Thermon to Acquire CCI Thermal Technologies for CAD $258 Million

10/4/17

EDMONTON, Alberta, Oct. 04, 2017 (GLOBE NEWSWIRE) -- Thermon Group Holdings, Inc. (NYSE:THR) announced the execution of a definitive agreement to acquire 100% of the equity interests of CCI Thermal Technologies Inc. and certain related real estate assets in an all-cash transaction valued at CAD $258 million.

CCI is a leader in the development and production of engineered heating and filtration solutions for industrial and hazardous area applications. CCI markets its products through several diverse brands known for high quality, safety and reliability, and serves clients in the energy, petrochemical, electrical distribution, power, transit and industrial end markets globally.

The acquisition of CCI supports Thermon’s vision to be the world’s leader in industrial process heating solutions by diversifying its product portfolio and end market exposure. The acquisition will also strengthen Thermon’s financial profile and provide a platform for future growth and consolidation in an adjacent, fragmented $800 million market. The current management team, led by President Bernie Moore, will continue to operate CCI from its Edmonton, Alberta headquarters, building upon its track record of profitability and growth.

Bruce Thames, President and Chief Executive Officer of Thermon said: “Thermon’s growth strategy is based, in part, on highly-complementary acquisitions that contribute proven technologies, products, enhanced scale and access to attractive new end-markets. These durable attributes make CCI an ideal strategic and financial fit and will greatly enhance the value Thermon is able to bring to its customer base. CCI is a well-run company that significantly expands our addressable market. Together with CCI’s management team, we will continue to prudently build the company for sustained growth and profitability. Strong cash flows generated by the combined company will create the financial strength to comfortably operate the business and enable de-levering of the balance sheet going forward. We believe this transaction will differentiate Thermon in the marketplace and deliver clear, long-term financial benefits for our shareholders.”

Harold Roozen, Executive Chairman of CCI added, “We believe that Thermon is the perfect partner to help us build on our strong brands and long-standing customer relationships. The opportunity to leverage Thermon’s global footprint to expand CCI’s business into new geographies is exciting. The combination of the two companies will truly create a world leader in process heating solutions.”

Ciscan Industries was founded in 1964 in Edmonton, Alberta and formed CCI Thermal Technologies Inc. following the acquisition of DriQuik in 2000. CCI’s current management team has been involved with the business since 1992. CCI has approximately 375 employees that support manufacturing and fabrication at five facilities in Canada and the United States. For its fiscal year ended July 31, 2017, CCI generated approximately CAD $95 million in total revenue, net income of CAD $15.9 million and Adjusted EBITDA of CAD $22.5 million, after adjusting for certain payments to related parties and other expenses that are not anticipated to continue after closing.

Transaction Details and Financing

Under the terms of the agreement and plan of merger, Thermon has formed an acquisition subsidiary that will acquire CCI and certain related real estate assets for CAD $258 million, which will be financed with cash on hand as well as a new senior secured debt facility. Thermon expects to realize annualized run-rate cost synergies of approximately CAD $2.4 million during the fiscal year ending March 31, 2019 (“Fiscal 2019”). One-time transaction related costs during the fiscal year ending March 31, 2018 are estimated to be approximately USD $5.5 million, excluding financing fees. At closing, we expect net leverage to be approximately 3.4x. The acquisition is expected to be accretive to operating margins, free cash flow and GAAP EPS in Fiscal 2019.

Financing for the transaction has been committed by JP Morgan Chase Bank, N.A. The new debt will be structured as a senior secured term loan facility of USD $250 million, and will also include a senior secured revolving credit facility of USD $60 million. Proceeds of the term loan facility will be used to fund the acquisition, certain fees and expenses associated with the transaction, and to repay Thermon’s existing term loan.

Wells Fargo Securities acted as exclusive financial advisor to Thermon in connection with the transaction. Deloitte Corporate Finance Inc. acted as exclusive financial advisor to CCI.

AboutCCI Thermal Technologies

CCI is a worldwide leader in development and production of advanced heating and filtration solutions for industrial and hazardous area applications. CCI’s business to date has been focused on serving customers’ heating and filtration solutions for industrial and hazardous area applications primarily in North America. CCI is headquartered in Edmonton, Alberta, Canada with five fabrication facilities in North America. For more information, please visit www.ccithermal.com.

AboutThermon

Through its global network, Thermon provides highly engineered thermal solutions, known as heat tracing, for process industries, including energy, chemical processing and power generation. Thermon's products provide an external heat source to pipes, vessels and instruments for the purposes of freeze protection, temperature maintenance, environmental monitoring and surface snow and ice melting. Thermon is headquartered in San Marcos, Texas. For more information, please visit www.thermon.com.

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