TSL Express Daily News

CALGARY, Alberta, May 15, 2025 (GLOBE NEWSWIRE) -- Tornado Infrastructure Equipment Ltd. (“Tornado” or the “Company”) (TSX-V: TGH; OTCQX: TGHLF), a leading manufacturer of specialized infrastructure and excavation equipment, is pleased to announce the closing of the acquisition (the “Acquisition”) of all the issued and outstanding shares in the capital of Custom Vacuum Services Ltd. (“CustomVac”) from 2624795 Alberta Ltd., an arm’s length party (the “Vendor”), pursuant to a share purchase agreement signed and dated today, among the Company, CustomVac and the Vendor, for an aggregate purchase price of $28,000,000 (the “Purchase Price”) paid in cash, subject to customary closing adjustments. CustomVac was founded in 2000 and is located in Nisku, Alberta. CustomVac manufactures and services truck-mounted and semi-trailer mounted vacuum equipment, both for the oil and gas, and the utilities, excavation, environmental and safety sectors in Canada.

“This acquisition is a key component of Tornado’s broader strategy to expand its footprint across the infrastructure equipment sector. We are actively engaged in identifying and acquiring high-quality businesses that complement and enhance our existing product portfolio. This approach underscores Tornado’s commitment to delivering long term value through innovation, diversification, and disciplined growth,” said Brett Newton, President and CEO of Tornado.

“As we continue to grow our footprint in infrastructure equipment, we are consistently seeking exceptional companies like CustomVac that align with our strategic vision and can serve as synergistic bolt-on acquisitions to our core product offerings,” added Mr. Newton.

Highlights of the Acquisition

• Compelling Synergies: The acquisition presents significant synergy opportunities, including cross-selling across both customer bases, leveraging Tornado’s established sales channels in Canada and the United States to drive increased sales of CustomVac products, and utilizing Tornado’s established and scalable supply chain to reduce production costs and improve efficiency.
• New Product Line for Tornado: CustomVac’s product line includes units that are designed for the transportation of dangerous goods, which will expand Tornado’s product offering to its customers.
• Delivers Attractive Financial Benefits: The Acquisition is expected to be profitable and immediately accretive to Tornado. CustomVac’s unaudited trailing 12-month gross profit was $9,580,000 and had assets of $11,592,000 as at January 31, 2025. The Company is not assuming any long-term debt in connection with the Acquisition.
• Fully Funded: Purchase Price was fully funded by a combination of cash on hand and the drawdown of the New Term Loan (described below) under the TD Facility (described below).

The Acquisition qualified as an "Exempt Transaction" within the meaning of TSX Venture Exchange Policy 5.3 and, other than the foregoing, terms of the Acquisition were not disclosed. No finders’ fees were paid in connection with the Acquisition.

“The acquisition of CustomVac marks a strategic step forward for Tornado, expanding its product line and opening its market into the environmental and waste management sector,” added Mr. Newton. “CustomVac’s strong market presence in Western Canada, combined with Tornado’s North American sales channels and scalable supply chain, positions us to drive immediate growth and cost efficiencies. Furthermore, CustomVac’s in-house manufacturing capabilities will allow Tornado to localize the production of key components currently sourced externally, improving both speed and cost effectiveness.

“Tornado entered this transaction from a position of financial strength, with only modest existing debt limited to a mortgage on our Red Deer facility and certain lease obligations,” said Derek Li, Chief Financial Officer of Tornado. “By strategically utilizing debt to fund the acquisition, we are preserving cash, avoiding shareholder dilution, and maximizing the tax efficiency of our capital structure. This approach reflects our confidence in the long term value and synergy potential of the CustomVac acquisition.”

About Custom Vacuum Services Ltd.

CustomVac manufactures and services mobile, coded vacuum equipment, both truck-mounted and semi-trailer mounted, for the oil and gas, utilities, excavation, environmental and safety sectors in Canada.

CustomVac has experienced significant growth since 2022 and currently operates out of a 39,000 sq. ft. state-of-the-art manufacturing and parts facility in Nisku, Alberta. Since its inception in 2000, the company’s continued expansion has led to several increases in facility size and production capacity to meet growing demand for its vacuum equipment.

Amendment to TD Facility

Concurrently with the closing of the Acquisition, the Company is pleased to announce that it has amended its revolving line (the “Operating Line”) and entered into a new $25,000,000 term loan (the “New Term Loan” and the Operating Line, the “TD Facility”) with the Toronto-Dominion Bank (“TD”).

The New Term Loan was used to partially finance the Acquisition made available as a single draw and amounts repaid may not be redrawn. The New Term Loan has a term of 5 years and an amortization period of 10 years. The New Term Loan bears interest at a floating rate equal to the prime rate per annum established by TD, plus 0.95%.

