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Stuart Olson completes previously announced acquisition of Studon Electric & Controls Inc.

January 06, 2015

CALGARY, Jan. 6, 2015 /CNW/ - Stuart Olson Inc. (TSX: SOX, SOX.DB, SOX.DB.A) ("Stuart Olson" or the "Company") today announced that it has completed the previously announced acquisition of Studon Electric & Controls Inc. ("Studon"), (the "Transaction").

Headquartered in Red Deer, Alberta, Studon is a leading electrical and instrumentation services provider offering non-union construction, maintenance and turnaround services to the oil & gas, pipeline and petrochemical industries in Western Canada.

Mr. David LeMay, President and Chief Executive Officer of Stuart Olson said, "the completion of the Studon acquisition is a critical step in our strategy to becoming an integrated full-service construction company. In particular, it strengthens the vertical integration of our Industrial Group, supports our objective of growing this group into a self-performing general contractor and greatly enhances our ability to service the maintenance, repair and operations ("MRO") sector."

Transaction Financing

The purchase price of $77.8 million (the "Purchase Price") consists of an equity purchase price of $67.7 million (the "Equity Purchase Price") plus the assumption of net debt and a working capital adjustment. The Equity Purchase Price consists of $59.9 million in cash (the "Cash Consideration") and $7.8 million in Common Shares (the "Share Consideration"). The Cash Consideration has been funded by a combination of cash on hand and a draw on Stuart Olson's existing credit facility. The Share Consideration consisted of 1,103,081 Common Shares at a deemed price of $7.05 per share, calculated using the 20-day volume weighted average trading price of the Common Shares as at November 25, 2014. The Share Consideration is subject to a lockup period of up to 720 days. One-third of the Common Shares issued will be released from lockup every 240 days.

The Purchase Price may be increased by a maximum of $24.2 million through earn-out payments over the next three years. The earn-out payments are based on Studon's annual EBITDA exceeding a threshold of $16.4 million, with the threshold being increased if Studon's prior year EBITDA is below $16.4 million.

About Stuart Olson Inc.

Stuart Olson provides building construction, commercial and industrial electrical contracting, and industrial insulation services to an array of public and private sector clients. The Company operates office locations throughout British Columbia, Alberta, Saskatchewan, Manitoba and Ontario. Stuart Olson's common shares and 2010 and 2014 convertible debentures are listed on the Toronto Stock Exchange under the symbols "SOX", "SOX.DB" and "SOX.DB.A", respectively. www.stuartolson.com

Non-IFRS Measure

Throughout this press release the term "EBITDA" is used. While common in the construction industry, EBITDA is not recognized measures under IFRS.

EBITDA is used by Stuart Olson management to assist in making operating decisions and assessing performance. It is presented in this press release to assist readers in assessing the performance of Stuart Olson, its operating companies and Studon. EBITDA is calculated consistently from period to period, although it likely will not be directly comparable to similar measures used by other companies because it does not have a standardized meaning prescribed by IFRS. Stuart Olson defines EBITDA as net earnings/loss from continuing operations before interest expense, income taxes, capital asset depreciation and amortization, impairment charges, and gains/losses on asset and investment dispositions. EBITDA as reported by us may not be comparable to similar measures presented by other reporting issuers.

Forward Looking Information

This press release contains certain statements that may constitute forward-looking information within the meaning of applicable securities laws. This forward-looking information includes, without limitation, statements relating to the Company's business strategy and the financial attributes of the Transaction Often, but not always, forward-looking information can be identified by the use of such words as "may," "will," "expect," "believe," "plan," "intend," "estimate," "outlook," "forecast," "should," "anticipate" and other similar terminology, including statements concerning possible or assumed future results. Forward-looking information is based on management's reasonable assumptions, analysis and estimates in respect of its experience and perception of trends, current economic conditions, government policies and expected developments, as well as other material factors that it considers to be relevant at the time of making such statements.

The forward-looking information in this press release is included solely for the purpose of assisting investors in understanding the Company's financial position and the results of its operations as at the date hereof. By its nature, forward-looking information involves known and unknown risks and uncertainties, which give rise to the possibility that management's assumptions, analysis and estimates will be incorrect and that the Company's anticipated results will not be achieved. Although the Company believes that the statements with respect to forward-looking information are reasonable and current, such statements should not be interpreted as a guarantee of future performance or results, and will not necessarily be an accurate indication of whether or not such results will be achieved. Forward-looking information is necessarily subject to a number of factors that may cause actual results to differ materially from those results implied by the expectations suggested by such information. Those factors include, without limitation, the risks and uncertainties described in the Company's Annual Information Form filed with the securities regulatory authorities in Canada under the Company's profile at www.sedar.com. Readers are encouraged to consider the foregoing risks and other factors carefully when evaluating the forward-looking information and are cautioned not to place undue reliance upon such information when making investment decisions.

The forward-looking information in this press release is current to the date hereof, and is subject to change following such date. While the Company may elect to do so, unless required by applicable law, it undertakes no obligation to update this information to reflect new information or circumstances at any particular time.

SOURCE Stuart Olson Inc.

David LeMay, President and Chief Executive Officer, Stuart Olson Inc., (403) 685-7777, Email: inquiries@stuartolson.com; Daryl Sands, Executive Vice President and Chief Financial Officer, Stuart Olson Inc., (403) 685-7777, Email: inquiries@stuartolson.com