New Credit Facility Improves Pricing, Trading Terms and Availability
/NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES/
ALL FIGURES ARE IN U.S. DOLLARS
TORONTO, Aug. 13, 2018 /CNW/ - Crius Energy Trust (TSX:KWH.UN) ("Crius", the "Company" or the "Trust") is pleased to announce that it has combined its existing credit facilities into a single consolidated credit facility ("Credit Facility") for the Company's wholesale energy supply requirements with a limit of $140 million, and has added a syndicated working capital facility with an initial limit of $110 million for cash advances and letters of credit. Macquarie Energy LLC and National Bank of Canada are co-leads and joint book-runners of the new Credit Facility.
"We are pleased to have successfully consolidated and expanded our Credit Facility, which provides a significant improvement to pricing and trading terms, as well as increases further financial flexibility and stability as we invest in profitable growth and continue to execute on our strategic initiatives in 2018 and beyond," commented Michael Fallquist, Chief Executive Officer of Crius. "The consolidation and expansion of the Credit Facility brings National Bank of Canada into the banking syndicate and demonstrates the confidence that our lenders have in our business and strategic direction."
The Credit Facility benefits Crius through improved pricing, with the current interest rate on working capital advances of LIBOR plus 5.5% changing to a tiered pricing structure which ranges from LIBOR plus 2.75% to 4.25%, based on leverage levels. Based on current leverage, pricing improves to LIBOR plus 3.0%. The new Credit Facility also results in reduced pricing on the volumetric energy fees applied to the Company's wholesale supply purchases, with the current blended average of $10 per residential customer equivalent per year reducing to approximately $9, based on current customer usage levels. These pricing improvements are expected to result in an estimated annual $3.5 million reduction in financing costs, based on current customer and working capital usage levels. The Credit Facility also provides improved trading terms, which we expect will result in lower wholesale energy procurement costs and therefore improved gross margins. The Credit Facility expands the working capital limit on the current facilities by $15 million to $110 million for the first twelve months, following which it reduces to $100 million. Furthermore, the parties have the flexibility to allocate the incremental $10 million between the working capital and the wholesale energy supply facility as needed during the first twelve months. The Credit Facility extends to August 2021.
The Company's Total Cash and Availability as of June 30, 2018 of $40.8 million improves to $51.4 million pro forma the new Credit Facility. Additionally, the blended cost of debt on Crius's total debt as of June 30, 2018 of $117.2 million reduces from 8.0% to 6.6% pro forma the new Credit Facility.
About Crius Energy Trust
With approximately 1.4 million residential customer equivalents, Crius Energy provides competitive electricity and natural gas products to residential and commercial customers in 19 states and the District of Columbia in the United States. The Company sells energy products through a family of brands strategy using a multi-channel sales approach including exclusive partnerships, direct-to-consumer channels, and broker marketing channels. Crius Energy offers consumers a broad suite of energy products and services including fixed and variable contracts, renewable energy, and bundled products to support their energy needs beyond what is offered by their local utility.
The Trust intends to continue to qualify as a "mutual fund trust" under the Income Tax Act (Canada) (the "Tax Act"). The Trust will not be a "SIFT trust" (as defined in the Tax Act), provided that the Trust complies at all times with its investment restriction which precludes the Trust from holding any "non-portfolio property" (as defined in the Tax Act). Material information pertaining to Crius may be found on SEDAR under the Trust's issuer profile at www.sedar.com or on the Trust's website at www.criusenergytrust.ca.
Caution Regarding Forward-Looking Statements
This news release contains forward-looking statements and forward-looking information (collectively, "forward-looking statements") including, without limitation, statements relating to the anticipated benefits of the Credit Facility, including improved pricing, trading terms and availability; profitable growth; executing strategic initiatives in 2018 and beyond; confidence of our lenders in Crius' business and strategic direction; reductions in blended average customer costs; reduction in financing costs; reduction in wholesale energy procurement costs; improved gross margins; expected term of Credit Facilities; non-IFRS financial measures pertaining to Total Cash and Availability; blended debt. All forward-looking statements reflect the Trust's beliefs and assumptions based on information available at the time the statements were made. Actual results or events may differ from those predicted in these forward-looking statements. All of the Trust's forward-looking statements are qualified by: (i) the assumptions that are stated or inherent in such forward-looking statements; and (ii) the risks described in the section entitled "Financial Instruments and Risk Management" in the MD&A for the second quarter of 2018, dated August 13, 2018, and the risks described in the sections entitled "Risk Factors" and "Forward-Looking Statements" in the annual information form of the Trust for the fiscal year ended December 31, 2017, dated March 8, 2018, which are available on SEDAR under the Trust's issuer profile at www.sedar.com and on the Trust's website at www.criusenergy.ca. Forward-looking statements involve known and unknown risks, future events, conditions, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, prediction, projection, forecast, performance or achievements expressed or implied by the forward-looking statements. Although the Trust has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Trust disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise, except in accordance with applicable securities laws.
Non-IFRS Financial Measures
In this news release, references to "Total Cash and Availability" means the sum of cash and cash equivalents and any excess availability that is available to the Trust under its credit facilities. Total Cash and Availability is a non-IFRS financial measure, which is commonly used by financial analysts in evaluating the financial performance of companies, including companies in the energy industry. Accordingly, Management believes that this non-IFRS financial measures may be a useful metric for evaluating the Trust's financial performance as Total Cash and Availability is a measure that Management uses internally to assess performance, in addition to IFRS measures. As there is no generally accepted method of calculating this non-IFRS financial measures, Total Cash and Availability is not necessarily comparable to similarly titled measures of other companies. This non-IFRS financial measure has limitations as an analytical tool and should not be considered in isolation from, or as an alternative to, other data prepared in accordance with IFRS. Additionally, there may be certain items included or excluded from Total Cash and Availability that are significant in assessing the Trust's operating results and liquidity. Refer to the management's discussion and analysis of the Trust for the three and six months ended June 30, 2018 for additional information concerning Total Cash and Availability.
SOURCE Crius Energy Trust
For further information: Michael Fallquist, Chief Executive Officer, [email protected], (203) 663-7545; Roop Bhullar, Chief Financial Officer, [email protected], (203) 883-9900; Kelly Castledine, Investor Relations, [email protected], (416) 644-1753