Petrowest announces an amendment to its syndicated credit facility, closing of the subordinated debt financing, and contract awards

CALGARY, Sept. 29, 2015 /CNW/ - Petrowest Corporation ("Petrowest") (TSX:PRW) announced today that it has entered into an amendment and restatement of its $90,000,000 syndicated credit facility with its syndicate of lenders, led by Bank of Montreal (the "Amended and Restated Credit Agreement"). Lloyd Wiggins, Petrowest's Chief Financial Officer, stated "the Amended and Restated Credit Agreement provides Petrowest with additional financial flexibility as Petrowest ramps up its operations for increased activity levels as we enter an exciting development period in British Columbia". In aggregate, Petrowest has approximately $22 million of successful contract awards in the infrastructure and energy sector following the announcement of our second quarter 2015 financial results on August 12, 2015.

The Amended and Restated Credit Agreement includes, among other things, modified financial covenants, including:

Covenant


Former Requirement


Revised Requirement

Senior Funded Debt to

Adjusted EBITDA Ratio(1)


not greater than 2.50:1


not greater than:

(i) 3.25:1 from October 1, 2015 to March 31, 2016,

(ii) 2.50:1 from April 1, 2016.

 

Total Funded Debt to

Adjusted EBITDA Ratio(2)


none


not greater than:

(i) 4.75:1 until September 30, 2015,

(ii) 4.00:1 from October 1, 2015 to March 31, 2016,

(iii) 3.25:1 from April 1, 2016.

 

Consolidated Fixed

Charge Coverage Ratio(3)


not less than 1.25:1


not less than:

(i) 1.05:1 from January 1, 2016 to June 30, 2016,

(ii) 1.10:1 from July 1, 2016 to September 30, 2016,

(iii) 1.25:1 from October 1, 2016.

 

Adjusted EBITDA


none


not less than:

(i) $18,650,000 for the four quarters ending on

September 30, 2015,

(ii) $20,700,000 for the four quarters ending on

December 31, 2015.

 

Unfinanced Capital

Expenditures(4)


not greater than $21

million


not greater than $13 million

Notes:

(1)

The ratio of Senior Funded Debt at the end of the most recently completed fiscal quarter of Petrowest to the

Adjusted EBITDA for the most recently completed consecutive four fiscal quarters of Petrowest. "Senior

Funded Debt" means the total of long term debt plus finance lease liabilities. "Adjusted EBITDA" means

earnings before net finance costs, income taxes, amortization, share-based compensation, foreign exchange

gains or losses, gains or losses on fair value of financial instruments and gains or losses on disposal of

capital assets (including intangible assets).

(2)

The ratio of Total Funded Debt at the end of the most recently completed fiscal quarter of Petrowest to the

Adjusted EBITDA for the most recently completed consecutive four fiscal quarters of Petrowest. "Total

Funded Debt" means the aggregate total of the Senior Funded Debt and the Subordinated Debt

(defined below).

(3)

The ratio of Adjusted EBITDA (minus the amount of unfunded capital expenditures of Petrowest and any

distributions made by Petrowest) to all principal and interest payments payable in respect of any

indebtedness of Petrowest (including the current portion of Petrowest's long term debt, plus any taxes

payable by Petrowest over the last 12 month period).

(4)

"Unfinanced Capital Expenditures" means 100% of capital expenditures less third party capital

contributed for the specific purposes of financing those capital expenditures, less new third party

debt advanced for the purpose of financing. The covenant applies to the fiscal year.

In addition to the revisions to the financial covenants noted above, Petrowest has agreed to (a) provide additional monthly reporting to the lending syndicate, (b) pay increased interest rates if the Total Funded Debt to Adjusted EBITDA Ratio is greater than 2.00:1, and (c) not have a negative variance between its monthly reported Adjusted EBITDA and its 2015 budgeted Adjusted EBITDA for such month greater than the greater of (i) 20% or (ii) $500,000. Any positive variance between Petrowest's monthly reported Adjusted EBITDA and its 2015 budgeted Adjusted EBITDA may be carried forward to successive months until the end of 2015. All other material terms of the syndicated credit facility remain unchanged.

Petrowest also announces the closing of a subordinated debt agreement with Crown Capital Fund IV, LP ("Crown") for a $15 million term loan (the "Subordinated Debt Financing"). The Subordinated Debt Financing satisfies a condition to the execution of the Amended and Restated Credit Agreement. Under the terms of the Subordinated Debt Financing, Crown has provided to Petrowest a term loan in an aggregate amount of $15 million. The term loan bears a fixed interest rate of 11% per annum, compounded and payable monthly, and matures in 36 months. Petrowest has, under the term loan, the option to prepay certain amounts within certain periods of time with or without a penalty. Petrowest intends to use the proceeds from the Subordinated Debt Financing for general working capital purposes and to reduce its outstanding indebtedness under its syndicated credit facility.

Under the terms of the Subordinated Debt Financing, Petrowest has granted to Crown 4,300,000 warrants (the "Petrowest Warrants"). Each Petrowest Warrant will entitle Crown to purchase one Class A Common Share in the capital of Petrowest at an exercise price of $0.40 for a period of five years.

As of the date hereof and prior to the Subordinated Debt Financing, Petrowest has $66.4 million outstanding under its syndicated credit facility. Mr. Wiggins added: "The Subordinated Debt Financing is a key component to provide additional liquidity ahead of the upcoming infrastructure bids, including the main civil works bid for BC Hydro's Site C project".

ABOUT PETROWEST

Petrowest is an Alberta corporation involved in both industrial and civil infrastructure projects, as well as pre-drilling and post-completion energy services, gravel crushing and hauling for non-energy sector customers. Petrowest's primary operations are based in northwestern Alberta and northeastern British Columbia.

SOURCE Petrowest Corporation

For further information: Please contact Nikolaus Kiefer, Vice President of Investor Relations & Corporate Development at (403) 384-0405 or info@petrowest.com.

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