Black Diamond Group Limited Opens Workforce Lodge in the Heart of the Montney
CALGARY, Alberta, April 16, 2018 (GLOBE NEWSWIRE) -- Black Diamond Group Limited (TSX:BDI) (“Black Diamond” or the “Company”), a leading provider of modular space solutions and workforce accommodations, announces that it has entered into an agreement to assume the land lease and ongoing operations of its currently owned 1,244-room Sunset Prairie Lodge located between Fort St. John, BC and Dawson Creek, BC (the “Agreement”). The camp, which was previously rented to a dedicated customer, will be converted into an open lodge and operated by the Company’s award winning Cygnus partnership with the West Moberly First Nations to service demand for workforce accommodations from multiple customers in the area.
Under the terms of the Agreement, Black Diamond will receive a cash payment of $11.2 million, which is net of the costs associated with acquiring the roughly 60 acre crown lease with a remaining 8-year term and a renewal option. The payment is from the current tenant and customer, a Canadian oil and gas producer. In exchange for the cash payment, Black Diamond will take responsibility for the eventual cost of dismantling the lodge.
“We are currently experiencing good occupancy levels and we expect lodging demand for many years to come at Sunset Prairie Lodge,” said Trevor Haynes, President and CEO of Black Diamond. “In operation since 2015, it is one of our most contemporary facilities comprised of executive style rooms that are typically preferred in the current market. Sunset Prairie Lodge is conveniently located in an area of strong development activity covering a broad range of natural resource sectors.”
Resource activity near Sunset Prairie Lodge
Sunset Prairie Lodge should benefit from activity related to oil and gas production from the prolific Montney shales, pipeline construction, general construction, forestry, and renewable energy projects. Sunset Prairie Lodge is also positioned to benefit from an increase in natural gas drilling if liquefied natural gas export terminals are developed on Canada’s Pacific Coast.
With the conversion of Sunset Prairie Lodge, Black Diamond’s capacity at its five open lodges will increase by 60% to approximately 3,300 rooms. All of the Company’s open lodges are listed on LodgeLink, Black Diamond’s convenient online marketplace for remote workforce accommodations.
Payment applied to debt reduction
The transaction is subject to finalization of customary contract terms and is expected to close by June 2018. The proceeds from this transaction, along with a $7.4 million tax refund received in Q1 2018 and other sources of cash flow, are expected to contribute to achieving substantial debt reduction by the end of Q2 2018.
Reducing long term debt continues to be a primary objective, as Black Diamond strongly believes that a lower leverage position will create immediate relative value to equity holders and create financial flexibility to position the Company for future growth.
About Black Diamond
Black Diamond rents and sells space rental solutions and modular workforce accommodations to business customers in Canada, the United States and Australia. The Company also provides specialized field rentals to the oil and gas industries of Canada and the United States. In addition, Black Diamond provides turnkey lodging services, as well as a host of related services that include transportation, installation, dismantling, repairs, maintenance and ancillary field equipment rentals. From twenty-two locations, the Company serves multiple sectors including oil and gas, mining, power, construction, engineering, military, government and education.
Black Diamond has two core business units: Workforce Solutions and Modular Space Solutions. Learn more at www.blackdiamondgroup.com.
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Certain information in this news release contains forward-looking statements including the proceeds to be received in connection with the Agreement and the use of proceeds therefrom, Management's assessment of Black Diamond's future operations, business prospects and opportunities, including demand for lodging and lodging capacity. With respect to the forward-looking statements contained in this news release, Black Diamond has made assumptions, regarding among other things: the level of demand for workforce accommodation in the regions mentioned, and that counterparties to contracts will perform the contracts as written. Although Black Diamond believes that the expectations reflected in the forward-looking statements contained in this news release, and the assumptions on which such forward-looking statements are made, are reasonable, there can be no assurance that such expectations or assumptions will prove to be correct. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond Black Diamond's control including, without limitation, the impact of general economic conditions, industry conditions, fluctuation of commodity prices, environmental risks, industry competition, availability of qualified personnel and Management, stock market volatility and timely and cost effective access to sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. Readers are cautioned that the forgoing list of factors is not exhaustive. Additional information on these and other factors that could affect Black Diamond's operations and financial results are included in Black Diamond's most recent annual information form and other reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com) and at Black Diamond's website (www.blackdiamondgroup.com). Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and Black Diamond does not undertake any obligation to update publicly or to revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.