VTX Vertex Resource Group Ltd

 (TSXV: VTX) – Vertex Resource Group Ltd. (“Vertex”) and Cordy Oilfield Services Inc. (TSXV: CKK) (“Cordy Oilfield”) are pleased to announce that they have entered into a definitive amalgamation agreement (the “Amalgamation Agreement”) pursuant to which Vertex has agreed to acquire all of the issued and outstanding shares of Cordy Oilfield. The acquisition of Cordy Oilfield will increase the strength and service offerings of Vertex across its operations.

"This strategic acquisition allows Vertex to compliment multiple offerings within our group. We are excited to bring Cordy under our umbrella, providing customers and employees with a next level experience. Congratulations to the Cordy team on their successes over the years, and we look forward to supporting that continued success," said Mr. Terry Stephenson, President and Chief Executive Officer of Vertex.

The acquisition is structured as a three-cornered amalgamation (the “Amalgamation”) under the Business Corporations Act (Alberta) pursuant to which the holders of common shares of Cordy Oilfield (“Cordy Shares”) will receive common shares of Vertex (“Vertex Shares”) and Vertex Energy Services Ltd., a wholly-owned subsidiary of Vertex, will amalgamate with Cordy Oilfield resulting in Vertex owning all of the issued and outstanding shares of the amalgamated corporation following the Amalgamation. In connection with signing the Amalgamation Agreement, a nominee of Cordy (the “Cordy Nominee”) is proposed to be appointed to the board of directors of Vertex, subject to approval by the TSXV (as defined below).

Under the terms of the Amalgamation Agreement, Cordy Oilfield shareholders will receive 0.081818 Vertex Shares for every one Cordy Share held (the “Exchange Ratio”), resulting in the issuance of approximately 18,913,253 Vertex Shares to Cordy Oilfield shareholders. If the Amalgamation were completed on the date of this news release, it would result in the Cordy Oilfield shareholders receiving, in the aggregate, that number of Vertex Shares equal to approximately 17.2% of the issued and outstanding Vertex Shares. Cordy Oilfield has no other classes of issued securities to be considered or included in the Amalgamation.

Vertex and Cordy anticipate the acquisition will create a stronger environmental services business that is expected to provide enhanced free cashflow generation through savings from integration, duplicate head office costs and increased fleet and personnel utilization. Benefits of the Amalgamation are expected to include:

• Highly complementary environmental service lines which can provide enhanced scale, utilization, and growth through cross-selling services to Vertex and Cordy’s customers.
• Estimated annual integration cost savings of approximately $1 million are expected to be realized within 12 – 18 months after closing of the Amalgamation.
• Expected to be immediately accretive to cash flow from operations and free cash flow per share for all shareholders of Vertex with the anticipated synergies of the Amalgamation.
• Improved cost structure to serve a growing and consolidating customer base.
• Strong pro forma financial position with attractive free cash flow from operations that is expected to reduce senior debt and help achieve Vertex’s targeted senior debt to EBITDA ratio of less than 2.0x, which is expected to be achieved within two years of closing.
• Enhances Vertex and Cordy’s position to advance and deliver on environmental, social and governance initiatives for Vertex, Cordy and its customers.
• Opportunity for Cordy shareholders to hold shares of a larger more diversified organization with a history of growth and stronger access to markets and capital to promote the development of Cordy’s operations.

“I am truly excited to have Cordy join the Vertex family,” said Stephenson. “Cordy is a specialized value-additive business with quality people and equipment. This acquisition is a strong fit for our company and shareholders. We expect joining Vertex will provide Cordy the necessary backing and capital to fuel their continued strong performance.”

Completion of the Amalgamation is subject to, (i) the approval of the shareholders of Cordy in accordance with applicable corporate and securities laws at a special meeting of Cordy Shareholders scheduled to be held on or about April 22, 2022; (ii) approval of the TSX Venture Exchange Inc. (“TSXV”); (iii) the completion of the Private Placement (as defined below); and (iii) certain other closing conditions customary in transactions of this nature.

The Amalgamation Agreement includes customary deal protection provisions in favour of Vertex including, among other ‎things, non-solicitation covenants, subject to “fiduciary out” provisions that entitle Cordy to consider and ‎accept a superior proposal and a right in favour of Vertex to match any superior proposal. The ‎Agreement provides for a $500,000 termination fee payable by Cordy in certain circumstances if the ‎Amalgamation is not completed.‎

No finders fees will be paid by Vertex or Cordy Oilfield in connection with the Amalgamation. Other than the Cordy Nominee, who will become an Insider (as defined in the policies of the TSXV) of Vertex following appointment to the board of directors of Vertex, no Control Person (as defined in the policies of the TSXV) or Insider of Cordy Oilfield is currently or will be following the Amalgamation, a Control Person or Insider of Vertex. No Non Arm’s Length Party (as defined in the policies of the TSXV) of either Cordy or Vertex has any material interest in the Amalgamation apart from the respective holdings of Cordy Shares by the Insiders of Cordy .

