QE2 SlideDeck Jan 2014 Web
Corporate Presenta,on January 2015
TSX.V: QE
www.qe2corp.com
READER’S ADVISORY •
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This corporate presenta,on (the “Presenta,on”) has been prepared by management of QE2 Acquisi,on Corp. (the “Corpora,on”) based on public informa,on and the Corpora,on’s confiden,al informa,on. This Presenta,on is for informa,on purposes only and is being made available on a confiden,al basis solely to enable the prospec,ve investor to evaluate the securi,es of the Corpora,on (the “Securi,es”). This Presenta,on does not cons,tute an offer to sell to any person, or a general offer to the public of, or the general solicita,on from the public of offers to subscribe or purchase, any of the Securi,es. Any unauthorized use of this Presenta,on is strictly prohibited. Distribu,on or copying of this Presenta,on, in whole or in part in any medium, to any person other than the prospec,ve investor is prohibited without the prior wriSen consent of the Corpora,on. The informa,on contained in these slides, the Presenta,on made to you verbally and any other informa,on provided to you (in wri,ng or otherwise) in connec,on with the Corpora,on and its business (the “Presenta,on Materials”) is subject to upda,ng, comple,on, revision, verifica,on and amendment without no,ce which may result in material changes. The Presenta,on Materials are not intended to provide financial, tax, legal or accoun,ng advice and do not purport to contain all the informa,on that a prospec,ve investor may require. Each prospec,ve investor should perform and rely on its own inves,ga,on and analysis of the Corpora,on and the terms of any offering of the Securi,es, including the merits and risks involved, and are advised to seek their own professional advice on the legal, financial and taxa,on consequences of making an investment in the Corpora,on. No securi,es commission or similar regulatory authority in Canada has reviewed or in any way passed upon this presenta,on, and any representa,on to the contrary is an offence. Neither the Corpora,on nor the agent of the Corpora,on makes any representa,on or warranty, express or implied, and assumes no responsibility for the accuracy or completeness of the informa,on contained in this Presenta,on or any other oral or wriSen communica,on transmiSed to prospec,ve investors, and nothing contained in this summary is, or shall be relied upon as, a promise or representa,on by the Corpora,on or the agent of the Corpora,on as to the past or future performance of the Corpora,on. The Corpora,on does not undertake to provide any addi,onal further informa,on or to enter into nego,a,ons regarding the investment opportunity to which these Presenta,on Materials relate. The Corpora,on retains the right, at any ,me, to terminate any discussions or nego,a,ons with prospec,ve investors. In the event of such termina,on the Corpora,on will not be under any obliga,on to disclose the reasons for such termina,on nor will they have any liability to any recipient hereof for any costs whatsoever incurred in the considera,on of the informa,on contained in these Presenta,on Materials.
QE2 Acquisi,on Corp.
www.qe2corp.com
2
FORWARD-‐LOOKING INFORMATION •
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Certain statements contained in this Presenta,on are forward looking statements. These forward looking statements are not based on historical facts but rather on the expecta,ons of management of the Corpora,on regarding the resul,ng company's future performance. All statements, other than statements of historical fact, may be forward looking statements. Forward looking statements are o]en, but not always, iden,fied by the use of words such as “seek”, “an,cipate”, “plan”, “con,nue”, “es,mate”, “expect”, “may”, “will”, “project”, “predict”, “propose”, “poten,al”, “targe,ng”, “intend”, “could”, “might”, “should”, “believe” and similar expressions. Although the Corpora,on believes in light of the experience of its officers and directors, current condi,ons and expected future developments and other factors that have been considered appropriate that the expecta,ons reflected in this forward-‐looking informa,on are reasonable, undue reliance should not be placed on them because the Corpora,on can give no assurance that they will prove to be correct, and actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-‐looking statements. Forward-‐looking statements contained in this Presenta,on include, but are not limited to, statements with respect to the Corpora,on's business strategy, the market in which the Corpora,on operates; the ability of the Corpora,on to successfully integrate businesses; the ,ming and nature of equity offerings to be completed by the Corpora,on; the Corpora,on's poten,al revenue; the ability of the Corpora,on to successfully complete mergers and acquisi,ons; the ability of the Corpora,on to realize on the poten,al of target companies; and other expecta,ons, beliefs, plans, objec,ves, assump,ons, inten,ons or statements about future events or performance. Forward-‐looking statements contained in this Presenta,on reflect the current beliefs and assump,ons of the Corpora,on's management based on informa,on in its possession as of the date of this Presenta,on. Readers are cau,oned that the foregoing list is not exhaus,ve. The forward‑looking statements contained herein are expressly qualified in their en,rety by this cau,onary statement. The forward‑looking statements included in this presenta,on are made as of the date of this presenta,on and the Corpora,on does not undertake and is not obligated to publicly update such forward‑looking statements to reflect new informa,on, subsequent events or otherwise unless so required by applicable securi,es laws.
QE2 Acquisi,on Corp.
www.qe2corp.com
3
Table of Contents OUR FOCUS AND OBJECTIVE INVESTMENT HIGHLIGHTS ABOUT US •
Leadership Team
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Capitalizing on Canada’s Growth
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Infrastructure Growth at Provincial Level
PORTFOLIO COMPANIES • Pillar Contrac,ng Ltd. •
Candesto Enterprises Ltd.
FINANCIAL HIGHLIGHTS • QE2 Projec,ons •
Capital Structure and Valua,on
•
Term Sheet
WHY INVEST IN QE2 • QE2 Business Strategy Contact Informa,on Biographies Disclaimers Acquisi,on Corp. QE2 www.qe2corp.com
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Our Focus & ObjecDve
We acquire Infrastructure and U,lity Service companies that keep Canada growing. We are focused on a niche of SMEs that are capitalizing on the Infrastructure requirements across Canada. Over the next 10 years (2014-‐2024) the Government of Canada plans to invest $70 billion for public infrastructure, including the $53-‐billion “New Building Canada Plan” for provincial, territorial and municipal infrastructure.
Focused on growing revenues to $100MM by 2018 EsDmated Annual Revenues ($ millions) $125 $100 $75 $50 $25 $0 2013
2014
Strong proven Management team
2015
Ac,ve Board of Directors
2016 Strong Corporate Governance
2017
2018 Aggressive M&A strategy
Source: Infrastructure Canada
QE2 Acquisi,on Corp.
www.qe2corp.com
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Investment Highlights A Unique Strategy in a Unique Market
ü QE2 Acquisi,on Corp. (“QE2”) was founded to take advantage of Canada’s booming economy through a unique strategy of aggrega,ng infrastructure and u,lity service companies at compelling valua,ons ü Retaining key management ensures business con,nuity while QE2 brings breadth of growth avenues ü Investors receive exposure to infrastructure-‐focused companies that have proved resilient across a wide spectrum of market condi,ons
History of Strong Returns and Growing Cash Flow
ü Our current and future acquisi,on targets have a track-‐record of boSom line growth
Consistency in Customer Base
ü QE2 focuses on acquiring businesses that are largely independent of oil and gas fluctua,ons ü Our clients are municipali,es, major u,lity companies and construc,on companies that primarily depend on general economic and popula,on growth rather than cyclical factors
Growing Through Focused AcquisiDons
• Porqolio companies Pillar Contrac,ng and Candesto Enterprises have been providing infrastructure services in Alberta for the last 16 – 20 years; management is keen to con,nue building upon this success
ü QE2 is designed to build upon this established growth through broader connec,ons across Canada
ü The strategy of QE2 is to move quickly on strategic acquisi,ons that are complimentary to the porqolio ü Target purchase price of 2-‐3x EV/EBITDA translates to a significant mul,ple li] in the public markets ü Minimize equity dilu,on through a balanced leverage strategy ü Currently evalua,ng mul,ple acquisi,on opportuni,es
QE2 Acquisi,on Corp.
