September 25, 2012 - Calgary, Alberta, Ridgeline Energy Services Inc. ("Ridgeline" or the "Company") (TSXV: RLE, OTCQX: RGDEF, FSE: RL7) an energy services and water treatment company, today announced it has exercised its option to purchase the Santa Fe Springs property.
The Lease and Option to Purchase Agreement (LOPA) with Lakeland Development Company (Lakeland) was previously announced in April 2012, along with the execution of an Asset Purchase Agreement (APA). It is expected that Ridgeline will close the LOPA concurrent with the closing of the APA. Ridgeline has been operating and conducting business under a lease and a management agreement at Santa Fe Springs since April 2012.
The Santa Fe Springs property is a 17 acre parcel of industrially zoned real estate centrally located in the Los Angeles basin. It is ideally located to serve businesses within the southern California market and is also located in close proximity to all three major highways. The Santa Fe Springs facility has an annual conditional use permit from the City of Santa Fe Springs that allows it to accept and processes non-hazardous waste water from commercial and industrial customers in the Los Angeles market. The Santa Fe Springs facility maintains one of the largest discharge permits among service providers supporting the Los Angeles County Sanitation District ("LACSD").
The location of the site, coupled with the existing water discharge permit, has allowed Ridgeline to build a multi-million dollar production facility utilizing its proprietary water treatment technology. Ridgeline currently has one operating water treatment installation in operation and a second system ready to commence treatment, with three more systems in various stages of construction. The Company plans a total of eight to nine systems to be installed on its Santa Fe Springs property over the next 6-9 months.
The LOPA has been amended to allow Ridgeline to acquire the property for a combination of stock and cash. The Bankruptcy Court in Lakeland’s Chapter 11 Bankruptcy has authorized Lakeland to assume the agreement as amended. The full purchase price is $13 million as per the announced agreement in April 2012. However, the amount due upon closing has been reduced by approximately $2.8 million and allows for deferred payments of the balance over 15 to 18 months.
Additional, amendments to the LOPA are outlined as follows;
Stock will be issued at a minimum price of $0.70 per share and priced over a 15 month term from the close of the Agreement. The maximum amount of stock to be issued will be capped at 9.9 million shares. Ridgeline anticipates that the total number of shares will be further reduced from this number. The stock will be released to Lakeland over a period of 15 months after the closing of the transaction.
Credit for Ridgeline payments made to date of $500,000.
Ridgeline will assume liabilities for Lakeland (up to $3.0 million). Payment has been deferred for 15 months from closing further reducing the amount of cash required at closing.
Ridgeline will be immediately awarded a $5 million soil remediation contract for the remediation of site conditions. The contract will be assigned to Ridgeline’s Environmental and Greenfill divisions. The contract is secured by an insurance settlement and a portion of the stock purchase price held in escrow.
Ridgeline will also treat certain water and fluids required to be remediated under a Los Angeles County approved plan, which will further reduce Ridgeline’s near-term cash requirements.
The net result of these changes is that Ridgeline will pay $2.6 million of upfront cash on closing, as originally planned, with the balance either paid in stock or cash over a deferred 15- 18 months period.
There are several benefits to Ridgeline for exercising the purchase option at this time:
Ridgeline will secure the Santa Fe Springs water treatment business, which has grown to over $500,000 of sales per month since April of this year, and is expected to continue to growing rapidly.
It secures Ridgeline’s offering of superior waste water and solids treatment to more than 150 oil and gas, and industrial customers, as well as the Company’s future customers in southern California.
It will add a valuable and substantial real estate asset to the Company’s balance sheet, which can be leveraged for less dilutive expansion capital as needed.
The use of stock issued over time and deferred payment for part of the purchase price greatly reduces the upfront cost, while realizing immediate cash flow from these operations.
Tony Ker, CEO of Ridgeline, stated, “The rapid revenue growth and significant potential we see at this site as we increased throughput, warranted immediate action to secure the property. We are extremely pleased with the terms we secured for this property and believe this transaction will not only accelerate our growth and profitability, but will serve as a model we can easily replicate at similar facilities around the country. Since our initial agreement in April of 2012, we have increased monthly revenue on an annualized basis from $2.7 million to over $6.9 million, which we plan to expand further as we add additional treatment systems utilizing our water treatment technologies.”
