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RED DEER, AB, May 9 /CNW/ - High Arctic Energy Services Inc. (TSX: HWO)
("High Arctic" or the "Corporation") is pleased to announce that it has
entered into a financing agreement with HSBC Bank Canada for new credit
facilities to replace the existing senior credit facilities. The main
components of the new credit facilities are a $20 million, two year
committed term loan with a four year amortization, a $5 million demand
revolving operating loan and a $5 million revolving evergreen loan. The
$20 million was advanced to the Corporation on May 6, 2011. The credit
facilities are secured by all of the assets of High Arctic and by
unlimited guarantees of its foreign subsidiaries.
The funds from the $20 million term loan, together with a cash payment
of $3.7 million, were used to repay High Arctic's existing term loan on
May 6, 2011. The Corporation is required to make quarterly principal
payments on the term loan of $1,250,000 beginning September 30, 2011.
The term loan carries an annual interest rate of the bank's prime
interest rate plus 1.75% and has a maturity date of June 30, 2013.
The $5 million demand revolving operating loan facility may be drawn to
a maximum of 75% of the eligible Canadian accounts receivable, less
certain priority claims, and 90% of the eligible foreign accounts
receivable insured by the Export Development Corporation or other bank
approved insurers. The annual interest rate for this facility is the
bank's prime interest rate plus 1.25%. The Corporation does not have
any amounts drawn against the revolving operating loan.
The $5 million revolving evergreen loan can be used for the acquisition
of equipment to be purchased and held in Canada. The evergreen loan
requires monthly principal payments equal to 1/48th of each advance drawn on the facility commencing in the month following
the month the advance is drawn. The interest rate for this facility is
the bank's prime interest rate plus 1.25%. The Corporation does not
have any amounts drawn against the evergreen loan. The maturity date is
June 30, 2013.
Total debt outstanding under the new credit facilities is $20 million as
compared to debt outstanding under the former term loan of $36.5
million as at December 31, 2010. The Corporation also currently has
cash on hand of approximately $15 million. The lower interest rates
and the terms of the new credit facilities reflect the Corporation's
current stronger financial position. The structured repayment terms
provides increased certainty and allows for effective cash flow
management. For the last several years the Corporation has been
constrained by the need to reduce its debt through cash flow sweeps and
other mandatory repayment requirements. High Arctic now has the
ability to dedicate more of the existing cash balance and the cash
generated from ongoing operations to capitalize on new business
opportunities and to enhance its fleet of equipment. The diligent
management of the credit facilities will remain a focus of management.
"High Arctic is pleased to have secured this new financing," said Bruce
Thiessen, Chief Executive Officer of High Arctic. "The financing is an
endorsement of our business. The committed term loan provides us with
a level of stability for the future and the flexibility to capitalize
on new opportunities."
Mr Binnion Chairman of the Board added "This is the final step in our
very successful restructuring of $146.2 million in debt. I would like
to thank our lenders and investors for their patience and especially
their trust. Our management and staff did an amazing job over three
years under stressful circumstances and all stakeholders have benefited
from their efforts. As a result we have a growing company, great and
seasoned management plus now a very strong balance sheet."
This news release may contain forward-looking statements relating to
expected future events and financial and operating results of the
Corporation that involve risks and uncertainties. Actual results may
differ materially from management expectations, as projected in such
forward-looking statements for a variety of reasons, including market
and general economic conditions and the risks and uncertainties
detailed in both the Corporation's Management Discussion and Analysis
for the year ended December 31, 2010 and the Annual Information Form
for the year ended December 31, 2010 found on SEDAR (www.sedar.com). Due to the potential impact of these factors, the Corporation
disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, unless required by applicable law.
About High Arctic
The Corporation, through its subsidiaries, is a provider of specialized
oilfield equipment and services, including drilling, completion and
workover operations. Based in Red Deer, Alberta, High Arctic has
domestic operations throughout Western Canada and international
operations primarily in Papua New Guinea.
SOURCE High Arctic Energy Services Inc.
For further information:
Chief Financial Officer
403 340 9825