www.qe2corp.com
6
Leadership Team Management Mihali (Mike) Belan-s CEO and Director1
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Over 15 years of experience iden,fying aSrac,ve investment opportuni,es and inves,ng and consul,ng for both private and public companies Played an instrumental role in laying the founda,on for many successful startups Most recent startup has grown to a market capitaliza,on of over $300 mm
Ben Leung, CA, CFO
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Chartered Accountant with over 20 years of financial accoun,ng and management experience in both public prac,ce and private industry
Brent Buhler, Vice President of Finance
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Co-‐founder and principal of Cambio Merchant Capital, Calgary Over 15 years covering all aspects of mergers and acquisi,ons work and sourcing growth capital for small-‐medium enterprises
Mihali (Mike) Belan-s1,2
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Chair of the Board; see above for more info.
Joe Gagliardi, FCMA1,2,3
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Founder of a successful Alberta-‐based recrui,ng firm Prior thereto a senior accoun,ng professional with both private and public companies
Maria Nathanail, LLB1,3
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Company Secretary; Associate at Burstall Winger Zammit, LLP
Board of Directors
1. Compensa5on Commi7ee 2. Audit Commi7ee 3. Governance Commi7ee
QE2 Acquisi,on Corp.
www.qe2corp.com
7
Capitalizing on Canada’s Growth
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World-‐class infrastructure is the backbone of our country's economic produc,vity.
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Our Government is commiSed to inves,ng in Canada's infrastructure to reduce commu,ng ,mes for families, enhance economic compe,,veness, encourage job crea,on and strengthen trade corridors.
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Housing, transporta,on, u,li,es and construc,on investment requirements has l a i d a s t r o n g f o u n d a , o n f o r t h e infrastructure-‐focused business of QE2
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$70 billion for public infrastructure, including $53 billion “New Building Canada Plan” will support projects of na,onal, regional and local significance that promote economic growth, job crea,on and produc,vity.
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The federal government works with provinces, territories, municipali,es and the private sector to provide funds to economically-‐ focused projects.
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With a P3 Screen for projects of over $100 million in eligible costs, our Government is ensuring that large infrastructure projects are delivered in the most cost-‐effec,ve way. Government of Canada Infrastructure Alloca,on – (2014-‐2019) ($ billions)
Source: Infrastructure Canada
QE2 Acquisi,on Corp.
www.qe2corp.com
8
Infrastructure Growth at Provincial Level Provincial Infrastructure Spend Expected to be Strong
BriDsh Columbia In Budget 2014, capital spending on infrastructure projects expected to total $17.7 billion over 3 years
Quebec The 2013-‐2023 Québec Infrastructure Plan proposes $92.3 billion in spending affec,ng every sector of ac,vity
Alberta Government of Alberta will invest $19.2 billion in public infrastructure over 3 years Saskatchewan Plans to spend $2.5 billion on infrastructure over next 3 years
Ontario Ontario plans to invest more than $130 billion in public infrastructure over the next 10 years. This will support more than 110,000 jobs on average each year in construc,on and related industries.
Manitoba Recently unveiled 5 year, $5.5 billion Infrastructure Plan
Serving municipaliDes and large construcDon companies, QE2 will gain full exposure to the infrastructure and uDlity service requirements in Canada Source: Infrastructure Canada and Provincial Budgets
QE2 Acquisi,on Corp.
www.qe2corp.com
9
QE2 Business Strategy QE2 Overview
Current Clients
QE2’s strategy is to acquire infrastructure-‐focused service providers in Canada and improve their performance through superior opera,ons management and business plan execu,on • QE2 has already completed two private company acquisi,ons: Pillar Contrac,ng and Candesto Enterprises •
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Pillar Contrac,ng has been providing street light installa,on and post pain,ng services in Alberta for the last 16 years
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Candesto Enterprises has been providing street sign and guardrail installa,on in Alberta for the last 20 years
QE2 focuses on opera,ons across Canada •
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Through its two ini,al acquisi,ons, QE2 has already gained a substan,al client base
The company has iden,fied several high impact acquisi,ons to add to the exis,ng porqolio
FoundaDon for Future Growth Future AcquisiDons
AcquisiDon Criteria •
Target acquisi,on mul,ples of 2.0-‐3.0x EV/EBITDA
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Management team in place and willing to stay for the transi,on period or longer
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Established client base and a history of successful opera,ons Businesses with healthy margins and low or no debt QE2 Acquisi,on Corp.
MoDvated Management Team
www.qe2corp.com
AcDve Board of Directors
Strong Corporate Governance
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Por^olio Company Overviews: Pillar Contrac-ng
Overview
• Pillar Contrac,ng was acquired by QE2 in October 2013 • Primary services include: •
Street light bulb replacement and post pain,ng
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Safety tes,ng for street light integrity
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Traffic lights maintenance
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Flagging services and other
• 16 year history of success and growth •
Founder agreed to con,nue to operate the business a]er the sale
• Strong customer base includes major u,lity companies and municipali,es in Alberta and Saskatchewan • Poten,al expansion opportunity into private sector with a focus on parking lots, transmission boxes, cable boxes, oversized loads and other • Recurring revenue streams through service and maintenance • Ability to expand into Saskatchewan and Manitoba
QE2 Acquisi,on Corp.
www.qe2corp.com
11
Por^olio Company Overviews: Candesto Enterprises
Overview
• Candesto Enterprises was acquired in April 2014 •
2013 EBITDA of $1.5 mm
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Implied EV/EBITDA of 1.8x
• Primary services include: • •
Assembly and installa,on of highway signs Guardrail and miscellaneous fencing installa,on
• Successful opera,ng history of over 20 years with founder willing to stay for another five years •
Management expects consistent margins and opera,ng performance in the future
• Customer base includes municipali,es and general contractors • Given Candesto’s experience and efficiency in guardrails and signage installa,on, direct compe,tors are likely to subcontract the company’s services
QE2 Acquisi,on Corp.
www.qe2corp.com
12
QE2 ProjecDons (OperaDons) QE2 Cash Flow Analysis (Based on Already Completed AcquisiDons)
EBITDA ProjecDons
(Shown in C$000s)
2013A
2014F
2015F
2016F
Revenue
$8,151
$8,087
$8,411
$8,961
Growth YoY
3.5%
(0.8%)
4.0%
6.5%
Cost of Sales
$5,745
$6,041
$5,869
$6,269
Gross Margin
$2,406
$2,046
$2,542
$2,691
29.5%
25.3%
30.2%
30.0%
Other Expenses
($451)
($980)
($998)
($1,029)
Normalized EBITDA
$1,955
$1,066
$1,544
$1,662
24.0%
13.2%
18.4%
18.6%
-‐ -‐
($189) ($50)
($219) ($34)
($120) ($11)
($239)
-‐
($135)
($195)
-‐
($39)
($26)
($45)
Cash Flow from Operations
$1,716
$789
$1,129
$1,291
Capital Expenditure (net)
($252)
($99)
($153)
($164)
Free Cash Flow
$1,463
$690
$976
$1,127
-‐ -‐
($370) ($260)
($363) ($525)
($345) ($425)
$1,463
$60
$87
$357
GM %
Normalized EBITDA %
Debt -‐ Interest Vendor Take Back -‐ Interest Taxes Net Changes i n Working Cap.
