Update on Review of Structural Alternatives and Business Outlook September 29, 2014
Comprehensive Review of Alternatives After a comprehensive review of structural alternatives designed to maximize shareholder value, Civeos Board has unanimously concluded that Civeo should continue as a C-corp and redomicile to Canada.…
REIT Conversion Evaluation Positive Attributes Negative Attributes Tax Savings: In most REIT conversions, tax savings are the primary driver of higher valuations. Capital Constraints: Increased dividend requirements restricts the…
REIT Option is Net Present Value Negative A REIT conversion is NPV negative, given limited ongoing tax savings and upfront cash uses. REIT structure for Civeo does not reduce taxes paid in Canada and Australia - only reduces taxes for…
REIT Conversion Costs Upfront costs are greater than the NPV of tax savings. Description Upfront Impact Required shareholder distributions estimated REIT rules require purging of all to be 1.8 billion previously undistributed…
Migrating to Canada is Best Option Given Civeos International Operations The migration provides similar efficiencies with significantly lower upfront costs compared to a REIT conversion. REIT Conversion Migration 720 million of cash…
Migration Overview Civeo expects to execute a self-directed redomiciling allowable under Section 7874 of the IRS Code - Section 7874 allows a company to change its domicile to a foreign jurisdiction without corporate level U.S. taxes…
Business Outlook Update and Conclusions
Business Outlook Update Maintain 3Q14 guidance of 220 million to 230 million of revenues with an EBITDA margin of 33% to 34% Lower Canadian results expected in 4Q14 - Existing customer projects are nearing completion and incremental…
Conclusions After rigorous and extensive review of structural alternatives, Board unanimously concluded that Civeo remaining a C-corp and redomiciling to Canada is in the best interests of the Company and its shareholders Migration…
Appendix
EBITDA and Adjusted EBITDA Reconciliation ( in millions) The term EBITDA consists of net income plus interest, taxes, depreciation and amortization. The term Adjusted EBITDA is defined as EBITDA adjusted to exclude impairment charges…
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