CERF and Winalta in rental merger

Canadian equipment rental and waste management company CERF has entered into an agreement to combine its oilfield rental business, waste management, and construction rental businesses with Winalta’s oilfield accommodation rental business.

Winalta is a wellsite services provider in Western Canada, with locations in Stony Plain and Grande Prairie (Alberta) and in Estevan (Saskatchewan).

It employs 18 full time staff and operates 239 wellsites, five integrated wellsites, 31 geo labs and 10 drill camps across western Canada.

The combined company will operate under the name CERF, and the deal will see Winalta shareholders receive 0.3352 of a CERF common share for each Winalta common share held, resulting in approximately 14,456,717 CERF common shares being issued. The deal equates to CA$ 1.17 (US$ 1.09) per Winalta share.

When the deal is completed, current CERF shareholders will own approximately 61% of the combined entity and the shareholders of Winalta will own approximately 39%.

The boards of directors of both companies have approved the deal, which is still subject to regulatory and shareholder approval.

CERF said the combination with Winalta would solidify it as a leading Canadian oilfield rental provider.

It said it would have one of the largest and most diversified fleets of commercial, industrial and oilfield related rental equipment in Canada, while the deal would also allow it to enter the wellsite accommodation sector.

From a financial perspective, CERF added that the deal would increase its EBITDA margins and reduce its cash flow volatility due to the contract backed nature of Winalta’s integrated wellsite business.

In addition, it said the combination should also provide significant operational and marketing synergies among the combined oilfield rental divisions, as well as general and administrative cost saving synergies.

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