Debt -‐ Principal Vendor Take Back -‐ Principal Free Cash Flow to Equity
Free Cash Flow ProjecDons
Note: Based on management es5mates and includes Includes $1.5 mm, 24 months, 12% conver5ble debt financing (assumed conversion aLer 24 months) QE2 and Candesto 2013A numbers are as of Jan. 31, 2014, Pillar 2013A numbers are as of Sep. 30, 2013. Future projec5ons for all three companies are harmonized to Dec. 31 year-‐end
QE2 Acquisi,on Corp.
www.qe2corp.com
13
QE2 ProjecDons (Consolidated) QE2 Cash Flow Analysis (Based on Already Completed AcquisiDons + QE2)
EBITDA ProjecDons
(Shown in C$000s)
2013A
2014F
2015F
2016F
Revenue
$8,151
$8,087
$8,411
$8,961
Growth YoY
3.5%
(0.8%)
4.0%
6.5%
Cost of Sales
$5,745
$6,041
$5,869
$6,269
Gross Margin
$2,406
$2,046
$2,542
$2,691
29.5%
25.3%
30.2%
30.0%
Other Expenses
($451)
($1,680)
($1,748)
($1,779)
Normalized EBITDA
$1,955
$366
$794
$912
24.0%
4.5%
9.4%
10.2%
-‐ -‐
($189) ($50)
($219) ($34)
($120) ($11)
($239)
-‐
($135)
($195)
-‐
($39)
($26)
($45)
Cash Flow from Operations
$1,716
$89
$379
$541
Capital Expenditure (net)
($252)
($99)
($153)
($164)
Free Cash Flow
$1,463
($10)
$226
$377
-‐ -‐
($370) ($260)
($363) ($525)
($345) ($425)
$1,463
($640)
($663)
($393)
GM %
Normalized EBITDA %
Debt -‐ Interest Vendor Take Back -‐ Interest Taxes Net Changes i n Working Cap.
Debt -‐ Principal Vendor Take Back -‐ Principal Free Cash Flow to Equity
Free Cash Flow ProjecDons
Note: Based on management es5mates and includes Includes $1.5 mm, 24 months, 12% conver5ble debt financing (assumed conversion aLer 24 months) QE2 and Candesto 2013A numbers are as of Jan. 31, 2014, Pillar 2013A numbers are as of Sep. 30, 2013. Future projec5ons for all three companies are harmonized to Dec. 31 year-‐end
QE2 Acquisi,on Corp.
www.qe2corp.com
14
Capital Structure and ValuaDon Capital Structure and ValuaDon All numbers shown in mm Total Basic Shares
QE2 Public 28.8
MktCap @ $0.11 (as of Jan 8th) Cash on Hand Total Debt Leases Vendor Takeback Convertible Debenture Proceeds Total Net Debt
$3.2 $0.1 $2.9 $0.3 $0.9 ($1.2) $2.9
Pro-forma Enterprise Value
$6.1
Valuation 2014E EBITDA(5) 2015E EBITDA(5) Implied EV/2014E EBITDA Implied EV/2015E EBITDA
ConverDble Debentures •
In connec,on with the RTO transac,on, QE2 raised $1,298,000 of subordinated unsecured conver,ble debentures
•
Conver,ble debentures mature in 24 months, bear a 12% interest rate and have a conversion price of $0.50/share DiluDves Dilutives Warrants ($0.50,24mths) Warrants ($0.50,20mths) 12% Conv Deb units ($0.50,24mths)(4) Total Dilutive Shares
Pro-Forma Comparables $1.1 $1.5 5.5x 4.1x
6.9x 5.0x
Notes: (1) A non-brokered private placement of $550,000 at $0.30 per shares with a halfwarrant and 8% broker warrants both at $0.50. (2) Crowsnest had 6.0 mm common shares which were exchanged on a 1:1 basis with QE2 common shares. (3) Crowsnest had 0.6 mm options at $0.10 which were exercised concurrent with the RTO and 0.3 mm Agent Options which expire Dec 2014. (4) A brokered private placement of $1.298 mm convertible debentures (12%, 2 year maturity) was completed in conjunction with the RTO. (5) Based on management estimates.
QE2 Acquisi,on Corp.
www.qe2corp.com
mm 2.0 0.9 2.8 5.7
Ownership (QE2 Pro-‐Forma post all diluDves)
28% Mgmt 63%
10%
CPC Other
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Why Invest in QE2
Consistent Cash Flows from a Pool of Successful Companies
High-‐demand Infrastructure Services in the Fastest Growing Province in Canada
Mul,ple Acquisi,on Opportuni,es at ASrac,ve Mul,ples to Grow the Business
Independent of Oil Prices and Short-‐ Term Energy Industry Performance
City Municipali,es and Construc,on Companies as Clients
Significant Growth Prospects through Increasing Opera,ng Efficiency
Mo,vated Leadership Team
QE2 Acquisi,on Corp.
www.qe2corp.com
16
Contact InformaDon
Mihali (Mike) BelanDs CEO Direct: 1.403.701.7299 Email: [email protected]
Ben Leung CFO Direct: 1.403.613.6888 Email: [email protected]
Calgary Mailing Address: Suite 4034, 909 -‐ 17 Ave SW, Calgary, AB, T2T 0A4
QE2 Acquisi,on Corp.
www.qe2corp.com
17
v3
Appendix A -‐ Biographies Mike BelanDs – CEO and Director Mr. Belan,s has more than 15 years’ experience iden,fying opportuni,es, inves,ng and consul,ng for companies in both the private and public sectors. He has played an instrumental role in laying the founda,on for many successful start-‐ups. One of his most recent has grown to a market cap in excess of $300 million. As CEO, Mr. Belan,s is involved in all aspects of QE2’s acquisi,ons, investments and new project ini,a,ves. He also leads the team in seyng the strategy and vision for the organiza,on and ar,cula,ng the road map for growth and a sustainable compe,,ve advantage. Mr. Belan,s is involved in iden,fying prospec,ve targets and market opportuni,es; in the case of acquisi,ons, conduc,ng due diligence, determining appropriate valua,on and structure, developing strategy for and conduc,ng nego,a,ons, driving ac,vi,es to closure and coordina,ng with other business units. He leads the team to ensure the organiza,on has the drive, mo,va,on and energy needed to succeed.
Ben Leung – CFO Mr. Leung is a Chartered Accountant with over 20 years of financial accoun,ng and management experience in both public prac,ce and private industry. He has served as the QE2's Controller for the last 12 months focusing on financial repor,ng and internal controls. His experience includes financial repor,ng, taxa,on, risk management, human resources and corporate governance. Prior to joining QE2, Mr. Leung was a senior manager with a Calgary based accoun,ng firm and focused on the audit and assurance department. Previous to that, he has held controllership posi,ons with publicly listed companies in the pharmaceu,cal, oil and gas, and manufacturing industries.
QE2 Acquisi,on Corp.
www.qe2corp.com
18
Appendix A -‐ Biographies Brent Buhler – Vice President Finance Mr. Buhler is Managing Director of Cambio Merchant Capital, a Calgary-‐based bou,que shop which provides merger and acquisi,on services for both foreign private equity groups, as well as growth-‐oriented domes,c enterprises. For the past fi]een years, Mr. Buhler has provided value to many Canadian market sectors -‐ from manufacturers to breweries, from energy service companies to explora,on juniors – and has experience with a wide spectrum of privately held Alberta-‐ based companies. In addi,on to his broad business experience, Mr. Buhler has a varied academic background. He has studied business and marke,ng at University of Calgary and also holds a Master of Arts from Ambrose Seminary.
