Oil Sands Truth: Shut Down the Tar Sands

Aecon Group adds Alberta tar sands contractor

Aecon Group adds Alberta oil sands contractor

Eric Lam, Financial Post
Aug. 9, 2010

TORONTO -- Toronto-based Aecon Group Inc. said Monday it has offered to purchase the assets of Alberta oil sands contracting services business Cow Harbour Construction Ltd., currently under creditor protection, for $180-million.

If approved, Aecon would become one of the largest mining and land reclamation contractors in the oil sands. It is already the largest construction and infrastructure development company in Canada.

Aecon's letter of intent, approved by an Alberta court through the Companies' Creditors Arrangement Act (CCAA) process, will have the company acquire Fort McMurray-based Cow Harbour's fleet of more than 500 pieces of mining equipment, real property, inventory, contracts, leases, licenses, intellectual property and other assets.

The deal is expected to close on Aug. 31, but is still subject to regulatory and court approval.

"The expansion of our capabilities in the oil sands industry has been a strategic priority for us," John Beck, chief executive with Aecon, said in the release. "This acquisition will solidify our competitive profile in a market we believe is poised for significant growth."

Under terms of the deal, Aecon will make a $10-million deposit, followed by $50-million on closing. The remainder will be paid within 90 days of that date. Aecon plans to finance the purchase price primarily through equipment loan financing.

Cow Harbour is a private company founded in 1987 with more than 800 employees and annual revenues of as much as $230-million. The company ran into operational issues after years of rapid growth, magnified by the credit crisis. The company filed for CCAA protection in April this year.

Financial Post


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