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Just Energy to Acquire Fulcrum Retail Holdings
August 25, 2011
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Just Energy Group Inc. has entered into a Purchase and Sale Agreement pursuant to which it has agreed to acquire all of the issued and outstanding membership units of Fulcrum Retail Holdings LLC for approximately $79.4 million (all amounts in US $), subject to customary working capital adjustments.
Just Energy will also pay up to $20 million to the seller 18 months following the closing date provided that certain EBITDA and billed volume targets are satisfied by Fulcrum during the earn-out period.
The earn-out amount will be prorated to the percentage of the two targets achieved and will be payable as to at least 45% in common shares of Just Energy, valued at the volume weighted average trading price for the common shares for the 5 consecutive trading days ending on and including the last trading day immediately preceding the closing date of the acquisition (converted into U.S. dollars). The balance of the earn-out amount is payable in cash.
Fulcrum is a privately held retail electricity provider operating in the State of Texas under the names Tara Energy, Amigo Energy, and Smart Prepaid Electric. Tara and Amigo focus on residential and small to mid-size commercial customers, selling primarily through online, targeted affinity marketing channels.
Fulcrum has aggregated a current total of 240,000 Residential Customer Equivalents. Fulcrum actively markets in Texas only, employing approximately 120 full-time employees.
As of June 30, Just Energy had 3.358 million RCEs, of which 1.452 million represent U.S. electric RCEs.
"Just Energy management believes that Fulcrum's marketing and sales approach supplements the sales channels used by Just Energy and should allow for both continued growth from existing Fulcrum products in Texas as well as cross selling opportunities for Just Energy offerings, particularly JustGreen and JustClean. Further, Fulcrum's marketing model can be utilized in Just Energy markets beyond Texas with the expansion of these channels occurring immediately," Just Energy said.
"Our JustGreen offerings will fit well with their product mix, offering their affinity partners an attractive addition to Fulcrum's product suite. Their key supplier is Shell, a valued member of our supplier pool ... In addition, this builds on our proven track record of growth through acquisition and integration as demonstrated by our Universal Energy and Hudson Energy transactions," said Ken Hartwick, CEO of Just Energy.
The transaction is expected by management to be accretive on a F2012 pro-forma basis.
Closing of the acquisition is expected to occur on or about October 1, 2011. Closing is subject to the satisfaction or waiver of a number of conditions including: (i) renegotiating Fulcrum's preferred supplier arrangement at no cost to Just Energy and (ii) securing any required consents from lenders and regulatory bodies.
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