QE2 Acquisi,on Corp.
www.qe2corp.com
19
Appendix A -‐ Biographies Maria Nathanail– Corporate Secretary and Director Ms. Nathanail has been prac,cing law since 2006. Her experience has helped her to develop her excellent legal, commercial and business development skills. She has acted for many start-‐up companies providing guidance through the growth process. She is currently an associate with Burstall Winger Zammit LLP in Calgary, Alberta, prac,cing in the areas of securi,es, corporate finance, mergers and acquisi,ons and general corporate commercial law. Prior to that, Ms. Nathanail was an associate with Torys LLP and Gowling Lafleur Henderson LLP. Ms. Nathanail obtained a Bachelor of Arts Degree in Poli,cal Science from the University of Calgary and a Juris Doctor from the University of Saskatchewan. Joe Gagliardi – Director Mr. Gagliardi is a Cer,fied Management Accountant and the founding partner of a successful Alberta-‐based recrui,ng firm, Recruitment Partners. Prior to his 8 years as a professional recruiter Mr. Gagliardi worked as a senior accoun,ng professional with both private and publically traded organiza,ons, earning him a wide spectrum of experience in industrial manufacturing, oil and gas service companies, food processing and agriculture, where he has held roles from Controller to CFO. Mr. Gagliardi is an ac,ve volunteer in the business community, par,cularly as a director on the board of directors for CMA Alberta and as the Chair of the Business Advisory Council for the J.R. Shaw School of Business (NAIT).
QE2 Acquisi,on Corp.
www.qe2corp.com
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DISCLAIMERS (conDnued) Future-‐Oriented Financial InformaDon This Presenta,on contains future-‐oriented financial informa,on and financial outlook informa,on (collec,vely, the "FOFI") about prospec,ve results of opera,ons, net income, financial posi,on, cash flows, and components thereof, all of which are subject to the same assump,ons, risk factors, limita,ons, and qualifica,ons as set forth in the above paragraphs. FOFI contained in this Presenta,on was made as of the date of this Presenta,on and is provided for the purpose of giving a general overview of the business opera,ons of the Corpora,on. The Corpora,on disclaims any inten,on or obliga,on to update or revise any FOFI contained in this Presenta,on, whether as a result of new informa,on, future events or otherwise, unless required pursuant to applicable law. Readers are cau,oned that the FOFI contained in this document should not be used for purposes other than for which it is disclosed herein. The Corpora,on calculates EBITDA as "earnings before interest, taxes, deprecia,on and amor,za,on". EBITDA does not have any standardized meaning prescribed by interna,onal financial repor,ng standards (IFRS) and therefore it may not be comparable with the calcula,on of similar measures for other en,,es. Management uses EBITDA to analyze the opera,ng performance of the business. EBITDA as presented is not intended to represent cash provided by opera,ng ac,vi,es, net earnings or other measures of financial performance calculated in accordance with IFRS. Investor Rights Securi,es legisla,on in certain of the Canadian provinces provides purchasers of securi,es pursuant to an offering memorandum (such as this Presenta,on) with a remedy for damages or rescission, or both, in addi,on to any other rights they may have at law, where the offering memorandum and any amendment to it contains a "Misrepresenta,on". Where used herein, "Misrepresenta,on" means an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make any statement not misleading in light of the circumstances in which it was made. These remedies, or no,ce with respect to these remedies, must be exercised or delivered, as the case may be, by the purchaser within the ,me limits prescribed by applicable securi,es legisla,on. Purchasers should refer to such applicable securi,es legisla,on for the complete text of these rights or consult with a legal adviser. The following statutory rights of ac,on for damages or rescission will only apply to a purchase of securi,es of QE2 Acquisi,on Corp. ("QE2" or the "CorporaDon") in the event that the foregoing presenta,on is deemed to be an offering memorandum pursuant to applicable securi,es legisla,on in the Provinces of Ontario, Saskatchewan, Manitoba, Newfoundland and Labrador, Nova Sco,a, New Brunswick and Prince Edward Island. Resale RestricDons The shares will be subject to a number of resale restric,ons, including a restric,on on trading. Un,l the restric,on on trading expires, a shareholder will not be able to trade the shares unless the shareholder complies with an exemp,on from the prospectus and registra,on requirements under securi,es legisla,on.
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21
INVESTOR RIGHTS Ontario Securi,es legisla,on in Ontario provides that when an offering memorandum is delivered to an investor to whom securi,es are distributed in reliance upon the "accredited investor" prospectus exemp,on provided in Sec,on 2.3 of NI 45-‐106 – Prospectus and Registra5on Exemp5ons (the "Accredited Investor Exemp,on"), the right of ac,on described below is applicable, unless the prospec,ve purchaser is: (a) an associa,on governed by the Coopera5ve Credit Associa5ons Act (Canada) or a central coopera,ve credit society for which an order has been made under Sec,on 473(1) of that act; (b) a bank, loan corpora,on, trust company, trust corpora,on, insurance company, treasury branch, credit union, caisse populaire, financial services corpora,on, or league that, in each case, is authorized by an enactment of Canada or a jurisdic,on of Canada to carry on business in Canada or a jurisdic,on in Canada; (c) a Schedule III bank, meaning an authorized foreign bank named in Schedule III of the Bank Act (Canada); (d) the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada); or (e) a subsidiary of any person referred to in paragraphs (a), (b), (c) or (d), if the person owns all of the vo,ng securi,es of the subsidiary, except the vo,ng securi,es required by law to be owned by the directors of the subsidiary. Where an offering memorandum that contains a Misrepresenta,on is delivered in connec,on with a trade made in reliance on the Accredited Investor Exemp,on or certain other exemp,ons available under applicable securi,es legisla,on in Ontario, a purchaser who purchases a security offered by the offering memorandum during the period of distribu,on will have, without regard to whether the purchaser relied on the Misrepresenta,on, a statutory right of ac,on for damages against the issuer and a selling security holder on whose behalf the distribu,on was made or, while s,ll the owner of securi,es a right of rescission against the issuer or selling security holder on whose behalf the distribu,on was made. If the purchaser elects to exercise the right of rescission, the purchaser will have no right of ac,on for damages. The right of ac,on will be exercisable by the purchaser only if the purchaser commences the ac,on, in the case of any ac,on for rescission, not more than 180 days a]er the date of the transac,on that gave rise to the cause of ac,on and in the case of any ac,on, other than an ac,on for rescission, before the earlier of: (i) 180 days a]er the plain,ff first had knowledge of the facts giving rise to the cause of ac,on; or (ii) three years a]er the date of the transac,on that gave rise to the cause of ac,on. A defendant shall not be liable for a Misrepresenta,on if it proves that the purchaser purchased the securi,es with knowledge of the Misrepresenta,on. In an ac,on for damages, the defendant shall not be liable for all or any por,on of the damages that the defendant proves do not represent the deprecia,on in value of the securi,es as a result of the Misrepresenta,on relied upon. In no case shall the amount recoverable for the Misrepresenta,on that exceeds the price at which the securi,es were offered.
