REG - Admiral Acquisition - Syndicated debt offering & Acuren Q1 results

AcurenAnnouncement

10/07/2024 16:30

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RNS Number : 9264V  Admiral Acquisition Limited  10 July 2024

THIS ANNOUNCEMENT (INCLUDING THE ANNEX) AND THE INFORMATION CONTAINED HEREIN
IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR
IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO
SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH
JURISDICTION.

For immediate release

Admiral Acquisition Limited

Admiral launches syndicated debt offering and reports Acuren's first quarter
results

10 July 2024 - Admiral Acquisition Limited (LSE: ADMR / ADMW) ("Admiral")
today announced the launch of the syndication of the committed loan facilities
to fund a portion of the consideration for its previously announced definitive
agreement to acquire 100% of ASP Acuren Holdings, Inc., the ultimate parent
company of Acuren ("Acuren" or the "Company"), a leading North American
provider of critical asset integrity services in a transaction valued at
approximately $1.85 billion, reflecting approximately 9.7x 2024E Estimated
Adjusted EBITDA of approximately $190 million, subject to customary closing
conditions (the "Transaction").

Admiral is also releasing unaudited first quarter financial results of Acuren
of approximately $220 million in revenue and $32 million of adjusted EBITDA
for the quarter ended 24 March 2024, compared to $219 million and $27 million,
respectively, for the quarter ended 26 March 2023. Further information about
Acuren's unaudited first quarter results are set out in the Annex to this
announcement.

Robert A.E. Franklin, co-founder of Admiral commented, "As we head towards
closing this transaction, we continue to be pleased by the progress of the
business and encouraged by the team's outlook for the remainder of the year.
The team continues to work towards completing the transaction at the end of
July and initiate our relisting process with the NYSE, which we anticipate
will take place in the fourth quarter."

Talman Pizzey, CEO of Acuren commented, "During the first half of 2024, our
business performed to plan which reflects continued earnings and margin
progression compared to the prior year.  We believe we are on track to
achieve our 2024 estimated EBITDA of $190 million.  We are extremely excited
to debut Acuren as a public company and are looking forward to building the
business into a world-class TICC company."

The purchase consideration payable in connection with the Transaction is
expected to be funded from debt proceeds of a $725 million senior loan
facility, Admiral's existing cash of approximately $560 million and equity
proceeds of approximately $690 million from a private placement of ordinary
shares to a limited group of investors and exercises of warrants in exchange
for ordinary shares. The ordinary shares will be issued at $10.00 per ordinary
share.

Jefferies is acting as lead arranger with Citi and UBS Investment Bank acting
as joint arrangers on the debt financing.

About Admiral Acquisition Limited

Admiral Acquisition Limited (LSE: ADMR / ADMW) is a publicly-listed
acquisition vehicle that was formed in May 2023 to undertake an acquisition of
a target company or business. Admiral is expected to change its name at
closing of the Transaction to Acuren Corporation.

About Acuren

Acuren is a leading North American provider of critical asset integrity
services. Acuren provides mission critical, regulatorily-mandated,
non-destructive testing, inspection and engineering & lab testing services
across a variety of industrial end markets. Acuren operates across three
service lines: Non-destructive Testing ("NDT"), Rope Access Technician
Solutions ("RAT") and Engineering and Lab Testing. NDT offerings include
breadth of non-destructive testing services including conventional, advanced
and tech-enabled NDT.  RAT offerings include a full suite of rope access
technician offerings including inspection, repair and specialty craft
services.  Engineering and Lab Testing offerings include materials
engineering and lab testing services.

Enquiries:

Ed Hammond

ed@collectedstrategies.com

(917) 346-6841

 

Dan Moore

dan@collectedstrategies.com

(201) 675-0906

 

IMPORTANT NOTICES

This announcement is not intended to, and does not constitute, or form part
of, any offer to sell or issue or any solicitation of an offer to purchase,
subscribe for, or otherwise acquire, any securities or a solicitation of any
vote or approval in any jurisdiction.

Neither the content of Admiral's website nor the Company's website, nor any
website accessible by hyperlinks on either of those websites is incorporated
in, or forms part of, this announcement.

FORWARD LOOKING STATEMENTS AND DISCLAIMERS

This announcement does not constitute or form part of any offer or invitation
to purchase, otherwise acquire, issue, subscribe for, sell or otherwise
dispose of any securities, nor any solicitation of any offer to purchase,
otherwise acquire, issue, subscribe for, sell, or otherwise dispose of any
securities in the United States or in any other jurisdiction. Securities may
not be offered or sold in the United States absent registration or an
exemption from registration.

