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General Finance Corporation Expands North American Leasing Operations With Strategic Acquisition Of Portable Liquid Storage Tank Container Assets

Stocks in this article: GFN

PASADENA, Calif., March 3, 2014 (GLOBE NEWSWIRE) -- General Finance Corporation (Nasdaq:GFN), the parent company of businesses in the mobile storage, modular space and liquid containment industries (the "Company"), today announced that it has entered into a definitive agreement to acquire substantially all the assets and assume certain liabilities of the affiliated companies, Lone Star Tank Rental LP, based in Kermit, Texas, and KHM Rentals, LLC, based in Kenedy, Texas, (collectively "Lone Star") for a total purchase consideration of $95 million, subject to certain working capital and other adjustments to be determined after the closing date.

Lone Star leases portable liquid storage tank containers and containment products, as well as provides certain fluid management services, to the oil and gas industry in the Permian and Eagle Ford basins of Texas through a fleet of more than 1,200 units. Unaudited revenues for Lone Star for the year ended December 31, 2013 totaled $45 million.

"This business combination creates an exciting opportunity for us," said Ronald F. Valenta, Chief Executive Officer of General Finance Corporation. "Lone Star is led by an experienced and motivated management team and will be a strong fit with our North American leasing operations, enabling us to expand our level of services to our portable liquid storage tank container customers and further bolster our presence in the oil and gas industry. We believe this acquisition will position us to capitalize on the growth opportunities in our country's key energy producing regions across Texas and to strengthen our capacity for increased revenue growth, profitability, and attractive shareholder returns."

The purchase price multiple is approximately 5.8 times Lone Star's adjusted EBITDA (earnings before interest, income taxes, depreciation and amortization) for the year ended December 31, 2013. Of the total purchase consideration, the sellers will receive $75 million in cash, $10 million in shares of the Company's common stock (the amount of which will based on the average of the closing per share market price during the 15-day trading period ending three days prior to the closing date of the transaction), $5 million payable over five years for a non-compete agreement, and $5 million payable over two years for a general indemnity holdback. The Company expects that the cash portion of the consideration payable at closing will be satisfied by $10 million from existing cash resources, $40 million from availability under an amended and expanded North American senior credit facility, which is currently at Pac-Van, and $25 million at the corporate level from a two-year secured term loan. 

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