About Ridgeline Energy Services Inc.
Ridgeline Energy Services Inc. is an energy services and water treatment company. The Company is applying proprietary technology to treat water generated from industrial and commercial waste water markets. These markets include a wide variety of clients across a broad spectrum of industries including oil and gas. Through its environmental consulting and remediation divisions, Ridgeline Environment has built a reputation as an established provider of environmental services to the Western Canadian oil and gas industry. Ridgeline GreenFill provides soil remediation and wet waste disposal services to the oil and gas industry. The Company trades on the TSX Venture Exchange under the symbol “RLE”, the OTCQX as “RGDEF” and the Frankfurt Stock Exchange as “RL7”.
Additional information is available on the Company’s website at: www.ridgelinecanada.com.
Ridgeline
Re: Ridgeline
I've never been more bullish on this stock than I am right here right now. I know it seems kinda silly given where the stock price is but as we all know there are plenty of times when the prices of these penny stocks don't accurately reflect the underlying company's value. In retrospect the stock got way overvalued back in March, but now it has overcorrected to the downside IMO.
3 weeks ago they said they had the 2nd water treatment unit at Santa Fe Springs "ready to commence treatment", so I'm expecting to see news of that one coming on line any day now. Also, from a transactional standpoint, I would think they might even be in a position to close on the property acquisition there by this point. Getting that other small acquisition (Piedmont) out of the way so fast has cleared the decks to allow them to work on this other bigger and more important one. The key to getting this property acquisition done is that it sets them up for some sort of debt-flavored financing, if not straight debt in the form of project finance then maybe convertible debt.
One of the better recent analyst reports that has come out on this company is the Haywood Securities report that came out on 10/2, upload it here, Ridgeline Energy Services (RLE.V) -- Haywood Initiation 10-2-12 *** . They have rated the stock "Sector Outperform" with a PT of $1, just about a double from the current quote. They're calling for $53M in revenues in Ridgeline's next fiscal year (i.e. FY ending 3/14, and with projected EPS of $.03 that puts the stock at a mere 17x next year's earnings, a ridiculously low multiple for a company with such a great growth profile.
With the stock just a hair off its 52-week low I would not blame you a bit if you held off buying it at this point. But you may want to put it on your radar screen and keep on the lookout for an ops update, and have some dry powder ready if they have some good news. There are a huge amount of people that are looking at this stock right now, and if good news comes out it would not take long for the stock to come roaring right back up to prior levels IMO.
*** If above hyperlink doesn't work go to same post at http://www.siliconinvestor.com/readmsg. ... d=28480638 , it should work there.
3 weeks ago they said they had the 2nd water treatment unit at Santa Fe Springs "ready to commence treatment", so I'm expecting to see news of that one coming on line any day now. Also, from a transactional standpoint, I would think they might even be in a position to close on the property acquisition there by this point. Getting that other small acquisition (Piedmont) out of the way so fast has cleared the decks to allow them to work on this other bigger and more important one. The key to getting this property acquisition done is that it sets them up for some sort of debt-flavored financing, if not straight debt in the form of project finance then maybe convertible debt.
One of the better recent analyst reports that has come out on this company is the Haywood Securities report that came out on 10/2, upload it here, Ridgeline Energy Services (RLE.V) -- Haywood Initiation 10-2-12 *** . They have rated the stock "Sector Outperform" with a PT of $1, just about a double from the current quote. They're calling for $53M in revenues in Ridgeline's next fiscal year (i.e. FY ending 3/14, and with projected EPS of $.03 that puts the stock at a mere 17x next year's earnings, a ridiculously low multiple for a company with such a great growth profile.
With the stock just a hair off its 52-week low I would not blame you a bit if you held off buying it at this point. But you may want to put it on your radar screen and keep on the lookout for an ops update, and have some dry powder ready if they have some good news. There are a huge amount of people that are looking at this stock right now, and if good news comes out it would not take long for the stock to come roaring right back up to prior levels IMO.
*** If above hyperlink doesn't work go to same post at http://www.siliconinvestor.com/readmsg. ... d=28480638 , it should work there.