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Strongco to Reallocate Capital from Real Estate Holdings

May 21, 2014
By

Proceeds of $47 Million will be Redeployed to Reduce Debt

TSX Symbol: SQP

MISSISSAUGA, ON, May 20, 2014 /CNW/ – Strongco Corporation (TSX:SQP.TO – News) announced today its plans to monetize several real estate
holdings through sale and leaseback transactions, in line with the
company’s strategy of not committing capital to real estate assets over
the long term. The anticipated gross proceeds from these transactions
will be approximately $47 million, which will be used by Strongco to
reduce debt.

The proposed transactions involve three different purchasers and five
properties. Separate Purchase and Sale agreements have been signed for
the two recently constructed branches in Fort McMurray, Alberta and
Saint Augustin-de-Desmaures, Quebec. The Quebec agreement also includes
branches in Val D’Or and Moncton, New Brunswick. A Letter of Intent
with a third purchaser has been agreed to for the sale and leaseback of
Strongco’s main branch and head office in Mississauga, Ontario. All
proposed transactions are subject to due diligence and normal
commercial conditions. It is anticipated that the Fort McMurray and the
Mississauga transactions may be completed by June 30 and the remaining
transaction by July 31, 2014.

“As with the sale and leaseback of our Acheson, Alberta facility last
year, it has always been our strategic intent to sell the new branches
we built and not tie up capital in real estate,” said Bob Dryburgh,
President and Chief Executive Officer of Strongco. “With respect to the
other existing branches, market values have increased substantially and
we believe this is an opportune time to crystallize those gains and
deploy the capital more efficiently in the business.”

The properties in Mississauga, Val D’Or and Moncton have been owned by
Strongco for some time, and the current market value of these
properties substantially exceeds the carrying value. An overall profit
of approximately $9 million, before taxes, is anticipated.

“A key focus for management is to improve Strongco’s debt by reducing
operating inventory levels,” added Dryburgh. “The real estate
transactions announced today further management’s goal to strengthen
the company’s balance sheet and efficiently deploy capital.”

About Strongco Corporation

Strongco Corporation is a major multiline mobile equipment dealer with
operations across Canada and in the United States, operating through
Chadwick-BaRoss, Inc. Strongco sells, rents and services equipment used
in diverse sectors such as construction, infrastructure, mining, oil
and gas, utilities, municipalities, waste management and forestry. The
Company has approximately 750 employees serving customers from 27
branches in Canada and five in the United States. Strongco represents
leading equipment manufacturers with globally recognized brands,
including Volvo Construction Equipment, Case Construction, Manitowoc
Crane, including National and Grove, Terex Cedarapids, Terex Finlay,
Ponsse, Fassi, Allied Construction, Taylor, ESCO, Dressta, Sennebogen,
Jekko, Takeuchi, Link-Belt and Kawasaki. Strongco is listed on the
Toronto Stock Exchange under the symbol SQP.

Forward-Looking Statements

This news release contains “forward-looking” statements within the
meaning of applicable securities legislation which involve known and
unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of Strongco or industry
results, to be materially different from any future results, events,
expectations, performance or achievements expressed or implied by such
forward-looking statements. All such forward-looking statements are
made pursuant to the “safe harbour” provisions of applicable Canadian
securities legislation. Forward-looking statements typically contain
words or phrases such as “may”, “outlook”, “objective”, “intend”,
“estimate”, “anticipate”, “should”, “could”, “would”, “will”, “expect”,
“believe”, “plan” and other similar terminology suggesting future
outcomes or events. This news release contains forward-looking
statements relating to the expected trading of common shares of
Strongco on the TSX, and such statements are based upon the
expectations of management.

SOURCE Strongco Corporation

Article source: http://ca.finance.yahoo.com/news/strongco-reallocate-capital-real-estate-210500737.html

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