Impax Energy Services Income Trust
TSX VENTURE : MPX.UN

Impax Energy Services Income Trust

November 27, 2009 14:21 ET

Impax Energy Services Income Trust Releases Financial Results for the Third Quarter Ended September 30, 2009

CALGARY, ALBERTA--(Marketwire - Nov. 27, 2009) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES.

Impax Energy Services Income Trust (TSX VENTURE:MPX.UN) ("Impax" or the "Trust") today announced its financial results for the third quarter ended September 30, 2009. The Trust's unaudited consolidated financial statements for the three and nine months ended September 30, 2009 and the related Management Discussion and Analysis as at November 24, 2009 are available online on SEDAR (www.sedar.com).

For the three months ended September 30, 2009, Impax incurred a loss of $30.0 million, which included the recognition of an impairment of $23.3 million in its intangible assets and $4.9 million in its property and equipment, compared to a loss of $0.3 million for the three months ended September 30, 2008. For the nine months ended September 30, 2009 the loss was $35.7 million, which included the recognition of an impairment of $23.3 million in its intangible assets and $4.9 million in its property and equipment, compared to a loss of $2.5 million for the nine months ended September 30, 2008.

IMPAX ENERGY SERVICES INCOME TRUST
HIGHLIGHTS

(in 000's of Canadian dollars, except per unit amounts)Three months ended Sept 30,  Nine months ended Sept 30, 
2009 2008 2009 2008 
         
Revenue$3,611 $10,266 $15,552 $30,549 
Loss before impairments, income        
 taxes and non-controlling interest(1,796(672(7,554(2,880
 Intangible assets impairment(23,266- (23,266- 
 Property and equipment impairment(4,927- (4,927- 
Net loss(29,989(346(35,751(2,489
EBITDA(1)449 2,862 722 8,917 
Standardized distributable cash(1)(99(6901,362 3,264 
Total assets31,463 102,693 31,463 102,693 
Loss per unit – basic and diluted$(2.19$(0.03$(2.62$(0.20

Revenue for the three months ended September 30, 2009 decreased by $6.7 million or approximately 65% compared to the same period in 2008, while EBITDA for the same period decreased by $2.4 million or approximately 84%. The Trust's operating results and financial circumstances, described further, are indicators of impairment and as such, management, using their best estimate of the most probable set of economic conditions recognized an impairment charge in the quarter of $23.3 million against intangible assets and $4.9 against property and equipment. It is possible that changes may occur that could further affect the carrying value of the Trust's long-lived assets in future periods and require further adjustments.

Recent events, as disclosed previously and described further, raise significant doubt about the ability of the Trust to continue as a going concern. The Trust has a significant working capital deficiency of $38.1 million, primarily due to the maturity of its bank credit facility and, has an operating deficit of $123.5 million. Subsequent to the end of the period, the resignation of the Trust's Chief Executive Officer and certain officers of its subsidiaries created events of default under the terms of the Trust's credit facility resulting in the secured lenders having the right to demand immediate repayment of all outstanding loans. These resignations occurred in conjunction with an offer from a company controlled by these individuals (the "Offer") to acquire the assets of the Trust. The Trust is evaluating the Offer and has forwarded the Offer to its secured lenders in accordance with the terms of its credit facility. Further, as a result of these covenant defaults, the Trust has been unable to finalize an amendment to the credit facility which would allow the Trust to maintain up to $3 million in outstanding loans under its operating facility while not meeting the required margining for receivables and inventory.

OUTLOOK

Low levels of industry activity are expected to continue in the fourth quarter of 2009 due to continued weakness in natural gas fundamentals as well as delays in planned industry activity until later in the fourth quarter. Overall, 2009 activity will be significantly lower than 2008. Based on industry forecasts, activity levels are not expected to see signs of recovery until mid to late 2010.

As discussed earlier, there is significant doubt about the ability of the Trust to continue as a going concern. The Trust has a significant working capital deficiency of $38.1 million, primarily due to the maturity of its bank credit facility and, has an operating deficit of $123.5 million. The continued support of the Trust's secured lenders, or an ability to re-finance the existing credit facility, is necessary for the Trust to continue its operations.

Should the secured lenders demand payment, it is highly unlikely that the Trust will be able to find alternative sources of financing required to fund the obligation due under the credit facility. The continued support of the Trust's lenders, or an ability to re-finance the existing credit facility, is necessary for the Trust to continue its operations. The Trust remains in discussions with its lenders to restructure its credit facility. The ultimate outcome of the discussions currently underway cannot be predicted with certainty at this time and the Trust is considering all alternatives, including filing a proposal to creditors or seeking creditor protection through the courts.

There can be no assurance that the steps management is taking to generate sales, reduce costs, restructure its credit facility and restore profitability will be successful.

Impax Energy Services Income Trust is an open-ended trust, providing oilfield services in western Canada. The Trust indirectly owns an approximate 72% 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 known and unknown risks and uncertainties. Although the Trust has attempted to identify important risks and factors that could cause results to differ materially from those contained in forward-looking information, 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 30, 2009 Annual Information Form filed with the Canadian securities regulatory authorities. Many of these risks and uncertainties are beyond the control of the Trust. The Trust undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change, except as required by applicable law. The reader is cautioned not to place undue reliance on forward-looking statements. All investors should be cautioned about making investments in the Trust before reviewing the Unaudited consolidated financial statements for the three and nine months ended September 30, 2009, Management Discussion and Analysis as at November 27, 2009 and other related disclosures available online on SEDAR (www.sedar.com).

Notes:
(1) As discussed in the Management's Discussion and Analysis, EBITDA is not an earnings measurement recognized by GAAP and does not have a standardized meaning prescribed by GAAP. References to "EBITDA" are to net earnings before interest expense, income taxes, amortization, impairment charges, unit based compensation and non-controlling interest. Management believes that, in addition to net earnings, EBITDA is a useful supplemental measure of both performance and cash available for distribution before debt service, changes in working capital, capital expenditures and income taxes. 

Additional Financial Information

The unaudited consolidated financial statements with accompanying notes and Management's Discussion and Analysis will be filed on SEDAR.

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

Contact Information

  • Impax Energy Services Income Trust
    Gary Jones
    Interim Chief Executive Officer
    (403) 233-8110
    or
    Impax Energy Services Income Trust
    Raymond P. Cej
    Chairman
    (403) 233-8110
    www.impaxenergy.com