Canada's Largest Privately Held Security Firm to Be Sold

UE Waterheater Income Fund to pay $135M for monitoring, installation company Gestion Protectron


TORONTO -- UE Waterheater Income Fund is paying about $135 million for Gestion Protectron Inc. of Montreal, Canada's largest privately held security monitoring and installation firm.

The deal will go through UE's operating entity, Union Energy LP, and will be financed through an offering of subscription receipts and bank credit, the Toronto-based fund said Wednesday.

"We're expanding our already large base of customers, who are increasingly looking to us for additional products and services," Roger Rossi, UE Waterheater Income Fund's CEO, said in a release.

"Our acquisition of Protectron is expected to be immediately accretive to distributable cash and is consistent with our business objectives of leveraging our base of approximately one million customers, continuing to grow our portfolio of customers, and maximizing operational efficiency."

In a related move, the fund has entered into a bought-deal agreement to sell, to a syndicate of underwriters led by CIBC World Markets, about 7.7 million subscription receipts at $13.60 each to raise $105 million.

Holders of the receipts are entitled to receive one unit of the fund after closing of the acquisition.

Founded in 1988, Protectron is the second-largest security monitoring company in Canada and among the 10 largest in North America by number of subscribers. It serves about 176,000 residential, commercial and wholesale subscribers mainly in Quebec, Ontario and British Columbia.

For the year ended March 31, Protectron had revenues of about $64 million and EBITDA - earnings before interest, taxes, depreciation and amortization - of about $18 million.

UE Waterheater Income Fund owns water heater rental business of Union Energy LP and related commercial activities. Union Energy's main business is the rental and service of a portfolio of more than one million residential water heaters in Ontario, under the Union Energy and Ontario Hydro Energy brand names.