QE2 Acquisi,on Corp.
www.qe2corp.com
22
TSX.V: QE
www.qe2corp.com
READER’S ADVISORY •
•
•
•
This corporate presenta,on (the “Presenta,on”) has been prepared by management of QE2 Acquisi,on Corp. (the “Corpora,on”) based on public informa,on and the Corpora,on’s confiden,al informa,on. This Presenta,on is for informa,on purposes only and is being made available on a confiden,al basis solely to enable the prospec,ve investor to evaluate the securi,es of the Corpora,on (the “Securi,es”). This Presenta,on does not cons,tute an offer to sell to any person, or a general offer to the public of, or the general solicita,on from the public of offers to subscribe or purchase, any of the Securi,es. Any unauthorized use of this Presenta,on is strictly prohibited. Distribu,on or copying of this Presenta,on, in whole or in part in any medium, to any person other than the prospec,ve investor is prohibited without the prior wriSen consent of the Corpora,on. The informa,on contained in these slides, the Presenta,on made to you verbally and any other informa,on provided to you (in wri,ng or otherwise) in connec,on with the Corpora,on and its business (the “Presenta,on Materials”) is subject to upda,ng, comple,on, revision, verifica,on and amendment without no,ce which may result in material changes. The Presenta,on Materials are not intended to provide financial, tax, legal or accoun,ng advice and do not purport to contain all the informa,on that a prospec,ve investor may require. Each prospec,ve investor should perform and rely on its own inves,ga,on and analysis of the Corpora,on and the terms of any offering of the Securi,es, including the merits and risks involved, and are advised to seek their own professional advice on the legal, financial and taxa,on consequences of making an investment in the Corpora,on. No securi,es commission or similar regulatory authority in Canada has reviewed or in any way passed upon this presenta,on, and any representa,on to the contrary is an offence. Neither the Corpora,on nor the agent of the Corpora,on makes any representa,on or warranty, express or implied, and assumes no responsibility for the accuracy or completeness of the informa,on contained in this Presenta,on or any other oral or wriSen communica,on transmiSed to prospec,ve investors, and nothing contained in this summary is, or shall be relied upon as, a promise or representa,on by the Corpora,on or the agent of the Corpora,on as to the past or future performance of the Corpora,on. The Corpora,on does not undertake to provide any addi,onal further informa,on or to enter into nego,a,ons regarding the investment opportunity to which these Presenta,on Materials relate. The Corpora,on retains the right, at any ,me, to terminate any discussions or nego,a,ons with prospec,ve investors. In the event of such termina,on the Corpora,on will not be under any obliga,on to disclose the reasons for such termina,on nor will they have any liability to any recipient hereof for any costs whatsoever incurred in the considera,on of the informa,on contained in these Presenta,on Materials.
QE2 Acquisi,on Corp.
www.qe2corp.com
2
FORWARD-‐LOOKING INFORMATION •
•
Certain statements contained in this Presenta,on are forward looking statements. These forward looking statements are not based on historical facts but rather on the expecta,ons of management of the Corpora,on regarding the resul,ng company's future performance. All statements, other than statements of historical fact, may be forward looking statements. Forward looking statements are o]en, but not always, iden,fied by the use of words such as “seek”, “an,cipate”, “plan”, “con,nue”, “es,mate”, “expect”, “may”, “will”, “project”, “predict”, “propose”, “poten,al”, “targe,ng”, “intend”, “could”, “might”, “should”, “believe” and similar expressions. Although the Corpora,on believes in light of the experience of its officers and directors, current condi,ons and expected future developments and other factors that have been considered appropriate that the expecta,ons reflected in this forward-‐looking informa,on are reasonable, undue reliance should not be placed on them because the Corpora,on can give no assurance that they will prove to be correct, and actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-‐looking statements. Forward-‐looking statements contained in this Presenta,on include, but are not limited to, statements with respect to the Corpora,on's business strategy, the market in which the Corpora,on operates; the ability of the Corpora,on to successfully integrate businesses; the ,ming and nature of equity offerings to be completed by the Corpora,on; the Corpora,on's poten,al revenue; the ability of the Corpora,on to successfully complete mergers and acquisi,ons; the ability of the Corpora,on to realize on the poten,al of target companies; and other expecta,ons, beliefs, plans, objec,ves, assump,ons, inten,ons or statements about future events or performance. Forward-‐looking statements contained in this Presenta,on reflect the current beliefs and assump,ons of the Corpora,on's management based on informa,on in its possession as of the date of this Presenta,on. Readers are cau,oned that the foregoing list is not exhaus,ve. The forward‑looking statements contained herein are expressly qualified in their en,rety by this cau,onary statement. The forward‑looking statements included in this presenta,on are made as of the date of this presenta,on and the Corpora,on does not undertake and is not obligated to publicly update such forward‑looking statements to reflect new informa,on, subsequent events or otherwise unless so required by applicable securi,es laws.
QE2 Acquisi,on Corp.
www.qe2corp.com
3
Table of Contents OUR FOCUS AND OBJECTIVE INVESTMENT HIGHLIGHTS ABOUT US •
Leadership Team
•
Capitalizing on Canada’s Growth
•
Infrastructure Growth at Provincial Level
PORTFOLIO COMPANIES • Pillar Contrac,ng Ltd. •
Candesto Enterprises Ltd.
FINANCIAL HIGHLIGHTS • QE2 Projec,ons •
Capital Structure and Valua,on
•
Term Sheet
WHY INVEST IN QE2 • QE2 Business Strategy Contact Informa,on Biographies Disclaimers Acquisi,on Corp. QE2 www.qe2corp.com
4
Our Focus & ObjecDve
We acquire Infrastructure and U,lity Service companies that keep Canada growing. We are focused on a niche of SMEs that are capitalizing on the Infrastructure requirements across Canada. Over the next 10 years (2014-‐2024) the Government of Canada plans to invest $70 billion for public infrastructure, including the $53-‐billion “New Building Canada Plan” for provincial, territorial and municipal infrastructure.
Focused on growing revenues to $100MM by 2018 EsDmated Annual Revenues ($ millions) $125 $100 $75 $50 $25 $0 2013
2014
Strong proven Management team
2015
Ac,ve Board of Directors
2016 Strong Corporate Governance
2017
2018 Aggressive M&A strategy
Source: Infrastructure Canada
QE2 Acquisi,on Corp.
www.qe2corp.com
5
Investment Highlights A Unique Strategy in a Unique Market
ü QE2 Acquisi,on Corp. (“QE2”) was founded to take advantage of Canada’s booming economy through a unique strategy of aggrega,ng infrastructure and u,lity service companies at compelling valua,ons ü Retaining key management ensures business con,nuity while QE2 brings breadth of growth avenues ü Investors receive exposure to infrastructure-‐focused companies that have proved resilient across a wide spectrum of market condi,ons
History of Strong Returns and Growing Cash Flow
ü Our current and future acquisi,on targets have a track-‐record of boSom line growth
Consistency in Customer Base
ü QE2 focuses on acquiring businesses that are largely independent of oil and gas fluctua,ons ü Our clients are municipali,es, major u,lity companies and construc,on companies that primarily depend on general economic and popula,on growth rather than cyclical factors
Growing Through Focused AcquisiDons
• Porqolio companies Pillar Contrac,ng and Candesto Enterprises have been providing infrastructure services in Alberta for the last 16 – 20 years; management is keen to con,nue building upon this success
ü QE2 is designed to build upon this established growth through broader connec,ons across Canada
ü The strategy of QE2 is to move quickly on strategic acquisi,ons that are complimentary to the porqolio ü Target purchase price of 2-‐3x EV/EBITDA translates to a significant mul,ple li] in the public markets ü Minimize equity dilu,on through a balanced leverage strategy ü Currently evalua,ng mul,ple acquisi,on opportuni,es
QE2 Acquisi,on Corp.
www.qe2corp.com
6
Leadership Team Management Mihali (Mike) Belan-s CEO and Director1
• • •
Over 15 years of experience iden,fying aSrac,ve investment opportuni,es and inves,ng and consul,ng for both private and public companies Played an instrumental role in laying the founda,on for many successful startups Most recent startup has grown to a market capitaliza,on of over $300 mm
Ben Leung, CA, CFO
•
Chartered Accountant with over 20 years of financial accoun,ng and management experience in both public prac,ce and private industry
Brent Buhler, Vice President of Finance
• •
Co-‐founder and principal of Cambio Merchant Capital, Calgary Over 15 years covering all aspects of mergers and acquisi,ons work and sourcing growth capital for small-‐medium enterprises
Mihali (Mike) Belan-s1,2
•
Chair of the Board; see above for more info.
