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NAPEC Inc. Announces Acquisition by Oaktree

DRUMMONDVILLE, QUEBEC -- (Marketwired) -- 12/04/17 -- All dollar amounts in this press release are in Canadian dollars, unless otherwise specified.

NAPEC Inc. ("NAPEC" or the "Company") (TSX: NPC) today announced that it has entered into a definitive arrangement agreement (the "Arrangement Agreement") pursuant to which funds managed by Oaktree Capital Management L.P. ("Oaktree"), will acquire all of the issued and outstanding common shares of NAPEC (the "Shares") for $1.95 in cash per Share (the "Purchase Price").

KEY TRANSACTION HIGHLIGHTS


--  Purchase Price of $1.95 in cash per Share representing a premium of
    35.4% to the closing price on December 1, 2017 and a premium of 43.9% to
    the 20-day volume weighted average price on the TSX.


--  Total transaction value of approximately $320 million, including the
    assumption of indebtedness.


--  The Board of Directors of NAPEC (the "Board of Directors") unanimously
    recommends that holders of Shares and warrants (collectively, the
    "Securityholders") vote in favor of the transaction.


--  Oaktree's Power Opportunities strategy partners with management teams of
    leading companies that provide equipment, services and/or software used
    in the generation, transmission, distribution, and consumption of
    electricity, natural gas and other utility resources.


--  Oaktree intends to leverage the expertise of the management team led by
    Pierre L. Gauthier, President and Chief Executive Officer, and intends
    on maintaining its head office in the Province of Quebec post-closing.

"In recent years, NAPEC has achieved significant progress and built a solid foundation through the realization of its strategic objectives via a combination of organic and acquisition-driven growth. This transaction represents a unique opportunity to provide a significant reward to our shareholders while also enabling NAPEC and its employees to enter into a new phase of growth supported by Oaktree's capital, industry expertise, experience and insight", said Pierre L. Gauthier.

The transaction has been unanimously approved by NAPEC's Board of Directors following the unanimous recommendation of an independent committee of directors comprised of Luc Reny, Guy Pelletier, Denis Tremblay, Jean Rochette, Serge Chiasson and Yves Filion (the "Independent Committee"). NAPEC's Board of Directors also unanimously recommends that Securityholders vote in favor of the transaction at the special meeting (the "Meeting") of Securityholders to be called to approve the transaction. "We are pleased with the culmination of the independent committee's work and are confident that this transaction is highly beneficial for both NAPEC and its shareholders. We are confident that with Oaktree as its owner and with the strong management team directed by Pierre L. Gauthier, NAPEC will continue to have the financial support and the leadership to expand its market reach in North America", said Luc Reny, Chairman of the Board of Directors.

"We are extremely excited about the opportunity to partner with NAPEC's management team to combine Oaktree's significant energy sector experience, network, and financial resources to continue to drive the Company's growth in the North American utility services market", said Jason Lee, Managing Director and Co-Portfolio Manager of Oaktree's Power Opportunity Strategy.

The Fonds de solidarite FTQ (the "Fonds"), NAPEC's largest shareholder having beneficial ownership and control over approximately 19% of the total Shares and warrants outstanding, has expressed to NAPEC and Oaktree its intention, as of the date hereof, to vote all such Shares and warrants in favor of the Transaction, subject to the Fonds' review of the final terms and conditions of the transaction.

FAIRNESS OPINIONS

National Bank Financial Inc., acting as financial advisor to NAPEC, has provided an opinion to the Independent Committee, and Richter LLP, retained by the Independent Committee as independent financial advisor, has also provided an opinion, each to the effect that, subject to the assumptions, limitations and qualifications set out in such opinions, the consideration to be received by the shareholders in connection with the transaction is fair, from a financial point of view, to such shareholders.

The fairness opinions will be included in the management information circular to be mailed to Securityholders in connection with the approval of the transaction.

TRANSACTION DETAILS

The transaction will be implemented by way of a statutory plan of arrangement under the Canada Business Corporations Act and is subject to court approval and to the approval of at least 66 2/3% of the votes cast by Securityholders present in person or represented by proxy at the Meeting.

The Arrangement Agreement provides that NAPEC is subject to a non-solicitation covenant with customary "fiduciary out" provisions allowing the Board of Directors to accept an unsolicited superior proposal in certain circumstances. The Arrangement Agreement also provides Oaktree with a right to match any such unsolicited proposal. A termination fee of $7.0 million would be payable by NAPEC to Oaktree in certain circumstances, including if it fails to exercise its right to match in the context of a superior proposal supported by NAPEC. Oaktree has agreed to pay the Company a termination fee of $7.0 million if the transaction is not completed in certain circumstances. The transaction is subject to customary closing conditions, including the expiration or early termination of waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, receipt of court approval pursuant to the Canada Business Corporation Act and receipt of Securityholder approval. The transaction is supported by a waiver from the Company's existing bank group and is not subject to any financing condition and is expected to close by the end of the first quarter of 2018.

NAPEC intends to mail a management information circular in the upcoming weeks to its Securityholders for the Meeting expected to be held before February 16, 2018. Details of the transaction as well as the rationale for the Board of Directors' support of the transaction will be set out in the management information circular.

Further details regarding the terms of the transaction are set out in the Arrangement Agreement and will be provided in the management information circular which will be available under the profile of NAPEC at www.sedar.com and on NAPEC's website (www.napec.ca).

