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RED DEER, AB, Oct. 26, 2012 /CNW/ - High Arctic Energy Services Inc. (TSX: HWO) ("High Arctic" or the "Corporation") is pleased to announce that it has now completed an extension and amendment of its credit facilities with its current lender that provides improved borrowing terms. The main components of the new two year committed credit facilities are a $30 million revolving loan and a $5 million revolving operating loan. The effective date of the amended credit facilities is October 1, 2012 and the maturity date of both main components is August 31, 2014. The credit facilities continue to be secured by all of the assets of High Arctic and by guarantees given by its material foreign subsidiaries.
The amended credit facilities permit borrowing in Canadian or US dollars and contain an interest rate grid whereby the interest rate applicable to borrowings will vary according to the currency of the borrowings and a prescribed leverage ratio. The Corporation's existing borrowings are all denominated in Canadian dollars and carry an annual interest rate equal to the lender's prime interest rate plus 1.0% as of the effective date of October 1, 2012. This rate represents a reduction of 75 basis points from the rate applicable to the term loan that was refinanced with the new revolving loan.
The revolving loan facility can be drawn based on a specified percentage of the book value of High Arctic's Canadian fixed assets. The outstanding loan balance under this facility is currently $13.8 million, representing the balance of the previous term loan. The $5 million revolving operating loan facility may be drawn based on 75% of the Corporation's eligible Canadian accounts receivable (85% in the case of investment grade receivables), less certain priority claims, and 90% of eligible foreign accounts receivable insured by the Export Development Corporation or other insurer approved by the lender. The Corporation does not have any amounts drawn against the revolving operating loan.
The extended and amended credit facilities enable High Arctic to increase its borrowings as needed to take advantage of investment opportunities. There are no plans to increase the borrowings in the foreseeable future, although the credit facilities may be used for construction financing for a new building in Grande Prairie, Alberta. High Arctic expects to close on the purchase of a six acre parcel of land during November and to commence construction of the new office and service facility that will serve as its key regional operating facility for the increasingly important Grande Prairie region.
This news release may contain forward-looking statements relating to expected future events and financial and operating results of the Corporation that involve risks and uncertainties. Actual results may differ materially from management expectations, as projected in such forward-looking statements for a variety of reasons, including market and general economic conditions and the risks and uncertainties detailed in both the Corporation's Management Discussion and Analysis for the year ended December 31, 2011 and the Annual Information Form for the year ended December 31, 2011 found on SEDAR (www.sedar.com). Due to the potential impact of these factors, the Corporation disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.
About High Arctic
The Corporation is a provider of specialized oilfield equipment and services. Based in Red Deer, Alberta, High Arctic has domestic operations throughout Western Canada and international operations primarily in Papua New Guinea.
SOURCE: High Arctic Energy Services Inc.
For further information:
Executive Vice President and General Counsel
403 340 9825