Aecon Group Inc. has entered into a definitive asset purchase agreement with North American Construction Group Inc. under which Aecon has agreed to sell to NACG substantially all of the assets related to Aecon's Contract Mining business for $199.1 million in cash.
Aecon's Contract Mining business provides overburden removal and environmental reclamation services through a dedicated fleet of earth-moving equipment, primarily in the oil sands in Fort McMurray, Alberta.
"Aecon is executing on a record level of backlog and pursuing an unprecedented number of opportunities across our Infrastructure and Industrial segments," said Jean-Louis Servranckx, President and CEO of Aecon. "The capital intensive Contract Mining business is outside Aecon's core construction activities and focus. This transaction is consistent with Aecon's drive to maintain and strengthen our balance sheet flexibility, which is key to the strong growth trajectory we are seeing in our core business."
Upon signing the asset purchase agreement, NACG paid Aecon a $10 million deposit, which will be applied to the purchase price if the transaction closes as contemplated. The balance of the price will be paid in four instalments, with the first instalment of $153.6 million due at closing and the following three instalments of $11.8 million each being paid six, twelve and eighteen months following closing, secured by a charge over certain assets that are the subject of the transaction. The deferred payments are not subject to conditions.
If the sale transaction is not completed due to a default by NACG of its obligations under the agreement, the deposit will be retained by Aecon.
Aecon will continue to operate its Contract Mining business, with no disruption to its clients or employees, in the normal course pending closing of the sale transaction.