I believe MDI announced the following acquistion after the market closed. We can expect a nice rebound tomorrow in the price. Upon the first look, the acquisition seems a good deal. According to my rough calculations, EPS should increase about $.20 on the yearly basis. It shouldn't be a surprise if the stock price goes up by about $2 tomorrow.
Happy investing!
Weifeng
Attention News/Business Editors: MAJOR DRILLING ACQUIRES MIDWEST
DRILLING MONCTON, N.B., Nov. 18 /CNW/ - Major Drilling Group International
Inc. (''Major'') (TSE-MDI) is pleased to announce that it has entered into an agreement
to purchase 100% of all issued and outstanding shares of the company carrying on
business under the names Midwest Drilling, Wescore Drilling and R.M. McIsaac Drilling
(collectively called ''Midwest''). Midwest is a privately held mineral exploration drilling
company conducting business in the Provinces of Manitoba, Saskatchewan and Ontario,
the Northwest Territories, Greenland and Portugal. The purchase is scheduled for
completion on or about December 15, 1997. The transaction is subject to certain
conditions, including regulatory approval and the completion of due diligence satisfactory
to Major. Midwest is one of the largest drilling companies in Canada, currently
maintaining a fleet of 117 drills (80 surface, 37 underground) together with support
equipment. Revenues from drilling operations for Midwest for the fiscal years ended
December 31, 1995 and 1996, and for the nine-month period ended September 30,
1997 were $31M, $39M and $34M respectively. EBITDA for the ongoing business for
the same periods was $1.5M, $3.0M (both 1995 and 1996 show EBITDA before
payment of any remuneration to the representative of Midwest's principal shareholder)
and $3.2M respectively. This information is based on audited financial statements of the
Company for the 1995 and 1996 fiscal years and unaudited interim statements for the
period ended September 30, 1997. The purchase price for the transaction is
$12,000,000 dollars, which will be funded from cash currently on hand and so will be
non-dilutive to shareholders. This acquisition provides Major with access to opportunities
in Central Canada as well as Greenland and Portugal. Ronald J. Goguen, President and
CEO of Major, stated: ''We consider Midwest to be a very strategic acquisition for
Major, completing our coverage of all geographic areas of Canada, and additionally
giving us access to new opportunities internationally. The additional personnel and
equipment will also assist with our ongoing expansion.'' Major is based in Moncton, New
Brunswick and currently has drilling operations throughout North, South, and Central
America, as well as in Turkey, Australia, Ghana and Indonesia. Its core business segment
is mineral exploration drilling world wide. Major also conducts environmental and
geotechnical drilling in the United States, and manufactures drills and support equipment
through Universal Drilling Systems (UDR), a subsidiary of Mining World Limited. -0-
11/18/97 For further information: James Gibson, Corporate Secretary, 111 Saint George
St., Moncton, N.B., E1C 1T7; Tel: (506) 857-8636, Fax: (506) 857-9211
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