Sterling Construction Company, Inc. Acquires Remaining Interest in Its Ralph L. Wadsworth Subsidiary
Sterling Construction Company, Inc. (NasdaqGS: STRL), ("Sterling" or the
"Company") today announced that on December 31, 2012 it made an early
exercise of its option under a December 2009 Purchase Agreement (“the
2009 Agreement”) and purchased the remaining 20% membership interest in
Ralph L. Wadsworth Construction Company, LLC (“RLW”) that was previously
held by RLW’s executive management. Sterling further retained the
services of RLW’s CEO, President and Vice President of Business
Development, Kip, Con and Tod Wadsworth, respectively, under new
employment agreements.
Total consideration of $23.1 million was funded by drawing down on
Sterling’s line of credit. Sterling intends to repay the borrowed funds
by liquidating some of its short-term investments. In accordance with
the 2009 Agreement, the purchase price is 20% of the simple average of
RLW’s EBITDA (income before interest, taxes, depreciation and
amortization) for the calendar years 2010, 2011 and 2012 times a
multiple of a minimum of 4.0 and a maximum of 4.5. In accordance with
the terms of the 2009 Agreement, the applicable multiple was 4.0. For
purposes of determining the exercise price, EBITDA for 2012 was based on
an estimate, and the final purchase price will be adjusted based on
actual EBITDA for 2012 once the audit of the financial results for 2012
has been completed.
Peter MacKenna, Sterling’s CEO commented, “We are very pleased to
conclude this transaction. The terms of the option provide for
operational continuity of RLW and a stable platform for organic growth
and further integration of our operating units.”
Sterling is a leading heavy civil construction company that specializes
in the building and reconstruction of transportation and water
infrastructure in large markets in Texas, Utah, Nevada, Arizona,
California and other states where there are construction opportunities.
Its transportation infrastructure projects include highways, roads,
bridges and light rail and its water infrastructure projects include
water, wastewater and storm drainage systems.
This press release includes certain statements that fall within the
definition of "forward-looking statements" under the Private Securities
Litigation Reform Act of 1995. Any such statements are subject to risks
and uncertainties, including overall economic and market conditions,
federal, state and local government funding, competitors' and customers'
actions, and weather conditions, which could cause actual results to
differ materially from those anticipated, including those risks
identified in the Company's filings with the Securities and Exchange
Commission. Accordingly, such statements should be considered in light
of these risks. Any prediction by the Company is only a statement of
management's belief at the time the prediction is made. There can be no
assurance that any prediction once made will continue thereafter to
reflect management's belief, and the Company does not undertake to
update publicly its predictions, whether as a result of new information,
future events or otherwise.
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