Cathedral Energy Services Ltd. agreed to acquire Drilling services business of Altitude Energy Partners, LLC for $88.7 million.
July 03, 2022
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Cathedral Energy Services Ltd. (TSX:CET) entered into an agreement to acquire Drilling services business of Altitude Energy Partners, LLC for $88.7 million on July 4, 2022. Under the terms of transaction, Cash consideration of $62.67 million which will be funded through cash on hand and expanded credit availability under the Company term and revolving credit facilities and the issuance of 67.031167 million Shares of Cathedral Energy Services Ltd. The company plans to operate under the Altitude name and brand in the US.
Lee Harns, the current President and CEO of Altitude, will enter into an employment agreement to continue as President of the Altitude business unit after the Acquisition, and accordingly will become an executive officer of Cathedral. Following the completion of the Acquisition, Harns is expected to exercise control over approximately 13,203,103 Common Shares representing approximately 6.2% of the issued and outstanding Common Shares. J.R. Boyles, a director and founder of Altitude, will be appointed to Cathedral's board of directors, subject to the completion of ordinary course due diligence prior to closing of the Acquisition. Following the completion of the Acquisition, it is expected that Boyles will exercise control over approximately 19,449,197 Common Shares, representing approximately 9.1% of the issued and outstanding Common Shares.
Peters & Co. Limited is acting as financial advisor to Cathedral with respect to the Acquisition and has provided its opinion to the board of directors of Cathedral that, based upon and subject to the assumptions, limitations and qualifications set forth therein, the consideration to be paid by Cathedral pursuant to the Acquisition is fair, from a financial point of view, to Cathedral. Acumen Capital Finance Partners Limited has also provided an opinion to the board of directors of Cathedral that, based upon and subject to the assumptions, limitations and qualifications set forth therein, the consideration to be paid by Cathedral pursuant to the Acquisition is fair, from a financial point of view, to Cathedral. ATB Capital Markets, Canaccord Genuity Corp., Cormark Securities Inc., and J. Danielle Endl, Kory Cross, Noah Versluys, of Stifel Nicolaus Canada Inc are acting as strategic advisors to Cathedral with respect to the Acquisition. DS Lawyers Canada LLP, Porter Hedges LLP and Gordon Lusky LLP acted as legal advisor to Cathedral. Parks Paton Hoepfl & Brown, LLC (PPHB) acted as Altitude and Black Bay's financial advisor and investment bank with respect to the Acquisition. Fishman Haygood and J. Danielle Endl of Stikeman Elliot acted as legal advisor to Altitude and Black Bay.
Cathedral Energy Services Ltd. is a Canada-based company, which operates in the United States (U.S.) under Discovery Downhole Services, a division of Cathedral Energy Services Inc., Altitude Energy Partners, LLC and Rime Downhole Technologies, LLC. The Company is involved and engaged in the business of providing directional drilling services to oil and natural gas companies in Western Canada and the U.S. Its services include directional drilling, drilling optimization, well planning and automated gamma services (AGS) and remote drilling. Its products include nDURANCE MOTORS, Measurement While Drilling (MWD), FUSION and RapidFire. Its MWD sensors collect data used to determine basic trajectory parameters, such as inclination, direction, and tool-face orientation. Its FUSION family OF MWD tools include FUSION Dual Telemetry (DT), FUSION WPR (Wave Propagation Resistivity), FUSION Gamma Ray (GR) and The Hawk. Its RapidFire family of MWD tools include RapidFire Pulse and RapidFire DT.