Trican Well Service Ltd.
TSX : TCW

Trican Well Service Ltd.

June 01, 2016 15:14 ET

Trican Well Service Announces $40 Million Bought Deal Financing and Amended Covenant Package with Its Lenders

CALGARY, ALBERTA--(Marketwired - June 1, 2016) -

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

Trican Well Service Ltd. ("Trican" or "the Corporation") (TSX:TCW) is pleased to announce it has entered into an agreement with a syndicate of underwriters led by RBC Capital Markets and Scotiabank (collectively, the "Underwriters") pursuant to which the underwriters have agreed to purchase on a "bought deal" basis 25 million common shares ("Common Shares") of Trican at a price of $1.60 per Common Share ("Issue Price") for aggregate gross proceeds of $40 million (the "Offering"). Trican has also granted the underwriters an option to purchase an additional 3.75 million Common Shares at the Issue Price to cover over-allotments, if any, and for market stabilization purposes (the "Over-Allotment Option"). The Over-Allotment Option is exercisable in whole or in part at any time until 30 days after the closing of the Offering.

The net proceeds from the Offering will be used to reduce outstanding debt and for general corporate purposes.

Trican is also pleased to announce it has reached an agreement in principle with its bank lenders under its revolving credit facility ("RCF") and the holders of its senior notes to make certain amendments to the applicable credit documentation ("Credit Amendments"). These amendments are subject to the closing of the Offering and are described below.

Dale Dusterhoft, President and CEO of Trican, stated, "We thank our lenders and investors for their continued support of Trican and our strategy. The equity offering, together with this further covenant relief package, puts Trican in a strong financial position to focus on driving profitability in our core Canadian business throughout this period of volatility and positions us to maintain our market leading position in Canada."

After applying the expected net proceeds from the Offering and the expected cash proceeds, before post-closing adjustments, from the previously announced disposition of Trican's Completion Tools business, Trican expects its total net debt balance to be approximately C$202 million. If both such transactions are completed, then since December 31, 2014, Trican will have reduced its total long-term debt by over C$595 million after applying the cash proceeds of the Completion Tools sale and the Offering.

The Offering will be completed by way of a short form prospectus in all provinces of Canada, and in the United States pursuant to applicable exemptions from registration, and is expected to close on or before June 21, 2016. Closing of the Offering will be subject to Trican entering into definitive agreements in respect of the Credit Amendments and the associated closing related thereto and satisfaction of certain other customary closing conditions for the Offering, including regulatory and stock exchange approvals.

The Common Shares to be offered have not been and will not be registered under the United States Securities Act of 1933, as amended, or under any state securities laws, and may not be offered or sold within the United States except in certain transactions exempt from the registration requirements of such act. This release does not constitute an offer to sell or a solicitation to buy such securities in the United States or in any other jurisdiction where such offer is unlawful.

Amendments to Trican's Lending Agreements

The agreement in principle with Trican's lenders includes the following changes to Trican's financial covenants under applicable lending agreements:

  • Removal of all prior financial ratio covenants until the first quarter of 2017
  • New Leverage Ratio and Interest Coverage covenants as per the following schedule:
For the quarter ended Leverage Ratio Interest Coverage EBITDA Basis
June 30, 2016 Waived Waived n/a
September 30, 2016 Waived Waived n/a
December 31, 2016 Waived Waived n/a
March 31, 2017 5.0x 2.0x Q1 x 4
June 30, 2017 5.0x 2.0x (Q1 x 3) + Q2
September 30, 2017 5.0x 2.0x ((Q1 + Q3) x 3/2)) + Q2
December 31, 2017 4.0x 2.5x LTM
March 31, 2018 3.0x 3.0x LTM
Thereafter 3.0x 3.0x LTM

The agreed upon amendments contain an "equity cure" provision, whereby 50% of the gross proceeds from equity offerings can be applied by Trican in the calculation of EBITDA for the Leverage Ratio and Interest Coverage covenants, provided the equity cure provision is not used more than twice in any four quarter period and the aggregate amount of any equity cure does not exceed C$20 million. Trican intends to use the equity cure provision in connection with the Offering, and the Offering will be deemed to have occurred during the quarter ended March 31, 2017 for the purposes of the calculation of EBITDA described above.

Under the agreed upon amendments, Trican would also agree to reduce its RCF commitment to $250 million, and remains capped at $175 million until the Corporation records a quarter of $25 million in EBITDA. After applying the net proceeds from the Offering and the cash consideration, before post-closing adjustments, from disposition of Trican's Completion Tools business, management estimates that Trican will have approximately $122 million drawn on its RCF.

Effectiveness of the Credit Amendments will be subject to Trican entering into definitive agreements with its bank lenders and holders of its senior notes in respect such amendments, completion of the Offering and the delivery of customary closing documents. Execution of the definitive agreements and the associated closing related thereto in respect of the Credit Amendments are expected to occur on or before the anticipated closing date of the Offering.

Cautionary Statements Regarding Forward-Looking Information

This news release contains "forward-looking information" within the meaning of applicable securities laws. Forward-looking information is frequently characterized by words such as "intend", "estimate" and "estimated", and other similar words, or statements that certain events or conditions "may" or "will" occur. The forward-looking information in this news release relates, but is not limited to, statements with respect to the expected use of the net cash proceeds from the Offering and the sale of Trican's Completion Tools business, the timing of and conditions to closing of the Offering, Trican's expected total debt balance and outstanding indebtedness under the RCF upon completion of the Offering and the sale of Trican's Completion Tools business, the expected amendments to Trican's lending agreements, including conditions thereto and timing thereof.

The forward-looking information set out in this news release, is based on certain expectations and assumptions regarding, among other things, the absence of further changes and further economic conditions which may adversely affect Trican.

Forward-looking information is subject to known and unknown risks and uncertainties and other factors which may cause actual results, events and achievements to differ materially from those expressed or implied in such forward-looking information. In particular, completion of the transactions described herein is subject to the risk that the conditions to closing of the Offering, the amendments to Trican's lending agreements or the sale of its Completion Tools business will not be fulfilled, or that other events will occur that prevent the consummation of these transactions substantially on the terms and within the timeline described herein or at all. Actual results could differ materially from those described in this press release as a result of the risk factors set forth under the section entitled "Risks Factors" in our Annual Information Form dated March 29, 2016. Readers are also referred to the risk factors and assumptions described in other documents filed by Trican from time to time with securities regulatory authorities.

Trican undertakes no obligation to update forward-looking information if circumstances or management's estimates or opinions should change except as required by law. The reader is cautioned not to place undue reliance on forward looking information.

Headquartered in Calgary, Alberta, Trican provides a comprehensive array of specialized products, equipment and services that are used during the exploration and development of oil and gas reserves.

Please visit our website at www.tricanwellservice.com.

Contact Information

  • Trican Well Service Ltd.
    Dale Dusterhoft
    President and Chief Executive Officer
    ddusterhoft@trican.ca

    Trican Well Service Ltd.
    Michael Baldwin
    Senior Vice President, Finance & CFO
    (403) 266-0202
    (403) 237-7716 (FAX)
    mbaldwin@trican.ca