Environmental Management Solutions Inc. and Biogénie To Merge

Date: November 14, 2006

Source: Environmental Management Solutions Inc.

Environmental Management Solutions and Biogénie Announce Merger Creating Canadian Leader in Environmental Services

Environmental Management Solutions Inc. (EMS-TSX) and Biogénie S.R.D.C Inc. today announced that the two companies have agreed to a transaction that will merge their complementary operations. The merger will create a Canadian leader in environmental services and enhance the combined companies' growth potential.

"The transaction we are announcing today is a fundamental transformation for EMS and an important development for the Canadian environmental services industry. Merging EMS and Biogénie creates a stronger national and international force in environmental services," said Tony Busseri, President and CEO of Environmental Management Solutions. "Together, we will be the largest integrated environmental services company in Canada. The combination is clearly beneficial to our shareholders, customers and employees today and creates significant opportunities for the future."

To effect the merger, EMS will acquire all the shares of privately held Biogénie for $55 million through a combination of cash and EMS shares. The transaction is expected to be completed by November 24, 2006 and is subject to the satisfaction of customary closing conditions, including the delivery of certain documentation.

EMS currently has two business units. GSI is focused primarily on the management, treatment and disposal of organic waste but also performs site assessment and remedial services including the treatment and recycling of contaminated soil. The second EMS business unit is Tanknology Canada, which provides storage tank testing, inventory management services, meter calibration and compliance testing.

Founded in 1986, Biogénie specializes in on-site and off-site soil treatment and reclamation for public and private sector clients across Canada as well as in the United States, France and United Kingdom. The company has soil treatment facilities located in: Montreal-East, St. Lambert, and Lac St. Charles, Quebec; Paris, France; and Manchester, UK.

Biogénie is the largest company in its business in Quebec and a key industry participant in other markets. For the fiscal year ended March 31st, 2006 Biogénie's annual revenue and EBITDA were approximately $50.4 million and $9.4 million respectively.

"Together, our two companies are a perfect strategic fit. GSI's capabilities in site assessment and remediation add further critical mass to Biogénie's important assessment and remediation operations. At the same time, Biogénie will benefit from GSI's integrated business model that is focused on the beneficial reuse of organic waste for the reclamation of degraded sites," said Benoit Cyr, President of Biogénie. "We will be able to grow our business more effectively as part of EMS than we likely could have done as a private company. Our management and employees look forward to working with our new colleagues to seize the opportunities that lie ahead for the new EMS."

Mr. Busseri noted: "This transaction captures the strengths of the two companies and adds to them. One obvious fit is that GSI's end product is a reusable treated organic waste that Biogénie can use to complete remediation of contaminated and degraded sites. GSI gets an outlet while Biogénie gets an input. Both units get what they need and customers get the fully engineered solution they want."

Following the merger, EMS will have three business units:

  • Site Assessment and Remediation (SAR) - Environmental contracting, off-site treatment and recycling of contaminated soil, and the remediation of contaminated/degraded sites.

  • Organic Waste Management (OWM) - Land application, composting and/or disposal of organic wastes and the sale of eco-products.

  • Tank Testing and Calibration - Storage tank precision leak testing and statistical inventory reconciliation, compliance testing, facility compliance and tank system audits.

Biogénie will be EMS's operating company in SAR and will maintain its headquarters, technical development centre, and laboratory in Quebec City. Its management team will remain in place and have agreed to collectively invest $7.1 million of the purchase price into common shares of EMS at a price of $0.50 per common share to align their longer-term economic interests with those of other EMS shareholders. GSI will be the operating company for OWM, while Tanknology Canada will continue as a leader in an important niche market, Tank Testing and Calibration.

The Company's focus will be on growing the revenue and cash flow base from the combined group of employees and operations. The Company believes there are opportunities for cost-saving synergies such as the use of Biogénie's laboratory for analytical testing and the consolidation of the two companies' insurance programs.

"Through this merger, EMS will attain critical mass in site assessment and remediation in Central Canada," said Mr. Busseri. "We will be in a better position to generate value for shareholders by taking advantage of increasingly favourable conditions in the industry here and overseas. With stronger operations and a solid financial foundation, we are ready for further growth."

The transaction will be financed through a new credit agreement that will be provided by a group of financial institutions. In addition, ONCAP, the largest shareholder of EMS, has exercised its pre-existing option to invest an additional $10 million in common shares of the Company at a price of $0.45 per share, less a 5% discount. Further, on closing, certain members of the EMS and Biogénie management teams and board of directors will be purchasing common shares of EMS for additional proceeds to EMS of approximately $1 million at a common share price of $0.50. The shares of EMS to be issued in connection with the acquisition and private placement financings have been conditionally approved by the Toronto Stock Exchange.Combined, the financing will be sufficient to pay for the acquisition of the shares of Biogénie and provide material funds to support the continuing operations and future growth of EMS.

Shareholder Conference Call and Webcast

EMS will hold a conference call and webcast today, Tuesday November 14, 2006 at 3 pm ET. Tony Busseri, President and CEO of EMS and Benoit Cyr, President of Biogénie will discuss the merger and answer investor questions. Media are invited to participate in listen-only mode. To participate by telephone, call 1-800-531 3169 or 416 644 3427. A recording of the conference call will be available until November 21, 2006 by calling 416 640 1917. To access the webcast, log onto www.newswire.ca or visit the Company's website at www.emsolutions.com.

About EMS

Environmental Management Solutions Inc. is Canada's leading environmental services company specializing in the management of organic-based waste streams and contaminated soils, with an emphasis on beneficial re-use. EMS provides cost-effective solutions to municipal, commercial and industrial clients in Eastern Canada and the northern United States through its subsidiaries GSI Environment Inc. and Tanknology Canada Inc. GSI provides integrated environmental services which include the land application, composting or disposal of organic wastes, eco-product sales, environmental contracting, and contaminated soil treatment and recycling. Tanknology provides storage tank precision leak testing and statistical inventory reconciliation, compliance testing, and facility compliance and tank system audits. Environmental Management Solutions is listed on the Toronto Stock Exchange under the ticker symbol EMS.

About Biogénie

Biogénie S.R.D.C. Inc. is a Quebec-based international environmental firm which provides both on-site and off-site remediation solutions. Biogénie serves public and private clients including government as well as major petroleum, industrial, real estate and utility companies throughout North America and Western Europe. Biogénie's distinctiveness lies in its world-class bioremediation expertise and its ability to carry out large and challenging projects at a fixed price. In addition to its headquarters and office located in Quebec City, Biogénie has offices in Montreal, Calgary, Edmonton, Philadelphia, Paris and Reading, U.K., as well as seasonal offices in Yellowknife and Iqaluit.


For further information, contact:
Tony Busseri
President and Chief Executive Officer
Environmental Management Solutions Inc.
905-335-2100 x 22

John Lute
Lute & Company
416-929-5883 x 222

Sign up to receive our free Weekly News Bulletin