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Heckmann Corporation And Power Fuels To Merge Creating A Leading Environmental Services Company Focused On Energy And Industrial End-Markets

Heckmann Corporation (NYSE: HEK) (the “Company”) today announced that it has entered into a definitive agreement (“the Agreement”) with Mark Johnsrud, founder and owner of Badlands Energy, LLC, a North Dakota limited liability company doing business as Power Fuels (“Power Fuels”), to merge with Power Fuels, a privately held North Dakota-based environmental services provider focused on the transportation, treatment, recycling, and disposal of fluids at Power Fuels’ sites. Power Fuels is the largest environmental services company in the Bakken Shale basin, a premier unconventional oil shale. The business combination accelerates Heckmann’s strategy of providing a one-stop-shop for comprehensive environmental solutions. The merger is expected to be highly accretive to Heckmann’s earnings per share and is expected to close in the fourth quarter of 2012. The Agreement, and completion of the merger, is subject to customary regulatory approvals, such as filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and customary closing conditions including the approval of Heckmann’s stockholders, which is required under NYSE listing standards to issue shares in connection with this transaction.

Through June 30, 2012, Power Fuels generated trailing 12-month revenues of approximately $363.5 million and trailing 12-month adjusted EBITDA of approximately $154.7 million 4. Under terms of the Agreement, Heckmann plans to pay $125.0 million in cash and 95.0 million shares of the Company’s common stock 5, subject to, among other things, a two-year lockup agreement and a two-year standstill agreement. Heckmann will also assume/refinance approximately $150 million in Power Fuels’ debt. The Company is in discussions with its current lending group to expand the size of its credit facility to accommodate the transaction.

The transaction significantly expands Heckmann’s total environmental solutions operations. The business combination is expected to double Heckmann’s annual revenue, extend its geographic reach and broaden Heckmann’s customer base. The combined Company will continue to expand its environmental service offering by leveraging the respective strengths of each organization, including the recently acquired Thermo Fluids Inc. business with its environmental recycling expertise. The combination is expected to create value for the stockholders through:
  • Immediately and materially increasing earnings per share;
  • Providing immediate access to the fast growing and oil-focused Bakken Shale area and expanding the Company’s leverage to oil – on a pro-forma combined basis, over 70% of current shale-related revenues are derived from oil and liquids basins;
  • Continuing to expand the recurring-revenue base of the Company;
  • Establishing an industry-leading management team by combining the Power Fuels team and their extensive operating expertise with the existing Heckmann team;
  • Creating a Company with a leading presence and nationwide customer support network in all major shale areas including the Bakken, Haynesville, Marcellus, Eagle Ford, Permian and Utica;
  • Leveraging complementary and significant operating and tax benefits; and,
  • Providing additional cash flow generation to support future growth.

On a pro-forma basis, after giving effect to the cash and refinanced debt of the transaction, the combined Company’s leverage ratio would have been reduced to approximately 2.6 times trailing 12-month adjusted EBITDA as of June 30, 2012.

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