Ridgeline Exercises Option to Purchase Santa Fe Springs Property
Reports $6.9 Million of Annualized Revenue from Santa Fe Springs Facility in August 2012; Up from $2.7 Million in April 2012
Ridgeline Awarded a $5 Million Soil Remediation Contract Related to the Santa Fe Springs Property
CALGARY, Sept. 25, 2012 /PRNewswire/ - Ridgeline Energy Services Inc. ("Ridgeline" or the "Company") (TSXV: RLE, OTCQX: RGDEF, FSE: RL7) an energy services and water treatment company, today announced it has exercised its option to purchase the Santa Fe Springs property.
The Lease and Option to Purchase Agreement (LOPA) with Lakeland Development Company (Lakeland) was previously announced in April 2012, along with the execution of an Asset Purchase Agreement (APA). It is expected that Ridgeline will close the LOPA concurrent with the closing of the APA. Ridgeline has been operating and conducting business under a lease and a management agreement at Santa Fe Springs since April 2012.
The Santa Fe Springs property is a 17 acre parcel of industrially zoned real estate centrally located in the Los Angeles basin. It is ideally located to serve businesses within the southern California market and is also located in close proximity to all three major highways. The Santa Fe Springs facility has an annual conditional use permit from the City of Santa Fe Springs that allows it to accept and processes non-hazardous waste water from commercial and industrial customers in the Los Angeles market. The Santa Fe Springs facility maintains one of the largest discharge permits among service providers supporting the Los Angeles County Sanitation District ("LACSD").
The location of the site, coupled with the existing water discharge permit, has allowed Ridgeline to build a multi-million dollar production facility utilizing its proprietary water treatment technology. Ridgeline currently has one operating water treatment installation in operation and a second system ready to commence treatment, with three more systems in various stages of construction. The Company plans a total of eight to nine systems to be installed on its Santa Fe Springs property over the next 6-9 months.
The LOPA has been amended to allow Ridgeline to acquire the property for a combination of stock and cash. The Bankruptcy Court in Lakeland's Chapter 11 Bankruptcy has authorized Lakeland to assume the agreement as amended. The full purchase price is $13 million as per the announced agreement in April 2012. However, the amount due upon closing has been reduced by approximately $2.8 million and allows for deferred payments of the balance over 15 to 18 months.
Additional, amendments to the LOPA are outlined as follows;
Stock will be issued at a minimum price of $0.70 per share and priced
over a 15 month term from the close of the Agreement. The maximum
amount of stock to be issued will be capped at 9.9 million shares.
Ridgeline anticipates that the total number of shares will be further
reduced from this number. The stock will be released to Lakeland over a
period of 15 months after the closing of the transaction.
Credit for Ridgeline payments made to date of $500,000.
Ridgeline will assume liabilities for Lakeland (up to $3.0 million).
Payment has been deferred for 15 months from closing further reducing
the amount of cash required at closing.
Ridgeline will be immediately awarded a $5 million soil remediation
contract for the remediation of site conditions. The contract will be
assigned to Ridgeline's Environmental and Greenfill divisions. The
contract is secured by an insurance settlement and a portion of the
stock purchase price held in escrow.
- Ridgeline will also treat certain water and fluids required to be remediated under a Los Angeles County approved plan, which will further reduce Ridgeline's near-term cash requirements.
The net result of these changes is that Ridgeline will pay $2.6 million of upfront cash on closing, as originally planned, with the balance either paid in stock or cash over a deferred 15- 18 months period.
There are several benefits to Ridgeline for exercising the purchase option at this time:
Ridgeline will secure the Santa Fe Springs water treatment business,
which has grown to over $500,000 of sales per month since April of this
year, and is expected to continue to growing rapidly.
It secures Ridgeline's offering of superior waste water and solids
treatment to more than 150 oil and gas, and industrial customers, as
well as the Company's future customers in southern California.
It will add a valuable and substantial real estate asset to the
Company's balance sheet, which can be leveraged for less dilutive
expansion capital as needed.
- The use of stock issued over time and deferred payment for part of the purchase price greatly reduces the upfront cost, while realizing immediate cash flow from these operations.
Tony Ker, CEO of Ridgeline, stated, "The rapid revenue growth and significant potential we see at this site as we increased throughput, warranted immediate action to secure the property. We are extremely pleased with the terms we secured for this property and believe this transaction will not only accelerate our growth and profitability, but will serve as a model we can easily replicate at similar facilities around the country. Since our initial agreement in April of 2012, we have increased monthly revenue on an annualized basis from $2.7 million to over $6.9 million, which we plan to expand further as we add additional treatment systems utilizing our water treatment technologies."
About Ridgeline Energy Services Inc.
Ridgeline Energy Services Inc. is an energy services and water treatment company. The Company is applying proprietary technology to treat water generated from industrial and commercial waste water markets. These markets include a wide variety of clients across a broad spectrum of industries including oil and gas. Through its environmental consulting and remediation divisions, Ridgeline Environment has built a reputation as an established provider of environmental services to the Western Canadian oil and gas industry. Ridgeline GreenFill provides soil remediation and wet waste disposal services to the oil and gas industry. The Company trades on the TSX Venture Exchange under the symbol "RLE", the OTCQX as "RGDEF" and the Frankfurt Stock Exchange as "RL7".
Additional information is available on the Company's website at: www.ridgelinecanada.com.
ON BEHALF OF THE BOARD OF DIRECTORS
Tony Ker, CEO
"Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release. This news release may contain forward-looking statements. Forward-looking statements address future events and conditions and therefore, involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. Such information is subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in the forward-looking information. Readers are cautioned not to place undue reliance on forward-looking information, as no assurances can be given as to future results, levels of activity or achievements."
SOURCE Ridgeline Energy Services Inc.