Vertex is also pleased to announce that subject to the approval of the TSXV it intends to complete a non-brokered private placement (the “Private Placement”) of $15,000,000 principal amount of a secured subordinated convertible debenture (“Convertible Debenture”). The completion of the Private Placement is a condition precedent to the Amalgamation.

The Convertible Debenture will have a five (5) year term from the date of issue (the “Term”). The Convertible Debenture will bear interest at 8% per annum from the date of issue, payable monthly in arrears in cash. At any time during the Term, the holders of the Convertible Debenture may elect to convert the outstanding net principal amount, or any portion thereof, into common shares of Vertex (“Common Shares”) at a conversion price of $0.65 per share (the “Conversion Price”).

The Convertible Debenture and any Common Shares issuable upon conversion thereof will be subject to a statutory hold period lasting four months and one day following the closing date of the Private Placement.

The proceeds of the Private Placement will used to satisfy ongoing obligations post-Amalgamation, future acquisitions and working capital. The Convertible Debentures will be subordinated to Vertex’s existing secured debt facilities.

The Private Placement is subject to approval of the TSXV and certain other commercial conditions customary in financings of this nature.

ABOUT VERTEX

Headquartered in Sherwood Park, Alberta, Vertex employs a staff of approximately 800 full-time and contract personnel that provide environmental services across North America. Vertex is a leading provider of environmental solutions, a unique combination of environmental consulting and environmental field services and equipment. Vertex’s integrated environmental solutions support asset development, operations, decommissioning, and restoration for customers in five North American sectors: Energy, Mining and Industrial, Utilities, Agriculture & Forestry, and Government. Established in 1962, Vertex combines 60 years of experience with an innovative, modern approach to provide versatile, expert solutions to the market.

ABOUT CORDY OILFIELD

Cordy provides construction and environmental services in western Canada. Cordy is headquartered in Calgary, Alberta, Canada, and is listed on the TSX Venture Exchange under the trading symbol “CKK”.

For further information please contact:

Terry Stephenson, CEO of Vertex:Tel: 780-464-3295Email: tstephenson@vertex.ca

Darrick Evong, CEO of Cordy Oilfield:Tel: 403-262-7667Email: darrick.evong@cordy.ca

READER ADVISORY

This news release contains forward-looking statements, within the meaning of applicable securities legislation, concerning the proposed Amalgamation, the respective business and affairs of Vertex and Cordy Oilfield and the Private Placement. In certain cases, forward-looking statements can be identified by the use of words such as ‘‘plans’’, ‘‘expects’’ or ‘‘does not expect’’, “intends” ‘‘budget’’, ‘‘scheduled’’, ‘‘estimates’’, “forecasts’’, ‘‘intends’’, ‘‘anticipates’’ or variations of such words and phrases or state that certain actions, events or results ‘‘may’’, ‘‘could’’, ‘‘would’’, ‘‘might’’ or ‘‘will be taken’’, ‘‘occur’’ or ‘‘be achieved’’.  Such forward-looking statements include those with respect to: (i) the completion of the Amalgamation; (ii) the percentage ownership of the issued and outstanding Vertex Shares by Cordy Oilfield shareholders, (iii) the proposed issuance of the Convertible Debentures and the use of proceeds arising therefrom, and (iv) the use of proceeds from the private placement. Forward-looking statements also include any other statements that do not refer to historical facts.

By their nature, forward-looking statements are based on assumptions and subject to inherent risks and uncertainties. There is a risk that the Amalgamation and the offering of the Convertible Debentures may be delayed, cancelled, suspended, or terminated. This could cause future results to differ materially from the forward-looking statements made in this news release.

Statements of past performance should not be construed as an indication of future performance. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors, including those discussed above, could cause actual results to differ materially from the results discussed in the forward-looking statements. All of the forward-looking statements made in this press release are qualified in their entirety by these cautionary statements. 

Readers are cautioned not to place undue reliance on such forward-looking statements.  Forward-looking information is provided as of the date of this press release and except as required by law, neither Vertex nor Cordy Oilfield undertakes no obligation to publicly update or revise any forward-looking statements. Forward-looking statements are provided herein for the purpose of giving information about the proposed issuance of Convertible Debentures and the use of proceeds. Readers are cautioned that such information may not be appropriate for other purposes.

Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.