Joe Gagliardi, FCMA1,2,3
• •
Founder of a successful Alberta-‐based recrui,ng firm Prior thereto a senior accoun,ng professional with both private and public companies
Maria Nathanail, LLB1,3
•
Company Secretary; Associate at Burstall Winger Zammit, LLP
Board of Directors
1. Compensa5on Commi7ee 2. Audit Commi7ee 3. Governance Commi7ee
QE2 Acquisi,on Corp.
www.qe2corp.com
7
Capitalizing on Canada’s Growth
•
World-‐class infrastructure is the backbone of our country's economic produc,vity.
•
Our Government is commiSed to inves,ng in Canada's infrastructure to reduce commu,ng ,mes for families, enhance economic compe,,veness, encourage job crea,on and strengthen trade corridors.
•
Housing, transporta,on, u,li,es and construc,on investment requirements has l a i d a s t r o n g f o u n d a , o n f o r t h e infrastructure-‐focused business of QE2
•
$70 billion for public infrastructure, including $53 billion “New Building Canada Plan” will support projects of na,onal, regional and local significance that promote economic growth, job crea,on and produc,vity.
•
The federal government works with provinces, territories, municipali,es and the private sector to provide funds to economically-‐ focused projects.
•
With a P3 Screen for projects of over $100 million in eligible costs, our Government is ensuring that large infrastructure projects are delivered in the most cost-‐effec,ve way. Government of Canada Infrastructure Alloca,on – (2014-‐2019) ($ billions)
Source: Infrastructure Canada
QE2 Acquisi,on Corp.
www.qe2corp.com
8
Infrastructure Growth at Provincial Level Provincial Infrastructure Spend Expected to be Strong
BriDsh Columbia In Budget 2014, capital spending on infrastructure projects expected to total $17.7 billion over 3 years
Quebec The 2013-‐2023 Québec Infrastructure Plan proposes $92.3 billion in spending affec,ng every sector of ac,vity
Alberta Government of Alberta will invest $19.2 billion in public infrastructure over 3 years Saskatchewan Plans to spend $2.5 billion on infrastructure over next 3 years
Ontario Ontario plans to invest more than $130 billion in public infrastructure over the next 10 years. This will support more than 110,000 jobs on average each year in construc,on and related industries.
Manitoba Recently unveiled 5 year, $5.5 billion Infrastructure Plan
Serving municipaliDes and large construcDon companies, QE2 will gain full exposure to the infrastructure and uDlity service requirements in Canada Source: Infrastructure Canada and Provincial Budgets
QE2 Acquisi,on Corp.
www.qe2corp.com
9
QE2 Business Strategy QE2 Overview
Current Clients
QE2’s strategy is to acquire infrastructure-‐focused service providers in Canada and improve their performance through superior opera,ons management and business plan execu,on • QE2 has already completed two private company acquisi,ons: Pillar Contrac,ng and Candesto Enterprises •
•
•
Pillar Contrac,ng has been providing street light installa,on and post pain,ng services in Alberta for the last 16 years
•
Candesto Enterprises has been providing street sign and guardrail installa,on in Alberta for the last 20 years
QE2 focuses on opera,ons across Canada •
•
Through its two ini,al acquisi,ons, QE2 has already gained a substan,al client base
The company has iden,fied several high impact acquisi,ons to add to the exis,ng porqolio
FoundaDon for Future Growth Future AcquisiDons
AcquisiDon Criteria •
Target acquisi,on mul,ples of 2.0-‐3.0x EV/EBITDA
•
Management team in place and willing to stay for the transi,on period or longer
• •
Established client base and a history of successful opera,ons Businesses with healthy margins and low or no debt QE2 Acquisi,on Corp.
MoDvated Management Team
www.qe2corp.com
AcDve Board of Directors
Strong Corporate Governance
10
Por^olio Company Overviews: Pillar Contrac-ng
Overview
• Pillar Contrac,ng was acquired by QE2 in October 2013 • Primary services include: •
Street light bulb replacement and post pain,ng
•
Safety tes,ng for street light integrity
•
Traffic lights maintenance
•
Flagging services and other
• 16 year history of success and growth •
Founder agreed to con,nue to operate the business a]er the sale
• Strong customer base includes major u,lity companies and municipali,es in Alberta and Saskatchewan • Poten,al expansion opportunity into private sector with a focus on parking lots, transmission boxes, cable boxes, oversized loads and other • Recurring revenue streams through service and maintenance • Ability to expand into Saskatchewan and Manitoba
QE2 Acquisi,on Corp.
www.qe2corp.com
11
Por^olio Company Overviews: Candesto Enterprises
Overview
• Candesto Enterprises was acquired in April 2014 •
2013 EBITDA of $1.5 mm
•
Implied EV/EBITDA of 1.8x
• Primary services include: • •
Assembly and installa,on of highway signs Guardrail and miscellaneous fencing installa,on
• Successful opera,ng history of over 20 years with founder willing to stay for another five years •
Management expects consistent margins and opera,ng performance in the future
• Customer base includes municipali,es and general contractors • Given Candesto’s experience and efficiency in guardrails and signage installa,on, direct compe,tors are likely to subcontract the company’s services
QE2 Acquisi,on Corp.
www.qe2corp.com
12
QE2 ProjecDons (OperaDons) QE2 Cash Flow Analysis (Based on Already Completed AcquisiDons)
EBITDA ProjecDons
(Shown in C$000s)
2013A
2014F
2015F
2016F
Revenue
$8,151
$8,087
$8,411
$8,961
Growth YoY
3.5%
(0.8%)
4.0%
6.5%
Cost of Sales
$5,745
$6,041
$5,869
$6,269
Gross Margin
$2,406
$2,046
$2,542
$2,691
29.5%
25.3%
30.2%
30.0%
Other Expenses
($451)
($980)
($998)
($1,029)
Normalized EBITDA
$1,955
$1,066
$1,544
$1,662
24.0%
13.2%
18.4%
18.6%
-‐ -‐
($189) ($50)
($219) ($34)
($120) ($11)
($239)
-‐
($135)
($195)
-‐
($39)
($26)
($45)
Cash Flow from Operations
$1,716
$789
$1,129
$1,291
Capital Expenditure (net)
($252)
($99)
($153)
($164)
Free Cash Flow
$1,463
$690
$976
$1,127
-‐ -‐
($370) ($260)
($363) ($525)
($345) ($425)
$1,463
$60
$87
$357
GM %
Normalized EBITDA %
Debt -‐ Interest Vendor Take Back -‐ Interest Taxes Net Changes i n Working Cap.