The release, publication or distribution of this announcement in certain
jurisdictions may be restricted by law and therefore persons in such
jurisdictions into which this announcement is released, published or
distributed should inform themselves about and observe such restrictions.

Certain statements in this announcement are forward-looking statements which
are based on Admiral's expectations, intentions and projections regarding the
Company's future performance, anticipated events or trends and other matters
that are not historical facts, including: (i) expectations regarding the
anticipated closing date of the Transaction; (ii) intentions regarding
changing its jurisdiction of incorporation, filing a registration statement
with the SEC and relisting on the NYSE; (iii) expectations regarding the
future operating and financial performance of the Company; (iv) expectations
regarding the Company's growth prospects and the Admiral team's role in its
growth and expansion plans; (v) intentions to capitalise on strategic
opportunities to expand; and (vi) expectations regarding funding of the
Transaction. These statements are not guarantees of future performance and are
subject to known and unknown risks, uncertainties and other factors that could
cause actual results to differ materially from those expressed or implied by
such forward-looking statements, including: (i) economic and market
conditions, competition, operating difficulties and other risks that may
affect the Company's and/or Admiral's future performance; (ii) the occurrence
of any event, change or other circumstances that could give rise to the
termination of the definitive agreement entered into among the parties thereto
in connection with the Transaction; (iii) the risk that securities markets
will react negatively to the Transaction or other actions by Admiral, the
Company and/or the combined company after completion of the Transaction; (iv)
the risk that the Transaction disrupts current plans and operations as a
result of the announcement and consummation of the Transaction described
herein; (v) the ability to recognise the anticipated benefits of the
Transaction and of the Company to take advantage of strategic opportunities;
(vi) costs related to the Transaction; (vii) the limited liquidity and trading
of Admiral's securities; (viii) the ability of Admiral to successfully effect
a listing on the NYSE; (ix) the Company's ability to drive growth and to
sustain such growth; (x) Admiral's ability to raise additional proceeds on
acceptable terms; (xi) changes in applicable laws or regulations (or the
interpretation thereof); (xii) the possibility that Admiral and/or the Company
may be adversely affected by other economic, business, and/or competitive
factors; and (xiii) other risks and uncertainties.

Given these risks and uncertainties, prospective investors are cautioned not
to place undue reliance on forward-looking statements. Forward-looking
statements may, and often do, differ materially from actual results.
Forward-looking statements speak only as of the date of such statements and,
except as required by applicable law or regulation, neither Admiral nor the
Company undertake any obligation to update or revise publicly any
forward-looking statements, whether as a result of new information, future
events or otherwise. Nothing in this announcement constitutes or should be
construed as constituting a profit forecast.

Financial information

The unaudited financial information contained herein is derived from the
historical financial statements of Rockwood Service Corporation ("Rockwood"),
an indirect wholly-owned subsidiary of the Company. Rockwood's historical
financial statements have historically been prepared based on US GAAP
applicable to private companies. The Company is solely a holding company for
Rockwood and there is no material business activity at the level of the
Company.  Rockwood is the main operating entity of the business, and all of
the operations of the underlying business occur at Rockwood and its
subsidiaries.

Use of projections

This announcement contains financial projections for Rockwood. Rockwood's
auditors have not audited, reviewed, compiled or performed any procedures with
respect to the FY 2024 revenue projections or the FY 2024 adjusted EBITDA
projections for the purpose of their inclusion in this announcement, and,
accordingly, no such auditors have expressed an opinion or provided any other
form of assurance with respect thereto for the purpose of this announcement.
These projections are for illustrative purposes only and should not be relied
upon as being necessarily indicative of future results. The assumptions and
estimates underlying the projected information are inherently uncertain and
are subject to a wide variety of significant business, regulatory, economic
and competitive risks and uncertainties that could cause actual results to
differ materially from those contained in the projected information. Even if
the assumptions and estimates are correct, projections are inherently
uncertain due to a number of factors outside of Admiral's or the Company's
control. Inclusion of the projected information in this announcement should
not be regarded as a representation by any person, including, without
limitation, Admiral or the Company, that the results contained in the
projected information will be achieved.

Legal Entity Identifier (LEI): 213800ZDFRNC8QXEZ481

Annex

Unaudited First Quarter Results of Acuren

Unaudited Financial Information on Rockwood Service Corporation

The table below contains summary consolidated unaudited financial information
of Rockwood Service Corporation ("Rockwood"), an indirect wholly-owned
subsidiary of the Company, including profit and loss information, balance
sheet information (highlighting net assets and liabilities) and relevant cash
flow information, for the first quarters ended 24 March 2024 and 26 March
2023. The Company is solely a holding company for Rockwood and there is no
material business activity at the level of the Company.  Rockwood is the main
operating entity of the business, and all of the operations of the underlying
business occur at Rockwood and its subsidiaries.

