Mr. Rene Amirault reports

SECURE ANNOUNCES $1.075 BILLION ASSET SALE TO WASTE CONNECTIONS

Secure Energy Services Inc. has entered into a definitive agreement with Waste Connections Inc. to sell the facilities formerly owned by Tervita Corp. that were ordered to be divested by the Competition Tribunal for $1.075-billion in cash plus approximately $75-million for certain adjustments as provided in the agreement, for total estimated cash proceeds of $1.15-billion.

"Despite the challenging circumstances leading to and associated with completing this sales process, we believe the transaction, including the counterparty, are beginning to highlight the underlying value of Secure's businesses, and represent another meaningful step forward in pursuit of our strategy as one of Canada's sector-leading waste management and energy infrastructure organizations," said Rene Amirault, chief executive officer of Secure. "Following closing, the transaction is expected to materially improve our financial position and capital allocation flexibility, marking a pivotal moment for our company to concentrate our resources, accelerate innovation and redeploy capital in areas of growth for Secure. The pro-active decision to proceed with the divestitures underscores our resilience and adaptability as we continue to prioritize maximizing value for our shareholders, customers and employees."

The strategic impact of this transaction solidifies Secure's position in the waste management sector. Following the close of the transaction, the corporation remains the market share leader of industrial and energy waste infrastructure in Western Canada and North Dakota. Secure's business is expected to continue to deliver robust margins and a stable cash flow profile underpinned by recurring volumes driven by industrial waste, metals and energy markets. The corporation's 2024 adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) is expected to range from $440-million to $465-million, subject to timing of the transaction close.

The transaction has been carefully considered by Secure's management and board of directors, and the corporation continues to believe there are strong grounds for appeal of the Competition Tribunal's decision. However, the corporation decided that it is in the best interest of stakeholders to take control of the process and move forward with a sale that generates significant cash proceeds and provides clear resolution of the competition matter. As a result, the corporation expects to alleviate any uncertainty or overhang on the stock that may have been caused by the Competition Tribunal's order, while concurrently providing certainty to the company's employees and customers.

Transaction details

The agreement outlines the sale of the facilities to Waste Connections for proceeds of $1.075-billion plus approximately $75-million in certain adjustments as provided in the agreement. The corporation anticipates the transaction to close in the first quarter of 2024, subject to regulatory approval by the Competition Bureau, and the satisfaction of customary closing conditions.

Over 250 Secure operational and support staff are expected to join the Waste Connections team upon closing the transaction.

Waste Connections is an integrated solid waste services company that provides non-hazardous waste collection, transfer and disposal services, including by rail, along with resource recovery, primarily through recycling and renewable fuels generation. Waste Connections serves approximately nine million residential, commercial and industrial customers, in mostly exclusive and secondary markets across 44 states in the United States and six provinces in Canada. Waste Connections also provides non-hazardous oil field waste treatment, recovery and disposal services in several basins across the U.S., as well as intermodal services for the movement of cargo and solid waste containers in the Pacific Northwest. The transaction provides Waste Connections with a growth platform in the Canadian market, leveraging its expertise in waste handling, recovery and disposal, and complementing its existing U.S.-based, non-hazardous oil field waste operations.

Secure remains dedicated to working closely with applicable regulatory authorities and Waste Connections to ensure a successful closing and a smooth transition.

Goldman Sachs & Co. LLC is acting as exclusive financial adviser to Secure, and Bennett Jones LLP is acting as legal counsel to Secure with respect to the transaction.

Allocation of transaction proceeds

At closing, the transaction will enhance Secure's financial flexibility by providing immediate liquidity for debt repayment, while maintaining significant leverage capacity and a surplus of cash available for, among other things, shareholder returns and financing of growth initiatives. The corporation intends to continue paying its quarterly dividend of 10 cents per share, or 40 cents per share on an annualized basis, offering an attractive yield of approximately 5 per cent based on its current share price.

