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Streicher Mobile Fueling to Acquire Texas Lubricant Distributor
September 12, 2005
Streicher Mobile Fueling, Inc., Ft. Lauderdale, FL, (NASDAQ: FUEL) a provider of integrated out-sourced energy and transportation logistics to the trucking, construction, energy, chemical and government service industries, has agreed to acquire H&W Petroleum Co., Inc., a Houston-based marketer and distributor of lubricants, fuels and petroleum products, with additional operating locations in Lufkin, Freeport, Waco, Waxahachie and Longview, TX. H&W has agreed to purchase, immediately prior to its acquisition, the operating assets of Harkrider Distributing Co. Inc., a Houston-based business engaged in the marketing and distribution of dry cleaning solvents, chemicals and petroleum products. Purchase price is $6.3 million, 4.5 times an annualized EBITDA. Revenues for H&W during fiscal 2005 were over $51 million.
The company will acquire all of H&W's capital stock and substantially all of the assets and related business of Harkrider previously acquired by H&W for a purchase price of approximately $6.3 million based on a multiple of 4.5 times a projected annualized EBITDA (earnings before interest, taxes, depreciation and amortization - a non-GAAP financial measure) of approximately $1.4 million. The purchase price will be paid by a combination of cash, the assumption of specified liabilities and the issuance of two year 10% promissory notes, which are subject to an earn out provision based on the performance of the combined H&W and Harkrider business after the acquisition. The price paid for H&W may also be adjusted by working capital and other closing adjustments, including the effect of H&W's purchase of a limited amount of Harkrider inventory. The closing of the transaction is anticipated to occur in September 2005.
Founded in 1974, H&W is a major petroleum lubricant distributor in the United States, delivering nearly 5 million gallons of lubricants to its customers during its fiscal year ended June 30, 2005, in addition to almost 18 million gallons of fuel. Having been a leading distributor of petroleum lubricants for Exxon Corporation and Exxon/Mobil Corporation for over 31 years, H&W has recently become one of the largest distributors of the Texaco line of lubricants and speciality oils for ChevronTexaco USA.
Revenues for H&W during fiscal 2005 were over $51 million. H&W provides lubricants and fueling services to over 3,800 customers, with its primary emphasis on those companies requiring large volumes of specialty industrial oils, motor and gear lubricants and greases subject to rigid technical and performance specifications.
Harkrider has distributed solvents and specialty petroleum products to dry cleaners and industrial customers in the Houston, Beaumont and San Antonio areas since 1946. Today, it is one of the largest dry cleaning solvents distributors in those Texas markets with annualized revenues of $2.6 million and over 800 customers.
Together, H&W and Harkrider will provide the company with a combined fleet of 52 specialized lubricant, fuel and chemical delivery bobtail" trucks; oil and lubricant flatbed and box trucks; tanker transports; and related support equipment, including approximately 200 storage tanks with over 1,200,000 gallons of capacity. The two companies currently employ a total of 75 individuals at their operating locations.
The company plans to operate H&W as a wholly-owned subsidiary under the H&W Petroleum name, with the former Harkrider business continuing as Harkrider Distributing. The company also intends to combine and integrate its existing Texas operations with those of H&W subsequent to the completion of the acquisition.
The company also announced that on September 1, 2005, it closed a $3.0 million private debt placement with institutional and other accredited investors to fund the acquisition, develop its operations and for other