 ($, 000s)                   Quarter ended 26 March 2023  Quarter ended 24 March 2024
 Revenue                     $219,307                     $220,364
 Cost of Goods Sold          181,437                      177,592
 Gross Profit                37,870                       42,772
 Operating Expenses          33,641                       28,674
 Operating Income (loss)     4,229                        14,097
 Interest Expense            (10,615)                     (15,024)
 Other Income                (1,295)                      (1,696)
 Provision for Income Taxes  1,543                        752
 Net Loss                    $(6,139)                     $(1,871)
                                                          As of 24 March 2024
 Cash and Cash Equivalents                                $89,732
 Total Current Assets                                     317,394
 Total Assets                                             1,247,165
 Total Current Liabilities                                105,156
 Total Liabilities                                        883,247
 Shareholders' Equity                                     363,918

 

Historic Unaudited Financial Information on Rockwood - As Adjusted

  ($, 000s)                                                                    Quarter ended March 26, 2023  Quarter ended March 24, 2024
 Net Loss                                                                      $(6,139)                      $(1,871)
 Depreciation Expense                                                          10,816                        6,748
 Amortization Expense                                                          12,281                        12,096
 Interest Expense, Net                                                         10,615                        15,024
 Income Tax Expense                                                            (1,543)                       (752)
 EBITDA                                                                        $26,030                       $31,245
 Adjustments
 Expenses related to the Seller((1))                                           1,173                         1,726
 Expenses related to prior acquisitions and integrations of acquisitions((2))  1,683                         717
 Restructuring, reorganization and severance((3))                              209                           124
 Normalization, currency and run rate adjustments((4))                         (957)                         (32)
 Other((5))                                                                    12                            504
 Adjusted EBITDA                                                               $28,151                       $34,284
 Adjusted EBITDA of Entities Acquired by Acuren                                1,326                         709
 Estimated Public Company Costs                                                (2,500)                       (2,500)
 Acquisition Adjusted EBITDA                                                   $26,977                       $32,493

 

Throughout the course of buyside financial diligence, Admiral has identified a
number of adjustments to EBITDA which Admiral believes presents a more
normalised view of the business.  Supporting detail and explanation are
below:

1.   Adjustment includes equity-based compensation being paid at Closing and
management fees of the Seller.

2.   Adjustment includes transaction costs and costs to integrate
acquisitions completed by Rockwood prior to the Acquisition.

3.   Adjustment includes restructuring, reorganization and unusual severance
costs incurred by Rockwood not expected to recur.

4.   Adjustment includes normalization of bad debt and incentive expenses,
currency adjustments and run rate adjustments.

5.   Adjustment includes non-recurring and non-operating expenses.

Key Differences in Accounting Policies

Rockwood's financial statements are in accordance with accounting principles
generally accepted in the US ("U.S. GAAP") under AICPA (American Institute of
Certified Public Accountants) standards for non-public entities. Admiral's
financial statements are in accordance with U.S. GAAP for public companies.
The key differences in accounting policies relate to segment reporting and
disclosure, accounting for leases and accounting for intangible assets.

·      Segment reporting and disclosures: As a public company, Admiral
is required to have more robust and detailed disclosures, including segment
reporting. Currently Rockwood does not prepare or disclose segment financials.
Admiral's expects to disclose Rockwood as one business segment in Admiral's
financials, pending discussion with its auditor. Note that this item is
related to disclosure only and will not have an impact the Rockwood results or
financial condition.

·      Accounting for leases:  Rockwood uses the risk-free rate to
discount future lease payments and recognize ROU lease balances for operating
leases and finance leases, in accordance with AIPCA standards for non-public
entities. Under PCAOB standards, Admiral may need to update the discount rate
to what is "implicit in the lease whenever that rate is readily determinable;
if such rate is not readily determinable, then the incremental borrowing
rate". Impact to the Rockwood financial statements has not yet been determined
but is not expected to be material. For reference, as of 31 December 2023, ROU
finance lease liability was $29.2 million and ROU operating lease liability is
$24.7 million. Finance lease expenses were $11.3 million in FY23, and
operating lease expenses were $12.1 million in FY23.

·      Accounting for intangible assets: As a private company, Rockwood
uses qualitative assessment approach to evaluate goodwill impairment. Under
PCAOB standards, Admiral will be required to reassess historical goodwill
impairment applying both qualitative and quantitative considerations. This
revised historical assessment approach is not expected to result in material
changes to the financial statements however Admiral has not yet performed any
procedures in this area.  Importantly, this historical assessment does not
impact the value of the current business or the expected goodwill amounts
reflecting Admiral's purchase of Rockwood.

10 July 2024

 

 

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