. Forward-looking statements may include, without limitation, statements regarding the operations, business, financial condition, expected financial results, performance, prospects, ongoing objectives, strategies and outlook for Aecon, including statements regarding: 础别肠辞苍鈥檚 sale of ATE to GIP, the expected results therefrom, use of proceeds from the transaction and related transaction timeline; 础别肠辞苍鈥檚 strategic partnership agreement with GIP and the results therefrom; 础别肠辞苍鈥檚 strategic focus on clean energy and other projects linked to sustainability and the opportunities arising therefrom; 础别肠辞苍鈥檚 goal of targeting prudent balance sheet leverage and liquidity and 础别肠辞苍鈥檚 plan to maintain a disciplined capital allocation approach focused on long-term shareholder value. Forward-looking statements may in some cases be identified by words such as 鈥渕ay鈥, "will," "plans," "believes," "expects," "anticipates," "estimates," "projects," "intends," "should" or the negative of these terms, or similar expressions. In addition to events beyond Aecon's control, there are factors which could cause actual or future results, performance or achievements to differ materially from those expressed or inferred herein including, but not limited to: the risk that the transaction will not close; the risk that the strategic partnership with GIP will not realize the expected results and may negatively impact 础别肠辞苍鈥檚 existing business; the risk that Aecon will not realize the opportunities presented by a transition to a net-zero economy; the risk that Aecon will not realize the anticipated balance sheet flexibility with the completion of the transaction and various other risk factors described in 础别肠辞苍鈥檚 filings with the securities regulatory authorities which are available under 础别肠辞苍鈥檚 profile on SEDAR () including the risk factors described in Section 13 - "Risk Factors" in Aecon's December 31, 2022 Management's Discussion and Analysis filed on SEDAR (www.sedar.com) on February 28, 2023.
These forward-looking statements are based on a variety of factors and assumptions including, but not limited to that: none of the risks identified above materialize, there are no unforeseen changes to economic and market conditions and no significant events occur outside the ordinary course of business. These assumptions are based on information currently available to Aecon, including information obtained from third-party sources. While the Company believes that such third-party sources are reliable sources of information, the Company has not independently verified the information. The Company has not ascertained the validity or accuracy of the underlying economic assumptions contained in such information from third-party sources and hereby disclaims any responsibility or liability whatsoever in respect of any information obtained from third-party sources.
Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Aecon undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
For further information:
Adam Borgatti
SVP, Corporate Development and Investor Relations
416-297-2600
ir@aecon.com
Nicole Court
Vice President, Corporate Affairs
416-297-2600
corpaffairs@aecon.com