TORONTO, November 3, 2006 - VenGrowth Private Equity Partners Inc. and its affiliates ("VenGrowth"), a leading private equity firm with over $1 billion in assets under management, today announced an $8.2 million investment in Paintearth Energy Services Inc. ("Paintearth"). The financing was led by the VenGrowth Traditional Industries Group.
The VenGrowth Traditional Industries Fund Inc., The VenGrowth III Investment Fund Inc. and VG Mezzanine I Limited Partnership provided a subordinated loan and also acquired an equity position in the company. VenGrowth's financing, along with funding from VenGrowth institutional stakeholder The Canadian Medical Protective Association, enabled Paintearth and its founders Rick Luchak and Ron Porter to acquire two business units of Integrated Production Services ("IPS"), a division of Complete Production Services, Inc.
With facilities in Alberta and Texas, Paintearth manufactures and distributes both "surface" and "downhole" equipment for the North American oil and gas industry. Surface equipment manufactured by Paintearth includes pressure vessels, units that separate natural gas from impurities, storage tanks and line heaters. Paintearth's downhole solutions include products to control or enhance the flow of oil and gas, artificial lift systems to encourage the flow of additional oil and gas and HARD KOTE™, a boronizing service to prevent abrasion and erosion on susceptible surfaces.
Mr. Luchak and Mr. Porter have been involved in the oil and gas industry for most of their careers and both have worked extensively with the two IPS business units that have been acquired by Paintearth.
"We have backed two highly experienced operators to acquire businesses that they know well," said Michael Wolfe, General Partner, VenGrowth. "While there will continue to be short-term over-or under-supplies of natural gas, supply and demand fundamentals suggest the number of gas wells will have to increase significantly over the next five years in order to maintain current domestic gas production levels. Oilfield service companies will benefit from the increased drilling activity. We are pleased to partner with a leading company within this buoyant sector. Paintearth has a strong customer base and our due diligence revealed an outstanding reputation for customer service."
"Paintearth's focus is on cost-effective solutions that increase production, lower operating costs and extend the lives of wells for our customers," said Rick Luchak, Chief Executive Officer, Paintearth. "This new partnership with VenGrowth will enable Paintearth to build on the many long-term relationships that it has developed in the North American oil and gas industry."
About VenGrowth Traditional Industries Group
The VenGrowth Traditional Industries Group specializes in financing solutions for mid-market Canadian companies in traditional manufacturing and services industries that are expected to generate sustainable cash flows. Investments are made on behalf of stakeholders in participating VenGrowth Funds. The Team primarily invests using debt instruments with the objective of generating interest and dividend income to the Funds. In addition, the Funds will typically hold equity interests alongside the loans with the intention of generating long-term capital appreciation. This group of VenGrowth professionals is led by Graham McBride, a highly-regarded mezzanine financing expert with over 19 years of experience.
About VenGrowth
With over $1 billion in assets under management, VenGrowth is Canada's largest private equity and venture capital firm managing both retail and institutional assets. Since 1982, VenGrowth's accomplished private equity managers have invested over $1.1 billion in over 180 companies, building a strong track record of successful portfolio transactions. These investments have been made on behalf of over 180,000 individual investors and leading pension funds, banks, insurance companies and family foundations. Portfolio companies benefit from VenGrowth's substantial experience, resources, and hands-on investment style. VenGrowth's offices are located in Toronto (Corporate Headquarters) and Ottawa. For more information, please visit www.vengrowth.com.
About Paintearth
Paintearth is a leading manufacturer of production enhancement equipment for North American oil and gas producers. The company produces a wide range of wellsite processing facilities, including a variety of pressure vessels, a line of patented artificial lift system accessories as well as products that control flow in all types of wells.
For further information:
Angus Fisher
Manager, Media & Communications
VenGrowth Asset Management Inc.
(416) 628 9255
afisher@vengrowth.com
