SDX Energy Regulatory News (SDX)

18 Jul 2006 07:00

Sondex PLC18 July 2006 Sondex plc("Sondex" or the "Company") Acquisition of Bluestar Tools. Sondex plc, a leading international technology supplier to the oil and gasindustry, announces the acquisition of Bluestar Tools ("Bluestar"), aCanadian-based business designing, manufacturing and supplying instrumentationand tools for drilling operations in oil and gas wells. The maximumconsideration, including sales related earn-out, is CA$22.75 million (£11.0million)*. Rationale for the Acquisition • Complementary product range for Sondex Drilling Division • Growing, profitable and cash generative • New Technology with significant growth potential both in North America and through the Sondex international sales network Bluestar Financial Highlights • Revenues in the six months ended 30 June 2006 were CA$4.3 million • The value of the gross assets acquired is CA$1.95million • Pro-forma profits attributable to the acquired assets in the 6 months prior to acquisition was circa CA$2 million About Bluestar Bluestar, based in Calgary Canada, is a fast growing supplier of specialisttechnology and equipment used in drilling oil & gas wells. This equipment isused to reduce drilling time and improve productivity. Bluestar supplies arange of Measurement and Logging While Drilling tools which are complementary toGeolink, a company acquired by Sondex in June 2004. Together Geolink andBluestar will form the expanded Sondex Drilling division. Bluestar'sinstruments include tools to assist, when desired, in keeping wells vertical andstraight during drilling. Additionally, Bluestar's instruments include areplaceable measurement tool which can provide cost savings in the directionaldrilling process. Bluestar has a significant presence in Canada, which accounts for 80 per cent ofits sales, and is also showing rapid growth in the USA. Bluestar's sales areexpected to be increased globally with the help of the Sondex internationaldistribution network. This acquisition will allow Sondex to combine Geolink andBluestar's products providing an enhanced well orientation solution enablingdirectional drilling contractors to offer a broader service. Prior to theacquisition by Sondex, Bluestar was owner managed; the management team willremain with the business and a programme of integration with Sondex is planned. The Consideration The maximum consideration of CA$22.75 million (£11.0 million) is settled asfollows: 1 At completion a payment in cash of CA$5.5 million (£2.7million) was made. 2 This will be followed by the issue of shares in Sondex plcto the value of CA$7.4 million (£3.6 million) which will be issued to thevendors between 12 months and 24 months after completion if certain technicaland revenue milestones are reached (subject to a maximum number of 2.65 millionshares); half are to be issued at the share price and exchange rate oncompletion and half at the prevailing market price and exchange rate at the dateof vesting. 3 Earn-out payments up to a maximum of CA $9.99 million(£4.8 million) paid 6 monthly in cash over a maximum of three years as a royaltyfrom sales of specified products. Funding for the maximum consideration and projected working capital requirementshas been arranged through an extension to the existing bank facilities with theBank of Scotland. * using a rate of £1:CA$2.068 Martin Perry, Chief Executive of Sondex, said: "This acquisition is an exciting opportunity for Sondex and is in line with ourstated strategy of investing for growth both organically and through targetedacquisitions. Bluestar offers our Drilling Division a complementary range of products whichare, through their innovative nature and strong market demand, expected to buildon the platform we have developed and deliver further growth for the Company." 18 July 2006 For further information, please contact: Sondex Tel: 01252 862 200Martin Perry (Chief Executive)Chris Wilks (Finance Director) College Hill Tel: 020 7457 2020Nick Elwes / Paddy Blewer www.sondex.com For further information about Bluestar please see www.bluestartools.com This information is provided by RNS The company news service from the London Stock Exchange