Toronto Stock Exchange: ARF; ARF.DB
CONCORD, ON, Oct. 31, 2014 /CNW/ - Armtec Infrastructure Inc. ("Armtec" or the "Company") (TSX: ARF; ARF.DB) today announced that it has entered into an agreement (the "October Amendment") with Brookfield Capital Partners Fund Ill LP ("Brookfield") to amend its term facility with Brookfield (the "Term Facility") in order to extend the previously disclosed covenant relief and enter into a new short-term credit facility.
As previously disclosed, the Company was selected to supply and install $70 million of soundwall barriers and fencing for a rail infrastructure project in central Ontario. In order to accommodate the Company's working capital requirement, including working capital for the ramp up of the Soundwall project, the Company has replaced the $7.5 million short-term credit facility (which was not drawn and expired September 19, 2014), pursuant to the previous amendment of the Term Facility dated June 26, 2014 (the "June Amendment"). Pursuant to the October Amendment, Brookfield has agreed to provide, subject to certain conditions, a new short-term facility of $10 million, bearing interest at the 30-day Banker's Acceptance (BA) rate plus 12% (the "Short-Term Facility"). The Short-Term Facility will mature on February 27, 2015.
Pursuant to the June Amendment, the Senior Secured Debt to EBITDA covenant under the Term Facility (the "Covenant") was waived to September 30, 2014. The Covenant required that Armtec maintain a Senior Secured Debt to EBITDA ratio (measured at the end of each month) of no greater than 5.25:1 until December 21, 2014 and 5.00:1 thereafter. Pursuant to the October Amendment, the Company will be provided with an extension of the waiver of the Covenant until February 27, 2015. The Covenant calculations would recommence on February 28, 2015 and would require Armtec to maintain a Senior Secured Debt to EBITDA ratio of no greater than 5.0:1.
The extension of the Short-Term Facility and Covenant waiver are both contained within the October Amendment. In consideration of the October Amendment, Armtec will pay Brookfield a fee of $4 million. In addition, a draw fee of $500,000 will be payable by Armtec should it use the Short-Term Facility. Armtec has the option to defer payment of the fee and draw fee, in which case such amounts will be added to the principal of the Term Facility; however, these fees will be excluded from further Covenant calculations.
As previously disclosed, performance during the first half of 2014 in both of Armtec's business units was impacted by lower volumes and higher operating costs related to the extreme weather and unfavourable installation conditions. In addition, increased raw material input costs and increased competition have negatively impacted the industry leading to compressed margins in the Drainage Solutions business unit. These business unit impacts have affected Armtec's EBITDA on a trailing twelve-month basis. The Soundwall project is expected to contribute to the Company's financial performance, favourably impacting revenue and EBITDA largely in the first half of 2015 and the long-term outlook for the Company's markets remains favourable.
The Company continues to review its liquidity, financial covenants, leverage and capital structure. A broad range of alternatives will also be reviewed and may involve the issuance of secured or unsecured debt, equity or other securities or other transactions.
About Armtec Infrastructure Inc.
Armtec is a manufacturer and marketer of a comprehensive range of infrastructure products and engineered construction solutions for customers in a diverse cross-section of industries that are located in every region of Canada, as well as in selected markets globally. These markets include Canada's national and regional public infrastructure markets and private sector markets in agricultural drainage, commercial building, residential construction and natural resources. Armtec operates through a network of offices and production facilities across the country. Armtec operates in two business units: Drainage Solutions manufactures and markets corrugated high density polyethylene pipe, corrugated steel pipe and other drainage related products including small bridge structures. Precast Concrete Solutions manufactures and markets highly engineered precast systems such as parking garages, bridges, sport venues and building envelopes as well as standard precast products such as steps, paving stones and utility vault.
This news release contains "forward-looking" statements within the meaning of applicable securities legislation (including deferring payment of various fees), which involve known and unknown risks, uncertainties and other factors which may cause the actual results or events to be materially different from any future results or events expressed or implied by such forward-looking statements. Forward-looking statements typically contain such words or phrases as "proposed", "may", "outlook", "objective", "intend", "estimate", "anticipate", "should", "could", "would", "will", "expect", "believe", "plan" and other similar terminology suggesting future outcomes or events. Forward-looking statements reflect current expectations regarding future results, events, performance and achievements and are based on information currently available to Armtec's management, anticipated operating and financial results of Armtec, and current and anticipated market conditions.
Forward-looking statements involve numerous assumptions and should not be read as guarantees of future results, events, performance or achievements. Such statements will not necessarily be accurate indications of whether or not such future results, events, performance or achievements will be achieved. You should not unduly rely on forward-looking statements as a number of factors, many of which are beyond the control of Armtec, could cause actual results, events, performance or achievements to differ materially from the results, events, performance or achievements discussed in the forward-looking statements, including, but not limited to the factors discussed in Armtec's materials filed with the Canadian securities regulatory authorities from time to time. Although the forward-looking statements contained in this news release are based upon what management of Armtec believes are reasonable assumptions, Armtec cannot assure investors that actual results, events, performance or achievements will be consistent with these forward-looking statements. All forward-looking statements in this news release are qualified by these cautionary statements. These forward-looking statements are made as of the date of this news release and, except as required by applicable law, Armtec assumes no obligation to update or revise them to reflect new events or circumstances.
SOURCE: Armtec Infrastructure Inc.
For further information: Carrie Boutcher, Vice President & Corporate Secretary, Armtec Infrastructure Inc., Tel: (647) 795-9290, www.armtec.com