TCT Logistics to buy Kleysen Transport’s van and temperature-controlled divisions

WINNIPEG and CALGARY (April 6, 2000) — Kleysen Transport Ltd. today said it plans to sell its van and temperature-controlled highway transport operation to TCT Logistics of Calgary. The business is valued at approximately $18 million in cash, stocks, and debt and accounts for about $45 million in annual sales.

TCT, which specializes in third-party warehousing distribution and transportation, said it would fund the purchase in part using $23 million secured from a Canadian pension fund, subject to certain conditions. The acquisition would involve 48 company-owned and 132 owner-operated trucks and 375 trailers. About 100 company drivers and 60 administrative staff are affected by the sale, but TCT Logistics is expected to retain most of the personnel.

The financing consists of subordinated debt, inclusive of warrants to acquire TCT shares at $0.30 per share, and an $8 million convertible loan exercisable into TCT shares at $0.30 per share.

The sale is effective April 24.

Kleysen said it wanted to become a niche player, expanding its flatdeck, bulk, and intermodal, logistics, and Kayway repair and maintenance business. As part of the sale, the van operation and a portion of TCT’s current fleet will be maintained and serviced at Kleysen’s Kayway Fleet Services facilities.

After the sale, Kleysen Transport will have more than 350 employees, in excess of $60 million in annual revenues, over 200 trucks and more than 800 trailers, chassis and containers.

“Compared to other parts of our diversified transportation company, our van and temperature-controlled business involved high costs and high volumes with low profit margins in an overly-competitive sector of the trucking industry,” said Kleysen president and chief operating officer Tom Kleysen. “In this area, size matters and you need to be a company like TCT Logistics with its sector specialization, size and volume to realize the maximum potential benefits. Our existing clients served by this part of the business will also experience the benefits of the larger TCT system.”

The company will invest $6 million in its 60-acre multi-commodity distribution centre in Calgary. Kleysen said it would pursue development of similar centres in other western Canadian cities, offering ransload services between truck and rail.