Debt -‐ Principal Vendor Take Back -‐ Principal Free Cash Flow to Equity
Free Cash Flow ProjecDons
Note: Based on management es5mates and includes Includes $1.5 mm, 24 months, 12% conver5ble debt financing (assumed conversion aLer 24 months) QE2 and Candesto 2013A numbers are as of Jan. 31, 2014, Pillar 2013A numbers are as of Sep. 30, 2013. Future projec5ons for all three companies are harmonized to Dec. 31 year-‐end
QE2 Acquisi,on Corp.
www.qe2corp.com
13
QE2 ProjecDons (Consolidated) QE2 Cash Flow Analysis (Based on Already Completed AcquisiDons + QE2)
EBITDA ProjecDons
(Shown in C$000s)
2013A
2014F
2015F
2016F
Revenue
$8,151
$8,087
$8,411
$8,961
Growth YoY
3.5%
(0.8%)
4.0%
6.5%
Cost of Sales
$5,745
$6,041
$5,869
$6,269
Gross Margin
$2,406
$2,046
$2,542
$2,691
29.5%
25.3%
30.2%
30.0%
Other Expenses
($451)
($1,680)
($1,748)
($1,779)
Normalized EBITDA
$1,955
$366
$794
$912
24.0%
4.5%
9.4%
10.2%
-‐ -‐
($189) ($50)
($219) ($34)
($120) ($11)
($239)
-‐
($135)
($195)
-‐
($39)
($26)
($45)
Cash Flow from Operations
$1,716
$89
$379
$541
Capital Expenditure (net)
($252)
($99)
($153)
($164)
Free Cash Flow
$1,463
($10)
$226
$377
-‐ -‐
($370) ($260)
($363) ($525)
($345) ($425)
$1,463
($640)
($663)
($393)
GM %
Normalized EBITDA %
Debt -‐ Interest Vendor Take Back -‐ Interest Taxes Net Changes i n Working Cap.
Debt -‐ Principal Vendor Take Back -‐ Principal Free Cash Flow to Equity
Free Cash Flow ProjecDons
Note: Based on management es5mates and includes Includes $1.5 mm, 24 months, 12% conver5ble debt financing (assumed conversion aLer 24 months) QE2 and Candesto 2013A numbers are as of Jan. 31, 2014, Pillar 2013A numbers are as of Sep. 30, 2013. Future projec5ons for all three companies are harmonized to Dec. 31 year-‐end
QE2 Acquisi,on Corp.
www.qe2corp.com
14
Capital Structure and ValuaDon Capital Structure and ValuaDon All numbers shown in mm Total Basic Shares
QE2 Public 28.8
MktCap @ $0.11 (as of Jan 8th) Cash on Hand Total Debt Leases Vendor Takeback Convertible Debenture Proceeds Total Net Debt
$3.2 $0.1 $2.9 $0.3 $0.9 ($1.2) $2.9
Pro-forma Enterprise Value
$6.1
Valuation 2014E EBITDA(5) 2015E EBITDA(5) Implied EV/2014E EBITDA Implied EV/2015E EBITDA
ConverDble Debentures •
In connec,on with the RTO transac,on, QE2 raised $1,298,000 of subordinated unsecured conver,ble debentures
•
Conver,ble debentures mature in 24 months, bear a 12% interest rate and have a conversion price of $0.50/share DiluDves Dilutives Warrants ($0.50,24mths) Warrants ($0.50,20mths) 12% Conv Deb units ($0.50,24mths)(4) Total Dilutive Shares
Pro-Forma Comparables $1.1 $1.5 5.5x 4.1x
6.9x 5.0x
Notes: (1) A non-brokered private placement of $550,000 at $0.30 per shares with a halfwarrant and 8% broker warrants both at $0.50. (2) Crowsnest had 6.0 mm common shares which were exchanged on a 1:1 basis with QE2 common shares. (3) Crowsnest had 0.6 mm options at $0.10 which were exercised concurrent with the RTO and 0.3 mm Agent Options which expire Dec 2014. (4) A brokered private placement of $1.298 mm convertible debentures (12%, 2 year maturity) was completed in conjunction with the RTO. (5) Based on management estimates.
QE2 Acquisi,on Corp.
www.qe2corp.com
mm 2.0 0.9 2.8 5.7
Ownership (QE2 Pro-‐Forma post all diluDves)
28% Mgmt 63%
10%
CPC Other
15
Why Invest in QE2
Consistent Cash Flows from a Pool of Successful Companies
High-‐demand Infrastructure Services in the Fastest Growing Province in Canada
Mul,ple Acquisi,on Opportuni,es at ASrac,ve Mul,ples to Grow the Business
Independent of Oil Prices and Short-‐ Term Energy Industry Performance
City Municipali,es and Construc,on Companies as Clients
Significant Growth Prospects through Increasing Opera,ng Efficiency
Mo,vated Leadership Team
QE2 Acquisi,on Corp.
www.qe2corp.com
16
Contact InformaDon
Mihali (Mike) BelanDs CEO Direct: 1.403.701.7299 Email: [email protected]
Ben Leung CFO Direct: 1.403.613.6888 Email: [email protected]
Calgary Mailing Address: Suite 4034, 909 -‐ 17 Ave SW, Calgary, AB, T2T 0A4
QE2 Acquisi,on Corp.
www.qe2corp.com
17
v3
Appendix A -‐ Biographies Mike BelanDs – CEO and Director Mr. Belan,s has more than 15 years’ experience iden,fying opportuni,es, inves,ng and consul,ng for companies in both the private and public sectors. He has played an instrumental role in laying the founda,on for many successful start-‐ups. One of his most recent has grown to a market cap in excess of $300 million. As CEO, Mr. Belan,s is involved in all aspects of QE2’s acquisi,ons, investments and new project ini,a,ves. He also leads the team in seyng the strategy and vision for the organiza,on and ar,cula,ng the road map for growth and a sustainable compe,,ve advantage. Mr. Belan,s is involved in iden,fying prospec,ve targets and market opportuni,es; in the case of acquisi,ons, conduc,ng due diligence, determining appropriate valua,on and structure, developing strategy for and conduc,ng nego,a,ons, driving ac,vi,es to closure and coordina,ng with other business units. He leads the team to ensure the organiza,on has the drive, mo,va,on and energy needed to succeed.
Ben Leung – CFO Mr. Leung is a Chartered Accountant with over 20 years of financial accoun,ng and management experience in both public prac,ce and private industry. He has served as the QE2's Controller for the last 12 months focusing on financial repor,ng and internal controls. His experience includes financial repor,ng, taxa,on, risk management, human resources and corporate governance. Prior to joining QE2, Mr. Leung was a senior manager with a Calgary based accoun,ng firm and focused on the audit and assurance department. Previous to that, he has held controllership posi,ons with publicly listed companies in the pharmaceu,cal, oil and gas, and manufacturing industries.
QE2 Acquisi,on Corp.
www.qe2corp.com
18
Appendix A -‐ Biographies Brent Buhler – Vice President Finance Mr. Buhler is Managing Director of Cambio Merchant Capital, a Calgary-‐based bou,que shop which provides merger and acquisi,on services for both foreign private equity groups, as well as growth-‐oriented domes,c enterprises. For the past fi]een years, Mr. Buhler has provided value to many Canadian market sectors -‐ from manufacturers to breweries, from energy service companies to explora,on juniors – and has experience with a wide spectrum of privately held Alberta-‐ based companies. In addi,on to his broad business experience, Mr. Buhler has a varied academic background. He has studied business and marke,ng at University of Calgary and also holds a Master of Arts from Ambrose Seminary.
