Impax Energy Services Income Trust

Impax Energy Services Income Trust

December 06, 2007 22:22 ET

Impax Energy Services Income Trust Announces Suspension of Cash Distributions

TORONTO, ONTARIO--(Marketwire - Dec. 6, 2007) - Impax Energy Services Income Trust (the "Trust" or "Impax") (TSX:MPX.UN) announced today that the Trust is suspending its monthly distributions following the payment of the previously announced distribution to unitholders of record as of November 30, 2007, scheduled for payment on December 14, 2007.

Impax Energy Services Master Limited Partnership ("Impax LP") is also announcing the suspension of its Distribution Reinvestment Plan ("DRIP") in accordance with its terms. The DRIP provides the opportunity for holders of Exchangeable Class A and Class B Units of Impax LP to reinvest their cash distributions in additional Exchangeable Class A Units of Impax LP from treasury. The suspension of the DRIP will not affect the distribution payable on December 14, 2007, which will be reinvested in Exchangeable Class A Units.

Based on the most recent monthly distribution level of $0.08 per unit, the Trust was paying out, on an annualized basis, approximately $7.4 million in cash after giving effect to the $4.4 million in distributions reinvested pursuant to the DRIP. During the suspension of distributions, management of the Trust intends to be proactive in paying down the amounts owing under its credit facilities and covering other debt-related costs.

Summary of Savings from Distribution Suspension

Historic Aggregate Annualized
Number Distribution / Unit Distributions
------- ---------------------- ---------------------
Unit Class Units Per Month Annualized Cash DRIP(1) Total
------- --------- ---------- ---- ------- ------
(mm) $mm $mm $mm

Trust Units 7.3 $0.08 $0.96 $7.0 - $7.0
Class A Units 5.0 $0.08 $0.96 $0.4 $4.4 $4.8
Class B Units(2) 1.1 - - - - -
---- ------- ------
Total Savings $7.4 $4.4 $11.8

(1) Cash distributions reinvested in Exchangeable Class A Units pursuant to
(2) Distributions suspended on Exchangeable Class B Units as of September
17, 2007

"During the industry slow-down experienced over the past several months, the Trust's debt level has risen to approximately $45 million", stated Scott Delaney, President and CEO of the Trust. "We recently renegotiated our credit agreements with our lenders and believe that our debt level would be manageable in a healthier environment; however, management and the Trustees believe that the prudent course of action is to use the Trust's free cash flow to pay down debt in the coming months in order to strengthen the Trust's balance sheet. This action will position the Trust to take advantage of growth opportunities as the industry stabilizes. We will continue to monitor the situation and will revisit the Trust's distribution policy on a regular basis."

In addition to the suspension of distributions, management is reviewing further alternatives to reduce costs and enhance operational synergies and performance. This review will result in a stronger operational base and position the Trust to benefit from an increase in activity levels in the oil and gas sector.

Impax Energy Services Income Trust is an open-ended trust, providing oilfield services in western Canada. The Trust indirectly owns an approximate 55% interest in Impax Energy Services Master Limited.

Partnership, which indirectly acquired and now operates through its subsidiaries the businesses of McClelland Oilfield Rentals Limited Partnership, EGOC Enviro Group Limited Partnership, Denray Rathole Drilling Limited Partnership and Dwayne Hommy Trucking Limited Partnership. These businesses provide services in the areas of oilfield rental, specialized equipment rental, access mat rental, waste management services, rat hole drilling and specialty fluid hauling.

This news release may contain forward-looking statements relating to expected future events and financial and operating results of the Trust 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 the Trust's March 27, 2007 Annual Information Form filed with the Canadian securities regulatory authorities. Due to the potential impact of these factors, 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, unless required by applicable law.

Contact Information

  • Impax Energy Services Income Trust
    Scott D. Delaney
    President and Chief Executive Officer
    (416) 304-6867