Peak Energy Services Trust
TSX : PES.UN

Peak Energy Services Trust
Wellco Energy Services Trust
TSX : WLL.UN

Wellco Energy Services Trust

February 29, 2008 14:24 ET

Peak Energy Services Trust Announces Credit Facility, Private Placement, and Peak and Wellco Energy Services Announce a Change In Meeting Date and Provide Guidance on Their Plan of Arrangement

CALGARY, ALBERTA--(Marketwire - Feb. 29, 2008) -

Background

Peak Energy Services Trust ("Peak") (TSX:PES.UN) today announced that it has entered into a commitment letter for a new senior syndicated credit facility (the "Credit Facility") arranged by National Bank Financial Inc. ("National Bank Financial") as Lead Arranger and Sole Bookrunner, with National Bank of Canada as Administrative Agent and Lender. Initially, the Credit Facility commitment will be a $75 million facility underwritten by National Bank of Canada and will be available for general trust purposes and to repay in full the existing credit facilities of Peak and Wellco Energy Services Trust ("Wellco") (TSX:WLL.UN) upon completion of the previously announced proposed plan of arrangement with Wellco (the "Arrangement"). After completion of the Arrangement, a further $25 million commitment may be available if the Credit Facility is successfully syndicated to other lenders. If increased to $100 million, the Credit Facility includes a customary accordion feature that allows Peak to request an additional $40 million of borrowing capability. The availability of this additional borrowing capability is subject to the satisfaction of certain conditions. The Credit Facility will replace Peak's existing $60 million credit facilities with National Bank of Canada and Alberta Treasury Branches.

In addition, Peak is pleased to announce it has secured a commitment in respect of a brokered private placement ("Private Placement") of trust units of Peak ("Units") through Grafton Capital Corporation for gross proceeds of $10.5 million. The Units of Peak offered pursuant to the Private Placement will be purchased by Deans Knight Capital Management Ltd. at a price of $2.54 per Unit. The net proceeds of the Private Placement will be used for general trust purposes. The Private Placement is expected to close prior to the completion of the Arrangement. Completion of the Credit Facility is conditional on closing of the Arrangement as well as other customary closing conditions for a transaction of this nature. Subject to Wellco Unitholder approval, the closing of the Arrangement is expected to occur on or about March 12, 2008.

The management of Peak believes that this new Credit Facility combined with the Private Placement will provide the go-forward entity with the financial flexibility to successfully execute on the long-term growth objectives of the combined entity.

Recommendations of the Wellco Board

National Bank Financial originally provided the board of directors (the "Wellco Board") of Wellco Energy Services Inc., the administrator of Wellco, with an opinion (the "Fairness Opinion") that as of February 1, 2008, the consideration to be received by the Wellco Unitholders pursuant to the Arrangement is fair, from a financial point of view, to the Wellco Unitholders. On February 28, 2008, National Bank Financial provided the Wellco Board with an addendum to the Fairness Opinion confirming that if the Private Placement had occurred prior to February 1, 2008, the Private Placement would not have altered the conclusion expressed in the Fairness Opinion.

The Wellco Board, based upon its own investigations, including its consideration of the addendum provided by National Bank Financial, has unanimously reaffirmed its prior conclusion that the Arrangement is fair, from a financial point of view, to the Wellco Unitholders and unanimously reaffirms its prior recommendation that Wellco Unitholders vote in favour of the Arrangement.

Postponement of Meeting

On December 19, 2007, Peak and Wellco jointly announced that they had entered into an Arrangement Agreement, whereby holders ("Wellco Unitholders") of trust units of Wellco will receive 0.90 of a trust unit of Peak for each trust unit of Wellco held by way of plan of arrangement. On February 5, 2008, Wellco mailed an information circular and proxy statement (the "Circular") to Wellco Unitholders in respect of a meeting (the "Meeting") to be held on March 4, 2008 for the purpose of approving the Arrangement.

In light of the Credit Facility and Private Placement, Wellco obtained a further interim order (the "Second Interim Order") from the Court of Queen's Bench of Alberta on February 29, 2008, to delay the Meeting until March 6, 2008, at 10:00 am MST in the Willow Room of the Sheraton Eau Claire at 255 Barclay Parade SW, Calgary, Alberta ("Postponed Meeting"). The delay is intended to give Wellco Unitholders additional time to assess the effect of the above financial transactions. Closing of the Arrangement is expected to occur well in advance of the outside date of March 31, 2008 as contemplated by the Arrangement Agreement.

Proxies for Adjourned Meeting

The forms of proxy that were mailed to the Wellco Unitholders with the Circular in early February, 2008 remain valid. No new forms of proxy will be sent for the Postponed Meeting. Due to the postponement of the Meeting, Wellco has extended the return deadline for proxies to 4:30 p.m. (Calgary time) on March 4, 2008, the second business day before the Postponed Meeting and has extended the deadline to dissent to the Arrangement to 4:00 p.m. (Calgary time) on March 5, 2008. If Wellco Unitholders have already submitted proxies and they do not wish to change their vote on the Arrangement, no further action is required on their part and their votes will be counted at the Postponed Meeting in accordance with the proxies already submitted. If Wellco Unitholders have not already submitted proxies, or they wish to change their vote on the Arrangement, Wellco Unitholders should complete and sign another appropriate form of proxy and have it returned to Computershare Trust Company of Canada in accordance with the instructions set out in the Circular.

About Peak Energy Services Trust

Peak Energy Services Trust is a diversified energy services organization providing oilfield equipment and related services to the energy industry in western Canada and the mid-western United States of America. Peak's trust units are listed on the Toronto Stock Exchange under the symbol "PES.UN".

About Wellco Energy Services Trust

Wellco Energy Services Trust provides a comprehensive array of oilfield services to organizations engaged in the search for oil and natural gas in western Canada. Wellco's trust units are listed on the Toronto Stock Exchange under the symbol "WLL.UN".

Certain information set forth in this news release, including management's assessment of Peak's and Wellco's future plans and operations, contains forward-looking statements. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond these parties' control, including the impact of general economic conditions, industry conditions, competition from other industry participants, volatility of commodity prices, currency fluctuations, environmental risks, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Peak's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Peak and Wellco will derive there from. Peak and Wellco disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The TSX have neither approved nor disapproved the information contained herein.

Contact Information

  • Peak Energy Services Trust
    Mr. Curtis W. Whitteron
    President and Chief Operating Officer
    (403) 543-7325
    (403) 543-7335 (FAX)
    or
    Peak Energy Services Trust
    Mr. Matthew J. Huber
    Chief Financial Officer
    (403) 543-7325
    (403) 543-7335 (FAX)
    or
    Peak Energy Services Trust
    Suite 900, 222 - 3rd Avenue S.W.
    Calgary, Alberta, T2P 0B4
    or
    Wellco Energy Services Trust
    Mr. Kenneth M. Bagan
    President and Chief Executive Officer
    (403) 232-6334
    (403) 232-6338 (FAX)
    or
    Wellco Energy Services Trust
    Mr. Corey Zahn
    Chief Financial Officer
    (403) 232-6334
    (403) 232-6338 (FAX)
    or
    Wellco Energy Services Trust
    Suite 2300, 500 - 4th Avenue S.W.
    Calgary, Alberta, T2P 2V6