QE2 Acquisi,on Corp.
www.qe2corp.com
19
Appendix A -‐ Biographies Maria Nathanail– Corporate Secretary and Director Ms. Nathanail has been prac,cing law since 2006. Her experience has helped her to develop her excellent legal, commercial and business development skills. She has acted for many start-‐up companies providing guidance through the growth process. She is currently an associate with Burstall Winger Zammit LLP in Calgary, Alberta, prac,cing in the areas of securi,es, corporate finance, mergers and acquisi,ons and general corporate commercial law. Prior to that, Ms. Nathanail was an associate with Torys LLP and Gowling Lafleur Henderson LLP. Ms. Nathanail obtained a Bachelor of Arts Degree in Poli,cal Science from the University of Calgary and a Juris Doctor from the University of Saskatchewan. Joe Gagliardi – Director Mr. Gagliardi is a Cer,fied Management Accountant and the founding partner of a successful Alberta-‐based recrui,ng firm, Recruitment Partners. Prior to his 8 years as a professional recruiter Mr. Gagliardi worked as a senior accoun,ng professional with both private and publically traded organiza,ons, earning him a wide spectrum of experience in industrial manufacturing, oil and gas service companies, food processing and agriculture, where he has held roles from Controller to CFO. Mr. Gagliardi is an ac,ve volunteer in the business community, par,cularly as a director on the board of directors for CMA Alberta and as the Chair of the Business Advisory Council for the J.R. Shaw School of Business (NAIT).
QE2 Acquisi,on Corp.
www.qe2corp.com
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DISCLAIMERS (conDnued) Future-‐Oriented Financial InformaDon This Presenta,on contains future-‐oriented financial informa,on and financial outlook informa,on (collec,vely, the "FOFI") about prospec,ve results of opera,ons, net income, financial posi,on, cash flows, and components thereof, all of which are subject to the same assump,ons, risk factors, limita,ons, and qualifica,ons as set forth in the above paragraphs. FOFI contained in this Presenta,on was made as of the date of this Presenta,on and is provided for the purpose of giving a general overview of the business opera,ons of the Corpora,on. The Corpora,on disclaims any inten,on or obliga,on to update or revise any FOFI contained in this Presenta,on, whether as a result of new informa,on, future events or otherwise, unless required pursuant to applicable law. Readers are cau,oned that the FOFI contained in this document should not be used for purposes other than for which it is disclosed herein. The Corpora,on calculates EBITDA as "earnings before interest, taxes, deprecia,on and amor,za,on". EBITDA does not have any standardized meaning prescribed by interna,onal financial repor,ng standards (IFRS) and therefore it may not be comparable with the calcula,on of similar measures for other en,,es. Management uses EBITDA to analyze the opera,ng performance of the business. EBITDA as presented is not intended to represent cash provided by opera,ng ac,vi,es, net earnings or other measures of financial performance calculated in accordance with IFRS. Investor Rights Securi,es legisla,on in certain of the Canadian provinces provides purchasers of securi,es pursuant to an offering memorandum (such as this Presenta,on) with a remedy for damages or rescission, or both, in addi,on to any other rights they may have at law, where the offering memorandum and any amendment to it contains a "Misrepresenta,on". Where used herein, "Misrepresenta,on" means an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make any statement not misleading in light of the circumstances in which it was made. These remedies, or no,ce with respect to these remedies, must be exercised or delivered, as the case may be, by the purchaser within the ,me limits prescribed by applicable securi,es legisla,on. Purchasers should refer to such applicable securi,es legisla,on for the complete text of these rights or consult with a legal adviser. The following statutory rights of ac,on for damages or rescission will only apply to a purchase of securi,es of QE2 Acquisi,on Corp. ("QE2" or the "CorporaDon") in the event that the foregoing presenta,on is deemed to be an offering memorandum pursuant to applicable securi,es legisla,on in the Provinces of Ontario, Saskatchewan, Manitoba, Newfoundland and Labrador, Nova Sco,a, New Brunswick and Prince Edward Island. Resale RestricDons The shares will be subject to a number of resale restric,ons, including a restric,on on trading. Un,l the restric,on on trading expires, a shareholder will not be able to trade the shares unless the shareholder complies with an exemp,on from the prospectus and registra,on requirements under securi,es legisla,on.
QE2 Acquisi,on Corp.
www.qe2corp.com
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INVESTOR RIGHTS Ontario Securi,es legisla,on in Ontario provides that when an offering memorandum is delivered to an investor to whom securi,es are distributed in reliance upon the "accredited investor" prospectus exemp,on provided in Sec,on 2.3 of NI 45-‐106 – Prospectus and Registra5on Exemp5ons (the "Accredited Investor Exemp,on"), the right of ac,on described below is applicable, unless the prospec,ve purchaser is: (a) an associa,on governed by the Coopera5ve Credit Associa5ons Act (Canada) or a central coopera,ve credit society for which an order has been made under Sec,on 473(1) of that act; (b) a bank, loan corpora,on, trust company, trust corpora,on, insurance company, treasury branch, credit union, caisse populaire, financial services corpora,on, or league that, in each case, is authorized by an enactment of Canada or a jurisdic,on of Canada to carry on business in Canada or a jurisdic,on in Canada; (c) a Schedule III bank, meaning an authorized foreign bank named in Schedule III of the Bank Act (Canada); (d) the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada); or (e) a subsidiary of any person referred to in paragraphs (a), (b), (c) or (d), if the person owns all of the vo,ng securi,es of the subsidiary, except the vo,ng securi,es required by law to be owned by the directors of the subsidiary. Where an offering memorandum that contains a Misrepresenta,on is delivered in connec,on with a trade made in reliance on the Accredited Investor Exemp,on or certain other exemp,ons available under applicable securi,es legisla,on in Ontario, a purchaser who purchases a security offered by the offering memorandum during the period of distribu,on will have, without regard to whether the purchaser relied on the Misrepresenta,on, a statutory right of ac,on for damages against the issuer and a selling security holder on whose behalf the distribu,on was made or, while s,ll the owner of securi,es a right of rescission against the issuer or selling security holder on whose behalf the distribu,on was made. If the purchaser elects to exercise the right of rescission, the purchaser will have no right of ac,on for damages. The right of ac,on will be exercisable by the purchaser only if the purchaser commences the ac,on, in the case of any ac,on for rescission, not more than 180 days a]er the date of the transac,on that gave rise to the cause of ac,on and in the case of any ac,on, other than an ac,on for rescission, before the earlier of: (i) 180 days a]er the plain,ff first had knowledge of the facts giving rise to the cause of ac,on; or (ii) three years a]er the date of the transac,on that gave rise to the cause of ac,on. A defendant shall not be liable for a Misrepresenta,on if it proves that the purchaser purchased the securi,es with knowledge of the Misrepresenta,on. In an ac,on for damages, the defendant shall not be liable for all or any por,on of the damages that the defendant proves do not represent the deprecia,on in value of the securi,es as a result of the Misrepresenta,on relied upon. In no case shall the amount recoverable for the Misrepresenta,on that exceeds the price at which the securi,es were offered.
QE2 Acquisi,on Corp.
www.qe2corp.com
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