Under the conditions of the agreement governing the TD Facility, the Operating Line has been increased from $6,000,000 to the lesser of (i) $8,000,000, or (ii) the sum of (a) 90% of the Company’s insured receivable value, (b) 75% of the Company’s other Canadian and U.S. receivable value, and (c) 50% of inventory value, up to a maximum of $4,000,000. The Operating Line will be used for general working capital purposes.

The Operating Line is available, at the Company’s discretion, by way of (i) prime rate-based loans in Canadian Dollars ("Prime Based Loans"), (ii) United States based rate loans in U.S. Dollars ("USBR Loans"), (iii) letters of credit in Canadian Dollars ("L/Cs"), and (iv) stand-by letters of guarantee in Canadian Dollars ("L/Gs"). The Operating Line bears interest at: (i) a floating rate equal to the prime rate per annum established by TD, plus 0.70% for Prime Based Loans, (ii) a floating rate equal to the U.S. base rate per annum, plus 0.07% for USBR Loans, and (iii) 2.00% per annum for L/Cs and L/Gs. The Operating Line is available on revolving basis, is uncommitted, made available at the Bank's discretion, and is not automatically available upon satisfaction of the terms and conditions, conditions precedent, or financial tests set out therein. Repayments under the Operating Line will be made on demand. As of today, the Operating Line has not yet been used by the Company.

“The increase in the Operating Line provides us with financial flexibility and access to additional working capital to manage the Company’s growing business including the CustomVac product line” said Tornado CEO, Brett Newton. “The relationship with TD has grown stronger since the original financing in July 2021 and the increase in the Operating Line is a reflection of the Company’s growth and operating track record.”

The TD Facility is secured by: (i) a first-ranking security interest in all of the present and future undertakings, property and assets of the Company and its Canadian subsidiaries Tornado Infrastructure Equipment (North America) Inc. and CustomVac; and (ii) a first-ranking mortgage charge on the Company’s production facility located in Red Deer, Alberta. The TD Facility contains two financial covenant ratios and other standard positive, negative and reporting covenants.

All amounts reported in this news release are in in Canadian Dollars unless otherwise indicated.

About Tornado Infrastructure Equipment Ltd.

Tornado is a pioneer and leader in the vacuum truck industry and has been a choice of utility and oilfield professionals with over 1,800 hydrovacs sold since 2008. The Company designs and manufactures hydrovac trucks as well as provides heavy duty truck maintenance operations in central Alberta. It sells hydrovac trucks to excavation service providers in the infrastructure and industrial construction and oil and gas markets. Hydrovac trucks use high pressure water and vacuum to safely penetrate and cut soil to expose critical infrastructure for repair and installation without damage. Hydrovac excavation methods are quickly becoming a standard in North America to safely excavate in urban areas and around critical infrastructure greatly reducing infrastructure damage and related fatalities.

For more information about Tornado Infrastructure Equipment Ltd., visit www.tornadotrucks.com or contact:

Advisory

Certain statements contained in this news release constitute forward-looking statements. These statements relate to future events. All statements other than statements of historical fact are forward-looking statements. The use of the words “anticipates”, “should”, ‘‘may”, “expected”, “expects”, “believes” and other words of a similar nature are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Although Tornado believes these statements to be reasonable, no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon. Such statements include those with respect to:

• Tornado’s broader strategy to expand its market into the infrastructure equipment sector.
• The anticipated synergy opportunities, including cross-selling across both customer bases, leveraging Tornado’s established sales channels in Canada and the United States to drive increased sales of CustomVac products, and utilizing Tornado’s established and scalable supply chain to reduce production costs and improve efficiency.
• The expectation that CustomVac’s strong market presence in Western Canada, combined with Tornado’s North American sales channels and scalable supply chain, positions Tornado to drive immediate growth and cost efficiencies.
• The expectation that CustomVac’s in-house manufacturing capabilities will allow the Company to localize the production of key components currently sourced externally, improving both speed and cost effectiveness.
• The Acquisition is expected to be profitable and immediately accretive to Tornado.
• The plan to use the Operating Line for general working capital purposes.
• The expectation that the Operating Line provides Tornado with financial flexibility and access to additional working capital to manage the Company’s growing business including the CustomVac product line.
  

These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Actual results could differ materially from those anticipated in these forward-looking statements as a result of prevailing economic conditions, and other factors, many of which are beyond the control of Tornado. Although Tornado believes these statements to be reasonable, no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon. The forward-looking statements contained in this news release represent Tornado’s expectations as of the date hereof and are subject to change after such date. Tornado disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as may be required by applicable securities regulations.

Information Relating to CustomVac

This news release contains certain pre-acquisition historical financial information relating to CustomVac. The information (including financial information) contained herein with respect to the Acquisition and CustomVac, is based upon information provided to the Company by CustomVac and has not been audited.

Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in policies of the Exchange) accepts responsibility for the adequacy or accuracy of this news release.