Quality Distribution completes fleet acquisitions in the Bakken shale
Jun 12, 2012 3:47 PM
Quality Distribution Inc announced that it has completed its previously announced acquisition of the operating assets and rights of RM Resources LLC. Together with the previously announced closing of the acquisition of certain operating assets of Wylie Bice Trucking LLC on June 1, 2012, the aggregate purchase price for the combined businesses is approximately $81.5 million plus potential additional consideration of $19.0 million if certain future operating and financial performance criteria are satisfied.
The increased purchase price was primarily due to new revenue producing assets purchased after the initial valuation date. Quality Distribution utilized borrowings under its asset-based credit facility to finance the cash portion of these transactions.
The transactions were structured as asset acquisitions, with aggregate consideration paid to the sellers as follows: (i) approximately $52.2 million in cash; (ii) a total of $21.3 million in five-year subordinated seller notes bearing interest at a 5% fixed rate; and (iii) $8.0 million in unregistered restricted shares of Quality common stock. Up to an additional $19.0 million may be payable in cash one year after the closing date, contingent upon the collective businesses meeting certain future operating and financial performance criteria.
"A year ago we embarked on a growth strategy to enter into the emerging frac shale energy market, with the intention of providing fluid hauling and disposal services in multiple shale regions," says Gary Enzor, Quality Distribution chief executive officer. "The Bice and RM acquisitions represent one of our most significant steps in this strategy by diversifying our energy logistics business and broadening our reach into the oil rich Bakken shale. We are excited about the growth prospects that well-established operations like Bice and RM bring to our shareholders."
Headquartered in Killdeer ND, Bice is a leading provider of transportation services to the unconventional oil and gas industry within the Bakken shale region, primarily hauling fresh water, flowback and production water, and oil for numerous energy customers. The flowback and production water Bice hauls is primarily disposed of utilizing five existing salt water injection wells owned and operated by RM.
Bice operates two trucking terminals in North Dakota utilizing approximately 500 drivers, making it one of the largest haulers of fresh and disposal water and oil in the Bakken shale. Bice is principally an asset-light business as the company primarily utilizes independent contractors who own their own equipment. RM has five existing disposal wells and is required to deliver a sixth well within six months of the closing date, adding significant disposal capacity.
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