Quality Distribution, Inc. Completes Acquisition of Wylie Bice Trucking and RM Resources
TAMPA, Fla., June 12, 2012 (GLOBE NEWSWIRE) -- Quality Distribution, Inc. (Quality or QLTY) (Nasdaq:QLTY) announced that it has completed its previously announced acquisition of the operating assets and rights of RM Resources, LLC (RM). Together with the previously announced closing of the acquisition of certain operating assets of Wylie Bice Trucking, LLC (Bice) 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 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 5-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, said Quality CEO Gary Enzor. 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.
On a combined basis for the twelve-month period ended March 31, 2012, the Bice and RM businesses generated approximately $129.1 million of revenue and $15.2 million of adjusted EBITDA. Adjusted EBITDA excludes approximately $1.0 million of charges not expected to recur. A reconciliation of the combined net income of Bice and RM to adjusted EBITDA is attached as a financial exhibit. Quality expects the collective acquisitions to be accretive to earnings beginning in the third quarter of 2012.
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 6 months of the closing date, adding significant disposal capacity.
Headquartered in Tampa, Florida, Quality operates the largest chemical bulk tank truck network in North America through its wholly owned subsidiary, Quality Carriers, Inc., and is the largest North American provider of intermodal tank container and depot services through its wholly owned subsidiary, Boasso America Corporation. Quality also provides logistics and transportation services to the unconventional oil and gas industry including crude oil, proppant sand, fresh water, and production fluids, through its wholly owned subsidiaries, QC Energy Resources, Inc. and QC Energy Resources, LLC. Quality's network of independent affiliates and independent owner-operators provides nationwide bulk transportation and related services. Quality is an American Chemistry Council Responsible Care(R) Partner and is a core carrier for many of the Fortune 500 companies that are engaged in chemical production and processing.
Quality 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 5-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, said Quality CEO Gary Enzor. 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.
On a combined basis for the twelve-month period ended March 31, 2012, the Bice and RM businesses generated approximately $129.1 million of revenue and $15.2 million of adjusted EBITDA. Adjusted EBITDA excludes approximately $1.0 million of charges not expected to recur. A reconciliation of the combined net income of Bice and RM to adjusted EBITDA is attached as a financial exhibit. Quality expects the collective acquisitions to be accretive to earnings beginning in the third quarter of 2012.
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 6 months of the closing date, adding significant disposal capacity.
Headquartered in Tampa, Florida, Quality operates the largest chemical bulk tank truck network in North America through its wholly owned subsidiary, Quality Carriers, Inc., and is the largest North American provider of intermodal tank container and depot services through its wholly owned subsidiary, Boasso America Corporation. Quality also provides logistics and transportation services to the unconventional oil and gas industry including crude oil, proppant sand, fresh water, and production fluids, through its wholly owned subsidiaries, QC Energy Resources, Inc. and QC Energy Resources, LLC. Quality's network of independent affiliates and independent owner-operators provides nationwide bulk transportation and related services. Quality is an American Chemistry Council Responsible Care(R) Partner and is a core carrier for many of the Fortune 500 companies that are engaged in chemical production and processing.