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Logistec Corporation acquires a majority interest in FER-PAL Construction Ltd

Logistec Corporation, a marine and environmental services provider, has recently announced that it has acquired 51% of the shares of FER-PAL Construction Ltd. ("FER-PAL"), a trenchless technology company that offers complete water main rehabilitation solutions, for an aggregate purchase price of $49.5 million, subject to adjustments.

Established in 1986 and based in Toronto, Ontario, FER-PAL specializes in water main rehabilitation projects utilizing trenchless technologies of all types and sizes for municipalities in Canada and the United States, including our Aqua-Pipe technology. FER-PAL has enjoyed a longstanding relationship with Sanexen Environmental Services Inc. ("Sanexen"), a subsidiary of Logistec, which has developed the proprietary technology for the trenchless rehabilitation of water mains, commercialized under the name Aqua-Pipe. For the year ended December 31, 2016, FER-PAL generated revenues of $97.4 million and profit attributable to owners of $8.2 million.

"We are very proud to have cemented our relationship with FER-PAL and its dynamic management team," said Madeleine Paquin, President and CEO of Logistec Corporation. "Shaun McKaigue and his colleagues have built tremendous expertise and know-how in the water main rehabilitation business and together, we are confident to have the best team to successfully expand our footprint throughout North America," added Ms. Paquin.

The purchase price paid by Logistec consists of a cash payment of $41.5 million and the issuance of 230,747 Class B subordinate voting shares in the capital of Logistec and is subject to post-closing adjustments. The Logistec shares issued as part of the purchase price will be covered by contractual lock-up restrictions as to 100% of such shares until January 6, 2018 and as to 50% until July 6, 2018, and orderly disposal provisions.

The vendors retain 49% of the shares of FER-PAL, which will be subject to a put option, exercisable by the vendors at any time after July 6, 2021, to sell all the remaining shares to Logistec in three equal tranches over a two year period for cash consideration based on a predetermined purchase price formula, as well as to a call option, exercisable by Logistec at any time after July 6, 2022, to purchase all the remaining shares from the vendors on the same terms.

FER-PAL's management team, including its President, Shaun McKaigue, its Vice-President, Project Management, Francesco Garcea, and its Vice-President, Operations, Gerald Ramsay, will continue to lead FER-PAL in their current roles following the transaction.

As part of the transaction, Sanexen and FER-PAL have extended the terms of their contractual relationship, which include exclusivity rights in favour of FER-PAL to market and promote Sanexen's structural liner products in several Canadian provinces and U.S. states.