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Toromont Seeks to Acquire Enerflex

Posted on October 20, 2009

Canada’s Toromont Industries Ltd. Has offered trust unit holders of Enerflex Systems Energy Fund (Enerflex) Ca $13.50 per unit held in a bid to acquire the Calgary, Alberta, Canada-based compression services firm. Toromont said that consideration would be comprised of at least 50% Toromont common shares and the balance in a mix of cash and additional stock. The offer represents a premium of approximately 34% over the closing price of Enerflex units at the close of trading on October 16, 2009, when the offer was made.

Based on the volume-weighted price of Enerflex units during the 20 trading days up to and including October 16, that premium is valued at about 33%. “We believe the combination of Enerflex and Toromont Energy Systems, our [Calgary-based] Gas Compression Division, would create a stronger organization better able to compete against large competitors in North American and international markets,” said Robert M. Ogilvie, chairman and CEO of Toromont. “We have been encouraged by our shareholders and Enerflex’s shareholders to pursue this combination. As discussions with Enerflex over the past two and a half years have not resulted in an agreement, the time has come to make a definitive proposal to the Enerflex Board,” he concluded.

In a response to that letter, Enerflex Systems Income Fund issued a statement on Monday, October 19, indicating that it had created a special committee of independent directors of the administrator of the fund to, among other things, consider and respond to Toromont’s letter and proposal. That committee consists of Douglas J. Haughey, Robert B. Hodgins and Patrick D. Daniel. “Enerflex takes issue with Toromont's characterization of past events in the letter and press release. No formal offer or binding business combination has yet been presented to Enerflex or its unitholders. Without approving or agreeing to further negotiations, Enerflex has requested further details from Toromont regarding the terms of Toromont's proposal so that the committee may properly consider the proposal,” according to that statement.

The statement also cautions unitholders in Enerflex Income Fund that the formation of the committee does not imply “assurance that an agreement with respect to a business combination or other form of transaction will be reached.” The acquisition proposal was delivered in an October 16, 2009 letter to Enerflex Chairman P. John Aldred and President and CEO J. Blaire Goertzen. The full text of that letter was released later and is available, with updated information posted after this writing (October 20) at Toromont’s web site at www.toromont.com. Enerflex’s response and following information can be found at its site at www.enerflex.com.

For more information: www.toromont.com

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