Construction company Aecon Group Inc. has struck a deal to acquire the assets of Cow Harbour Construction Ltd., a Fort McMurray, Alta. oil sands mining, land reclamation and contracting business which filed for bankruptcy protection this spring.
Under a letter of intent announced Monday, Aecon will pay $180-million to acquire Cow Harbour's capital assets in Alberta, including more than 500 pieces of mining equipment, as well as all of Cow Harbour's property, inventory, contracts, leases, licences and intellectual property.
The transaction is slated to close by the end of August and has been approved by the Court of Queen's Bench of Alberta, which has been overseeing Cow Harbour's bankruptcy restructuring under the federal Companies' Creditors Arrangement Act.
A private company founded in 1987, Cow Harbour had grown to become one of the top three mining and land reclamation companies in the oil sands sector, with over 800 employees and revenues of $230-million, Aecon said.
But operating problems linked to rapid growth and a tightening of credit markets led to financial problems that forced the company to seek protection from creditors in April.
The letter of intent provides for a $10-million deposit, another $50-million in cash when the deal closes and the balance of the purchase price to be paid within 90 days of closing.
Aecon said the acquisition of Cow Harbour's equipment and resources in Alberta, combined with those of Aecon subsidiary Alarie Construction in Ontario, would significantly enhance the Toronto company's ability to meet the mining needs of customers across Canada.
"The expansion of our capabilities in the oil sands industry has been a strategic priority for us," said John Beck, chairman and CEO of Aecon Group. "This acquisition will solidify our competitive profile in a market we believe is poised for significant growth. The fact that we've been able to acquire a truly competitive fleet in this manner only adds to the attraction of this investment for us."
Aecon said it intends to offer jobs to most of the employees of Cow Harbour once the transaction closes.