PRESS RELEASE Stella-Jones Inc. has signed a non-binding letter of intent to acquire Tangent Rail Corporation, a provider of wood crosstie supply chain services to the railroad industry. This acquisition will expand Stella-Jones' capabilities within the U.S. railway tie industry and provide the company with creosote manufacturing operations. Tangent's sales for the year ended December 31, 2009 are expected to reach approximately US$175 million.
The transaction is expected
to close before the end of the first quarter of 2010 and is subject to
antitrust clearance in the United States, as well as customary closing
conditions, including entry into a definitive purchase agreement, regulatory
approvals and satisfactory due diligence. Further details on the transaction
will be provided once preliminary closing conditions have been satisfied. The
letter of intent provides Stella-Jones with the exclusive right to negotiate
and execute a definitive purchase agreement during the period leading up to the
Tangent serves the
railroad industry with treated wood products, mainly railway ties, through
facilities located in Warrior, Ala.; Terre Haute and Winslow, Ind.; Alexandria,
Louisiana and McAlisterville, Pa. The wood preservative, creosote, is produced
at its distilleries in Terre Haute and Memphis, Tenn. Life-cycle solutions,
consisting of tie pickup and tie disposal, are carried out at three facilities
in Alabama, Minnesota and North Carolina.
"The acquisition of
Tangent Rail Corporation would considerably enhance our offerings to the U.S.
railroad industry, while also extending our geographical reach," said Brian
McManus, President and CEO of Stella-Jones. "Tangent enjoys a solid market
reputation and possesses high-quality assets, which should facilitate its
integration into our network if the transaction is completed."
The company plans to
finance the acquisition through a combination of equity and debt, subject to
prevailing market conditions.