Central Alberta Well Services Corp.
TSX VENTURE : CWC

Central Alberta Well Services Corp.

April 21, 2010 08:30 ET

Central Alberta Well Services Closes $40 Million Financing

CALGARY, ALBERTA--(Marketwire - April 21, 2010) - Central Alberta Well Services Corp. (TSX VENTURE:CWC) ("CWC" or the "Company") is pleased to announce it has established new credit facilities which provide a total credit capacity of $40 million to the Company. The combined facilities consist of a $30 million three-year term facility and a $10 million revolving operating facility. The three-year term facility has the following characteristics:

  • A fixed interest rate of 8.045%;
  • Interest only payments for the first 12 months;
  • Principal and interest for the remaining 24 months; and
  • A final principal payment of $15 million on April 30, 2013.

The operating facility is margined to the Company's accounts receivable to a maximum of $10 million and is committed until April 30, 2011 at which point it may be extended with the consent of the operating lender. The operating facility bears interest on a progressive scale from lender's prime rate plus 125 to 200 basis points based on the Company's debt to EBITDA ratio. Both facilities are secured by a general security agreement on all assets of the Company.

The proceeds from the new credit facilities will be used to repay in full all amounts outstanding under the existing Brookfield Bridge Lending Facility which expires on April 30, 2010. In addition, the Company has repaid in full the outstanding $1.2 million non-interest bearing note due March 31, 2010 held by Brookfield Special Situations II L.P. which was issued in connection with the previously announced automatic redemption of warrants in January, 2010.

As a condition of obtaining the new credit facilities, CWC was required to obtain an independent third party valuation on substantially all of the Company's oil and gas services equipment (the "Equipment"). CWC engaged Aestimo Services Ltd. ("Aestimo") to prepare a valuation of the Equipment. Based upon the assumptions in the valuation prepared by Aestimo, Aestimo concluded the fair market value ("FMV") of the Equipment to be $148 million as of March 11, 2010 (see cautionary note "Fair Market Value"). Using the FMV of the Equipment estimated by Aestimo, the following net asset value per share can be calculated:

  ( millions)
Aestimo's FMV of the Equipment as at March 11, 2010 $148
Less: Long term debt as at April 20, 2010 ($30)
Add: Estimated working capital surplus as of March 31, 2010 $9
Net Asset Value $127
Common shares outstanding as at April 20, 2010 159
Net Asset Value per common share $0.80

The closing of new credit facilities, along with the recently completed rights offering position CWC with a stable and flexible capital structure and allows management to focus on operations, competitive positioning, and opportunistic growth.

About Central Alberta Well Services

Central Alberta Well Services provides oilfield services, including well servicing, coil tubing, snubbing, nitrogen, well testing and oilfield equipment rentals to oil and gas companies operating in the Western Canadian Sedimentary Basin. The Company has its corporate office in Calgary, Alberta, with its operational head office in Red Deer, Alberta, and additional operating centres in Provost, Brooks, Whitecourt and Grande Prairie, Alberta, and Weyburn, Saskatchewan.

READER ADVISORY

"Fair Market Value" - The FMV is the estimated amount expressed in terms of money, that may reasonably be expected for property in exchange between a willing buyer and a willing seller, with equity to both, neither being under any compulsion to buy or sell and both having reasonable knowledge of the relevant facts in the most common market. This value also assumes the Equipment has been maintained according to the manufacturer's recommendations and performance standards. The FMV of the Equipment represents the fair market value attributed to the Equipment by Aestimo and does not incorporate a deduction for the Company's net debt nor does the FMV reflect the net asset value or the fair market value of the Company.

"Net Asset Value" – the Net Asset Value disclosed in this press release is based solely on the calculation and parameters set forth in this press release and does not represent the fair market value of the Company. 

EBITDA is calculated from the statement of income (loss) as revenue less operating costs and general and administrative expenses and is used to assist management and investors in assessing the Company's ability to generate cash from operations. EBITDA is a non-GAAP measure and does not have any standardized meaning prescribed by GAAP and may not be comparable to similar measures provided by other companies. 

Certain statements contained in this press release, including statements which may contain such words as "could", "should", "believe", "expect", "will", and similar expressions and statements relating to matters that are not historical facts are forward-looking statements, including, but not limited to, statements as to the use of proceeds from the new credit facilities. Management has made certain assumptions and analyses which reflect their experiences and knowledge in the industry. These assumptions and analyses are believed to be accurate and truthful at the time, but the Company cannot assure readers that actual results will be consistent with these forward-looking statements. However, whether actual results, performance or achievements will conform to the Company's expectations and predictions is subject to known and unknown risks and uncertainties which could cause actual results to differ materially from the Company's expectations. All forward-looking statements made in the press release are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected outcomes to, or effects on, the Company or its business operations. The Company does not intend and does not assume any obligation to update these forward-looking statements except as required by applicable securities laws. Any forward-looking statements made previously may be inaccurate now.

Common Shares: 159,184,064

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Central Alberta Well Services Corp.
    Darryl E. Wilson
    President & Chief Executive Officer
    (403) 264-2177
    darrylwilson@cawsc.com
    or
    Central Alberta Well Services Corp.
    Darcy A. Campbell, CMA
    Vice-President, Finance and Chief Financial Officer
    (403) 264-2177
    darcycampbell@cawsc.com
    or
    Central Alberta Well Services Corp.
    755, 255 - 5 Avenue SW
    Calgary, Alberta T2P 3G6
    (403) 264-2177