The board of directors and management believe there is a substantive disparity between Secure's current share price and the fundamental value of its business. The transaction proceeds represent an accretive multiple in the face of an ordered sale, which, in the corporation's view, underscores this disconnect and supports a value above this benchmark. As such, the corporation intends to move forward with a normal course issuer bid (NCIB) to repurchase shares, and will evaluate other methods that may be available to reduce this valuation gap and return capital to shareholders following closing, which may include consideration of the merits of a substantial issuer bid, based on, among other things, market conditions, the discretion of the board of directors, compliance with debt covenants and financial performance at the applicable time. Finally, Secure plans to execute on growth opportunities following closing both organically, and through acquisitions that align with the corporation's investment criteria and complement its core environmental waste management and energy infrastructure business operations.

Revised capital guidance

As a result of the transaction, the corporation is providing updated guidance with respect to the 2024 capital program. The corporation expects to spend approximately $60-million on sustaining capital, including landfills expansions, and approximately $15-million on settling Secure's abandonment retirement obligations, down from guidance previously provided of $85-million and $20-million, respectively, after adjusting for the impacts of the transaction.

At this time, Secure continues to have $50-million allocated for growth opportunities in 2024 that leverage existing infrastructure through long-term contracts. The corporation intends to update its growth plans and provide further details following the entering of agreements with its customers.

Strategic update

Following the merger with Tervita Corp. in July, 2021, the corporation conducted a thorough review of its businesses, intending to capitalize on its core competencies and strategic advantages, ultimately aiming to enhance value for shareholders. In connection with this review, business units that did not fit into the corporation's core waste management and energy infrastructure strategy were identified for divestment.

Secure is pleased to announce that it has successfully executed on this strategic initiative with various non-core divestitures completed over the last two years. Since the beginning of 2022, the corporation has successfully sold three non-core oil field-services-focused business units and various redundant or unused assets for aggregate gross proceeds of approximately $73-million. These sales were completed through multiple transactions, and included the following businesses and assets:

• Project management services focused on mobile yellow iron used for demolition and remediation;
• Oil field water management and water pumping services, focused on oil and gas completion activity;
• Consulting services related to oil field environmental and regulatory matters;
• Redundant heavy-duty equipment;
• Various real estate assets not required for continuing core business operations.

With the final disposition expected to close on Dec. 15, 2023, the corporation's portfolio rationalization under this initiative will be complete.

Allen Gransch, president of Secure, remarked: "These divestitures were a key part of our strategic review and market repositioning as a leading waste management and energy infrastructure company. I'd like to thank the 400 employees associated with these business units for their contributions to Secure, and wish them and their new organizations all the best. The decision to divest these assets aligns with our commitment to optimize our portfolio and allocate resources to infrastructure-based businesses that provide stable recurring revenue while generating significant free cash flow."

Approximately 70 per cent of the corporation's expected adjusted EBITDA in 2024 is anticipated to correspond to the corporation's environmental waste management infrastructure segment, which aligns with the corporate strategy as Secure continues to grow its waste management business while divesting non-core oil field services business lines, as noted above.

Investor conference call

Secure will host a conference call Monday, Dec. 11, 2023, at 1 p.m. MT to discuss the transaction. To participate in the conference call, dial 416-764-8650, or toll free 1-888-664-6383. To access the simultaneous webcast, please visit the company's website. For those unable to listen to the live call, a taped broadcast will be available at the company's website and, until midnight MT on Monday, Dec. 18, 2023, by dialling 1-888-390-0541 and using the passcode 037452.

About Secure Energy Services Inc.

Secure is a leading waste management and energy infrastructure business headquartered in Calgary, Alta. The corporation's extensive infrastructure network located throughout Western Canada and North Dakota includes waste processing and transfer facilities, industrial landfills, metal recycling facilities, crude oil and water gathering pipelines, crude oil terminals, and storage facilities. Through this infrastructure network, the corporation carries out its principal business operations, including the processing, recovery, recycling and disposal of waste streams generated by its energy and industrial customers, and gathering, optimization, terminalling and storage of crude oil and natural gas liquids. The solutions the corporation provides are designed not only to help reduce costs, but also lower emissions, increase safety, manage water, recycle byproducts and protect the environment.