ADVISORS

National Bank Financial Inc. is acting as financial advisor to NAPEC and Stein Monast LLP and Stikeman Elliott LLP are acting as NAPEC's legal counsel. Kirkland & Ellis LLP and McCarthy Tetrault LLP are acting as legal counsel to Oaktree.

OVERVIEW OF THE COMPANY

NAPEC is a company operating in the energy sector. The Company is a leading provider of construction and maintenance services to the public utility and heavy industrial markets, mainly in Quebec, Ontario and the eastern United States. NAPEC and its subsidiaries build and maintain utility electrical and natural gas transmission and distribution systems and related energy infrastructure. The Company also installs gas-powered and electric-powered heavy equipment for utilities, gas-fired industrial power plants and petrochemical facilities in North America. The Company also offers environmental construction and road matting services.

Additional information on NAPEC can be found in the SEDAR database (www.sedar.com) and on the Company's website, at www.napec.ca.

ABOUT OAKTREE

Oaktree is a leader among global investment managers specializing in alternative investments, with US$100 billion in assets under management as of September 30, 2017. The firm emphasizes an opportunistic, value-oriented and risk-controlled approach to investments in distressed debt, corporate debt (including high yield debt and senior loans), control investing, convertible securities, real estate and listed equities. Since its inception in 1995, Oaktree's Power Opportunities strategy has focused exclusively on providing capital to leading companies that provide equipment, services, software and infrastructure used in the electric power and natural gas industries. Headquartered in Los Angeles, Oaktree has over 900 employees and offices in 18 cities worldwide. For additional information, please visit Oaktree's website at www.oaktreecapital.com.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts included in this press release, including statements regarding the prospects of the industry and prospects, plans, financial position and business strategy of NAPEC, may constitute forward-looking statements within the meaning of Canadian securities legislation and regulations. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "anticipate", "plan", "foresee", "believe" or "continue", the negatives of these terms, variations of them and similar expressions. More particularly and without restriction, this press release contains forward-looking statements and information regarding: statements and implications about the anticipated benefits of the proposed transaction for NAPEC, its employees, business partners, shareholders and other stakeholders, including future financial and operating results, plans, objectives, expectations and intentions of Oaktree or NAPEC; and the anticipated timing of the special meeting of Securityholders of NAPEC and of the completion of the proposed transaction.

In respect of the forward-looking statements and information concerning the anticipated benefits and timing of the completion of the proposed transaction, NAPEC has provided such statements and information in reliance on certain assumptions that it believes are reasonable at this time, including assumptions as to the ability of the parties to receive, in a timely manner and on satisfactory terms, the necessary regulatory, court and Securityholder approvals; the ability of the parties to satisfy, in a timely manner, the other conditions to the completion of the transaction; and other expectations and assumptions concerning the proposed transaction. The anticipated dates indicated may change for a number of reasons, including the inability to receive, in a timely manner, the necessary regulatory, court and Securityholder approvals, the necessity to extend the time limits for satisfying the other conditions to the completion of the proposed transaction or the ability of the Board of Directors to consider and approve, subject to compliance by the Company of its obligations in this respect under the Arrangement Agreement, a superior proposal for the Company. Although NAPEC believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct, that the proposed transaction will be completed or that it will be completed on the terms and conditions contemplated in this press release. Accordingly, investors and others are cautioned that undue reliance should not be placed on any forward-looking statements.

Risks and uncertainties inherent in the nature of the proposed transaction include, without limitation, the failure of the parties to obtain the necessary Securityholder, regulatory and court approvals or to otherwise satisfy the conditions to the completion of the transaction; failure of the parties to obtain such approvals or satisfy such conditions in a timely manner; significant transaction costs or unknown liabilities; the ability of the Board of Directors to consider and approve, subject to compliance by the Company of its obligations in this respect under the Arrangement Agreement, a superior proposal for the Company; the failure to realize the expected benefits of the transaction; and general economic conditions. Failure to obtain the necessary Securityholder, regulatory and court approvals, or the failure of the parties to otherwise satisfy the conditions to the completion of the transaction or to complete the transaction, may result in the transaction not being completed on the proposed terms, or at all. In addition, if the transaction is not completed, and NAPEC continues as an independent entity, there are risks that the announcement of the proposed transaction and the dedication of substantial resources of the Company to the completion of the transaction could have an impact on its business and strategic relationships (including with future and prospective employees, customers, suppliers and partners), operating results and activities in general, and could have a material adverse effect on its current and future operations, financial condition and prospects. Furthermore, the failure of NAPEC to comply with the terms of the Arrangement Agreement may, in certain circumstances, result in it being required to pay a fee to Oaktree, the result of which could have a material adverse effect on its financial position and results of operations and its ability to fund growth prospects and current operations. Consequently, the reader is cautioned not to place undue reliance on the forward-looking statements and information contained in this press release.

The forward-looking statements in this document reflect the Company's expectations on the date hereof and are subject to change after that date. The Company expressly disclaims any obligation or intention to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable securities laws.

No Offer or Solicitation

This announcement is for informational purposes only and does not constitute an offer to purchase or a solicitation of an offer to sell NAPEC common shares.

Source: NAPEC Inc.

Contacts:
Pierre L. Gauthier
President and Chief Executive Officer
819-479-7771
p.gauthier@napec.ca

Mario Trahan, CPA, CMA
Chief Financial Officer
819-479-7771
m.trahan@napec.ca

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