Phoenix Oilfield Hauling Inc.
TSX VENTURE : PHN

Phoenix Oilfield Hauling Inc.

December 14, 2011 16:00 ET

Phoenix Announces Closing of $48 Million in Financings

CALGARY, ALBERTA--(Marketwire - Dec. 14, 2011) -

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Phoenix Oilfield Hauling Inc., ("Phoenix" or the "Company") (TSX VENTURE:PHN), a leading provider of hauling services and equipment rentals to the energy industry, today announced that it has closed approximately $48 million in financings with PNC, Werklund Capital Corporation ("WCC") and members of the Company's senior management team.

"In partnership with PNC and Werklund Capital we have been able to substantially strengthen our balance sheet and reduce our cost of capital," said Bharat Mahajan, Vice President, Finance and CFO of Phoenix. "With this stronger foundation in place, we have greater flexibility to deploy capital as opportunities and overriding market conditions dictate and can now focus on executing our ambitious growth plans for 2012 and beyond."

The Company intends to use the financing to repay certain existing bank borrowings, restructure its balance sheet, and to grow its existing operations in the Western Canadian Sedimentary Basin and the eastern and southern U.S. while also establishing new operations in the southern U.S. The announced financing is also at rates significantly lower than its previous operating facility and as such will decrease the Company's interest and financing costs going forward.

The Company's financing with PNC Bank Canada Branch the name under which PNC Bank, N.A., a member of the PNC Financial Services Group, Inc., does business in Canada("PNC") is a senior credit facility secured by a general security agreement with a first charge on all the Company's assets. This facility includes a current operating facility of $35 million and an accordion feature for $5 million which may be accessed should the Company's operations demand ("PNC Facility"). The PNC Facility bears interest at prime plus 1.25% per annum plus an unused facility fee of 0.25% per annum. The PNC Facility is due on January 1, 2015. There are no principal payments required on this facility until the due date.

Phoenix also closed its previously announced equity and convertible debenture financing with WCC for gross proceeds of $7.7 million (the "WCC Transaction"). The Company issued 1,241,667 common shares to WCC at a price of $2.40 per share with resulting proceeds of approximately $3.0 million in the capital of the Company (the "Common Shares"). Further, the Company entered into a convertible debenture with WCC for $4.7 million (the "Convertible Debenture"). The Convertible Debenture is due on December 13, 2014, bears interest at 4% per annum, payable quarterly, and is convertible into 1,850,980 Common Shares of the Company at a price of $2.55 per share. There are no principal payments required on the Convertible Debenture until the due date. WCC, in its sole discretion, has the right to convert, sell or syndicate all or a portion of the Convertible Debenture. In the event of full conversion of the Convertible Debenture, the holder thereof will have the right to appoint one nominee to the board of directors of the Corporation (the "Board"). The Convertible Debenture will be secured by way of a general security interest against all present and subsequently acquired property of the Company and will be subordinate to the interests of the Company's senior lenders. The Common Shares and Convertible Debenture issued pursuant to the WCC Transaction will be subject to a statutory four month hold. WCC will receive a work fee of $115,500 in connection with this transaction.

WCC is a related party of Phoenix because David Werklund, the principal of WCC, is a director and interim President and Chief Executive Officer of Phoenix. WCC is also a major shareholder of Phoenix. Accordingly, Phoenix formed a special committee of the Board (the "Special Committee"), comprised of independent directors for the purpose of reviewing the WCC Transaction. The Special Committee retained Raymond James Ltd. ("RJ") as its financial advisor for the WCC Transaction. RJ has provided an opinion to the Special Committee confirming that the WCC Transaction is fair, from a financial point of view, to the shareholders (other than WCC) of Phoenix. Based upon the recommendation of the Special Committee, the Board of Directors unanimously determined that the WCC Transaction was in the best interests of the Company.

"We continue to see strong growth opportunities for Phoenix covering well established operating areas in the Western Canadian Sedimentary Basin, as well as emerging resource plays in the United States," said Mr. David Werklund, Executive Chairman of WCC. "Phoenix's evolving business and growing portfolio of opportunities offers solid potential returns and as a result we are substantially increasing our investment in the Company."

The Company also closed a portion of its previously announced private placement with members of its senior management team raising an additional $240,000 through the issuance of 100,000 Common Shares at a price of $2.40 per share. The Common Shares issued pursuant to the management private placement will be subject to a statutory four month hold period. The Company may close up to an additional 150,000 Common Shares at a price of $2.40 per share for additional gross proceeds of up to $360,000 in a private placement with management as permitted by the TSX Venture Exchange (the "TSXV").

About Phoenix Oilfield Hauling Inc.

Phoenix provides specialized transportation of products, materials, supplies and equipment required for the exploration, development and production of petroleum resources in the Western Canadian Sedimentary Basin and in the United States of America principally in and around the states of Texas and Pennsylvania. Transportation services include both the equipment necessary to move the load as well as a trained, professional driver capable of securing, moving and manipulating the load at its origin and destination. The Company's Canadian heavy haul division is capable of hauling loads in excess of 300,000 pounds. Phoenix's rental operations include the rental of tanks, matts, pickers, light towers and other equipment necessary for oilfield operations.

Phoenix was incorporated in 1994 as a private company to serve the oil and gas industry. In the spring of 2006 the Company went public on the TSXV. Phoenix has major operations in Calgary, AB, Slave Lake, AB, Nisku, AB, Grand Prairie, AB, Waskada, MB, Mineral Wells, TX, and New Columbia, PA. Phoenix is publicly traded on the TSXV under the symbol PHN. For more information on Phoenix please see the Company's filings at www.sedar.com.

About Werklund Capital Corporation

Werklund Capital Corporation is a fast-growing, dynamic capital investment firm. WCC's business philosophy is to achieve a reasonable return on it's capital by seeking investment opportunities in which WCC can make a significant and positive contribution.

WCC was founded by Mr. David P. Werklund, a successful and respected Calgary businessman, and is comprised of a team of highly experienced and focused professionals committed to partnering with its portfolio companies to achieve advanced financial growth through the application of superior business practices.

This news release may contain certain forward-looking statements, which include assumptions with respect to (i) future operations; (ii) future economic conditions; (iii) future capital expenditures; and (iv); the closing of an additional private placement with management.

The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. All such forward-looking statements involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control. Such risks and uncertainties include, without limitation, risks associated with loss of markets, volatility of commodity prices, fluctuations in foreign exchange or interest rates, environmental risks, competition from other companies, ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, the lack of availability of qualified personnel or management, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. The Company's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances 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, including the amount of proceeds, that the Company will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive. All forward-looking statements contained in this press release are expressly qualified in their entirety by these cautionary statements.

The forward-looking statements contained in this news release are made as at the date hereof and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

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

  • Phoenix Oilfield Hauling Inc.
    Bharat Mahajan, CA
    Vice President, Finance and Chief Financial Officer
    (403) 264-4950 Ext. 222
    bmahajan@phoenixhauling.com