Included in this update:
- Audiotech Healthcare provides an update on its going private transaction
- Dalmac Energy finalizes new credt facility and is featured in the Edmonton Journal
Reminder of our upcoming Small-Cap Conferences this Fall in Calgary and Vancouver.
The Calgary conference will be held on Tuesday, October 9th and Vancouver is scheduled for Tuesday, November 6th. We know the markets have been challenging but there are great opportunities out there at present and many underfollowed and underappreciated companies need the exposure to tell their stories. We require 1-2 additional companies to participate at each conference in order to make for successful events. If anyone has referrals or knows of a quality company that is looking for quality exposure to investors, we would appreciate hearing from you. Investors can register for the events at www.smallcapconference.ca/register.php.
QIS Capital will be issuing a research report on a new oil and gas company we are following early next week. Stay tuned to learn more about this company which is showing year over year production growth of over 100% and remains virtually debt free.
Please feel free to email us anytime at firstname.lastname@example.org or call us at (250) 377-1182. We look forward to your comments, questions, and feedback.
Audiotech Healthcare Corporation (AUD:TSX-V)
Current Price: $0.33 (coverage commenced Nov. 8/04 - $0.14)
Audiotech Healthcare Corporation has announced (as an update to its prior news release of July 24, 2012) that the Board of Directors has, on recommendation of the Special Committee based on receipt of a comprehensive valuation report and other due diligence and deliberations, accepted the proposal from AHC Acquisition Inc. whereby AHC will acquire (the Transaction) all of the outstanding common shares of Audiotech Healthcare (other than shares held by the Iadarola Group) at a price of $0.35 per share and Audiotech has entered into a formal Arrangement Agreement dated September 10, 2012 with AHC whereby the Transaction will be effected by way of statutory plan of arrangement under the BC Business Corporations Act.
Among other conditions, the Transaction requires the approval of Audiotech's shareholders by special resolution, as well as majority of the minority approval pursuant to the policies of the TSX Venture Exchange, approval of the Supreme Court of British Columbia and acceptance by the Exchange.
The parties continue to prepare documentation and work towards obtaining the necessary approvals and acceptances, including the calling of a special meeting at which Audiotech shareholder approvals will be sought.
Assuming completion of the proposed Transaction, the common shares of Audiotech Healthcare will be delisted and no longer publicly traded and Audiotech Healthcare will apply under securities legislation to cease reporting in each jurisdiction where it is currently reporting.
QIS Capital Comments:
Next step is the special meeting which we would expect (after providing the minimum 60 days notice) to be in late November or early December. Following completion of the meeting and assuming acceptance of the offer, payout would likely be in late December or early January. At the last traded price of $0.33, a 3 month hold would generate a return of about 6% (20% annualized). Congratulations to all of those who have benefited by being a (patient) shareholder of Audiotech Healthcare.
Dalmac Energy Inc. (DAL:TSX-V)
Current Price: $0.50 (coverage commenced Nov 15/11 - $0.37)
Dalmac Energy Inc. has announced that it has finalized a senior secured finance facility of up to $17 million with PNC Bank Canada Branch (PNC). This new facility bears an interest rate of lender prime plus 1.25% which is considerably less that the company's current loan rates. Dalmac will use the facility to pay off its existing bank and other long-term debts which currently total approximately $8.4 million and will have up to $6.5 million available to finance new capital expenditures. The balance of the facility will be available for working capital. Dalmac will have the option to increase the facility to $20 million, subject to lender approval. The facility will have a four year term and is subject to a number of conditions including the completion of security documents and due diligence.
Responding to the current surge in demand for its services, Dalmac plans on increasing the size of its fleet over the next 12 months by purchasing about $6.5 million dollars of additional oilfield equipment to handle the growth. The company is confident that current positive industry indicators will continue to translate into high demand and record revenues and earnings for Dalmac throughout the remainder of calendar 2012 and well into 2013
Dalmac Energy Inc. has been featured in this article of the Edmonton Journal.
Lamphier: Edmonton-based Dalmac Energy deserves a little r-e-s-p-e-c-t
By Gary Lamphier, Edmonton Journal - September 7, 2012
EDMONTON — Like many small players in the oilpatch, Dalmac Energy (TSXV:DAL) has a tough time getting noticed.
So when the Edmonton-based oilfield services firm posted record financial results two weeks ago, investors reacted as they usually do: with a shrug.
