HOUSTON and CALGARY, Sept 4 /CNW/ - Production Enhancement Group, Inc.
(TSX: WIS) ("PEG" or the "Company") today announced the repayment of its
current senior loans, and the expansion of its debt facilities with a new
major energy lending institution and its syndicated participants, (the
"Lender"). This new US$70 million senior facility (the "Facility") refinances
the current senior indebtedness and provides US$40 million in expansion
financing for additional capital expenditures and working capital.
The Facility will provide adequate financing to fund the Company's
current capital expenditure program for coiled tubing, nitrogen, pressure
pumping and wireline units for the balance of 2007 and 2008. The initial
funding commitment is for US$55 million, with an additional $15 million to be
available upon the attainment of certain financial performance criteria.
Borrowings under the Facility bear interest at 14%, with the Company having
the ability to pay 3% in kind. The Facility will require the payment of
interest only until December 31, 2008, at which time the principal will begin
to be amortized on a quarterly basis over an 8 year straight-line amortization
schedule. The notes will mature on August 31, 2012, but may be prepaid under
certain circumstances during their term upon the payment of additional
The Lender will also receive warrants to purchase 8,193,249 shares of the
Company's common stock at an initial exercise price of CDN$2.00 per share (the
"Warrants"). The initial exercise price of the Warrants will be adjusted in
the future to the average of the then market price at the reset date (based on
a 60-trading day weighted average calculation) and CDN$0.64 (the market price
on the date of Closing based on a five trading day weighted average
calculation), provided that such reset price will not be less than
CDN$0.64/share nor more than CDN$2.00/share. The reset date will be the
earlier of (i) February 28, 2009 or (ii) a change of control, liquidation,
merger, or other similar event of the Company. The holders of the Warrants
have agreed not to sell short any Common Stock of the Company while the
Warrants are outstanding. The term of the Warrants is four years, but the
Company also has the right to require the Warrants to be exercised if the
market price of the Common Stock reaches two times (2.0x) the then effective
exercise price based on a 60-trading day weighted average calculation at such
time. The Warrants also have the benefit of certain registration rights and
anti-dilution provisions customary for this type of instrument.
On August 14, 2007, the Company filed its second quarter financial
statements and disclosed it was in violation of certain financial covenants
with its previous lender for both periods ending March 31, 2007 and June 30,
2007 (please refer to the public filings on SEDAR and the PEG website).
Implementation of this new Facility eliminates the technical defaults under
the prior senior facility, refinances all prior senior debt obligations,
provides approximately USD$32 million in net additional capital expenditure
capacity over the next 18 months for fleet expansion and provides additional
"The financial backing being provided to PEG by one of the largest
financial institutions in the energy sector is a testament to the progress we
have made as a company and we look forward to further developing our
relationship with our new financial partner," said Philip C. Crawford, PEG's
Chief Executive Officer. "They have a solid track record in assisting growth
companies to successfully implement their strategies. This facility provides
us with a unique resource to accelerate the development of our well
intervention services globally, and further ensures that we can implement our
2007 and 2008 expansion plans for new equipment and accelerated earnings. With
over $5 billion in energy investments and over $150 billion under management
world-wide, the financial resource of this partner could provide the Company
with additional support for years to come."
For a complete copy of PEG's 2007 second quarter financial statements and
management's discussion and analysis, please visit www.sedar.com or PEG's
website at www.productionenhancement.com.
About Production Enhancement Group, Inc.
Production Enhancement Group, Inc., a Houston-based energy services
company incorporated in Alberta, Canada, trades on the TSX under the symbol
WIS. PEG's wholly owned subsidiary, WISE(R) Well Intervention Services, Inc.,
has developed patented WISE(R) multifunction coiled tubing technologies and
markets a full range of coiled tubing, pressure pumping and wireline services.
WISE(R) is a trademark of Production Enhancement Group, Inc.
The TSX does not accept responsibility for the adequacy or accuracy of
This release and PEG's website referenced in this release may contain
forward-looking statements, including expectations of future components of
cash flow and earnings. Investors are cautioned that assumptions used in the
preparation of such information may prove to be incorrect. Events or
circumstances may cause actual results to differ materially from those
predicted, a result of numerous known and unknown risks, uncertainties, and
other factors, many of which are beyond the control of PEG. These risks
include, but are not limited to the risks associated with the oil and gas
industry, commodity prices, and exchange rate changes. Industry related risks
could include, but are not limited to operational risks in exploration,
development, and production, delays or changes in plans, and health and safety
risks, including, without limitation, costs and expenses. The risks outlined
above should not be construed as exhaustive. Investors are cautioned not to
place undue reliance on any forward-looking information. PEG undertakes no
obligation to update or revise any forward-looking statements.
For further information:
For further information: visit www.productionenhancement.com or contact:
Douglas Parker, Chief Financial Officer, Production Enhancement Group, Inc.,
(281) 282-1851, firstname.lastname@example.org; Ken Wetherell, Investor
Relations, Bryan Mills Iradesso, (403) 503-0144 x224, email@example.com