CALGARY, July 29, 2015 /CNW/ - Petrowest Corporation ("Petrowest") (TSX:PRW) announces that its syndicate of lenders, led by Bank of Montreal, has granted a waiver to September 30, 2015 of non-compliance with certain financial covenants in the Company's syndicated credit facility. In addition, Petrowest undertook to enter into an amending agreement to the syndicated credit facility, on or before September 30, 2015, that includes modified financial covenants through the third quarter of 2016.
"The waiver and expected amendment to the syndicated credit facility will provide Petrowest with additional financial flexibility and liquidity as Petrowest ramps up its operations for increased activity. It is encouraging to receive the continuing support from our lenders and these developments are evidence of the strong relationship we have with them", said Lloyd Wiggins, Petrowest's Chief Financial Officer.
Specifically, the waiver is of the senior funded debt to Adjusted EBITDA and consolidated fixed charge coverage ratios. In consideration for the waiver, Petrowest agreed to provide additional monthly reporting and comply with the following new covenants: (a) not draw down additional funds on the reducing revolving term loan without the prior approval of the syndicate lenders; (b) maintain a minimum Adjusted EBITDA of $18.65 million for the trailing four quarterly period ending on September 30, 2015; and (c) not permit a negative variance of the greater of (i) 20%, or (ii) $500,000, between the monthly budgeted Adjusted EBITDA and the monthly actual Adjusted EBITDA during 2015 (any positive variance may be carried forward to the successive months).
The proposed amending agreement to the syndicated credit facility is expected to include modified financial covenants through the third quarter of 2016, additional financial covenants (including those set out in (b) and (c) above, with the additional requirement to maintain a minimum Adjusted EBITDA of $20.7 million for the trailing four quarterly period ending on December 31, 2015) and increased interest rates if Petrowest's new financial covenant total funded debt to Adjusted EBITDA is greater than 2.00:1.00.
In addition, on the back of increased operating activity, Petrowest is anticipating raising up to $15 million of subordinated debt. The proposed subordinated debt financing is an additional condition to executing the amending agreement mentioned above. Petrowest anticipates finalizing a subordinated debt credit agreement and an amendment to the syndicated credit facility prior to September 30, 2015.
Petrowest is expected to release its second quarter financial results on August 12th following financial markets close.
Adjusted EBITDA is a non-IFRS financial measure. The definition and use of non-IFRS financial measures by Petrowest is described in Petrowest's Management, Discussion and Analysis ("MD&A") for the three months ended March 31, 2015, available under Petrowest's profile on the SEDAR website at www.sedar.com.
FORWARD LOOKING INFORMATION
Certain of the statements made and information contained herein, including the finalization of an amendment to the syndicated credit facility, completion of a subordinated debt financing and the time required for achieving such matters, is "forward-looking information" within the meaning of applicable securities legislation. Forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking statements, including, without limitation, risks and uncertainties relating to the volatility of industry conditions (levels of industry activity), the inherent uncertainty of operations and cost estimates and the potential for unexpected costs and expenses, the seasonality of operations, price fluctuations; uncertain political and economic environments; changes in laws or policies, delays or the inability to obtain necessary governmental permits; and other risks and uncertainties, including those described under risk factors in the Company's current Annual Information Form and management discussion and analysis. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements. There can be no assurance that the Company will be able to successfully negotiate an amendment to the syndicated credit facility or complete a subordinated debt financing. The forward-looking information contained herein is presently for the purpose of assisting investors in understanding the Company's plans and objectives and may not be appropriate for other purposes. Accordingly, readers are advised not to place undue reliance on forward-looking statements.
Petrowest is an Alberta corporation involved in pre-drilling and post-completion energy services as well as industrial and civil infrastructure projects, gravel crushing and hauling for non-energy sector customers. Petrowest's primary operations are based in the Grande Prairie area of northern Alberta and in northeastern British Columbia.
SOURCE Petrowest Corporation
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