Although Dalmac’s thinly-traded shares did climb a few pennies on the news, the party fizzled out before it began. The stock closed Friday at just 47 cents on the Venture Exchange — back to where it was in April.
The lack of market recognition obviously annoys Dalmac CEO John Babic, a serial entrepreneur who founded Nisku-based Hyduke Energy Services in 1995, before leaving in 2003 to form Dalmac.
“We’re just getting hammered out there and it’s due to a combination of things,” says Babic, who grew up in Hinton and later studied business at the University of Alberta.
“A lot of investors have a day trader mentality now. Everyone has lowered their expectations. A lot of it stems from the uncertainty in Europe and the financial meltdown we saw (in 2008) that almost brought the world banking system to its knees,” he says.
“So there’s a lot of money sitting on the sidelines. Memories of 2008 are still fresh.”
That could change, of course. Indeed, U.S. stocks hit a five-year high this week, after the head of the European Central Bank said the ECB would prop up the debt-laden economies of Spain and Italy through unlimited purchases of their government bonds.
A weak U.S. jobs report Friday has also heightened expectations that the U.S. central bank will roll out another round of economic stimulus. Those hopes also gave stocks a boost.
Whether the market rally is sustainable or not is anyone’s guess, however. So Babic says he’s more focused on growing his company rather than Dalmac’s share price.
So far, so good. From a standing start in 2003, Dalmac has grown steadily. For the year ended Apr. 30, it posted net earnings of $2.6 million or 13 cents a share on revenues of $35.7 million, up from a profit of $1.9 million or 10 cents a share on revenues of $26.2 million a year earlier.
Babic expects Dalmac to do even better in 2013, driven by growing oil and gas drilling programs in the foothills of west-central Alberta, where it serves the needs of major energy producers like Chevron, Apache, Penn West, Shell and ConocoPhillips.
“There’s more than enough work for a company our size and for the type of work we do, so we’re very fortunate,” he says.
“A lot of the resurgence of activity in the oilpatch is happening right here, in the Fox Creek area, the Edson area or the Drayton Valley area. And a lot of it is due to the new drilling technologies that are being used, such as directional drilling and multi-stage fracking. It’s enabling producers to extract oil and gas from hard rock, in zones that were deemed inaccessible five years ago.”
Dalmac supports those field activities in various ways — by hauling water or other fluids to remote well sites, by trucking crude oil or natural gas liquids to processing facilities, or by hauling waste material to disposal sites.
“There’s a lot of forest in Alberta and a lot of wells aren’t located by the side of a highway or near a pipeline. And everything that comes out of the ground has to be filtered. So we’re like a pipeline on wheels. That’s kind of what we do,” says Babic.
“Our equipment is used at different stages of the well production cycle. So when they’re drilling a well they might need a pressure truck or a hydro-vac to help clean things up. And after a well is drilled they’ll want to fracture the well (to enable the oil or gas to flow). So the amount of water that’s required increases exponentially and it all has to be hauled to that location.”
To support all that field work, Dalmac has steadily built up the size of its staff to about 180, and its fleet of mobile equipment to the current 207 units. It plans to spend $6 million this year to add another 10 or 12 units to its fleet.
“We’ve grown a lot. We started out nearly 10 years ago at about $5 million in revenues and we’ll likely be north of $40 million next year and you have to have the infrastructure to sustain that size of operation. So from where we started there’s been a big change,” says Babic.
“We’re very fortunate that with all these drilling programs there’s a lot of new production they want to tap into and that’s going to keep us going for the forseeable future. So it should bode quite well for Dalmac and for our employees.”
© Copyright (c) The Edmonton Journal
In other news, Dalmac Energy Inc. has granted a total of 600,000 incentive stock options to certain of its directors with an exercise price of 50 cents per share. The options have a five-year term and are subject to a three-year vesting restriction.
QIS Capital Comments:
It’s great to see Dalmac getting increased attention by the media and investors. Liquidity is also picking up with the average daily trading volume over the past 15 days reaching 54,500 shares. The senior secured finance facility is a great step forward for Dalmac as it not only reduces current interest charges, but will also allow the company to continue to expand to meet increasing demand. Management is forecasting another record year in fiscal 2013 (ending April 30, 2013) and should be announcing its first quarter results by the end of September.