CALGARY, ALBERTA--(Marketwired - Jan. 24, 2014) - Tuscany International Drilling Inc. ("Tuscany" or the "Company") (TSX:TID)(COLOMBIA:TIDC) announces that it has entered into a forbearance agreement (the "Forbearance Agreement") with its senior secured lenders ("Senior Lenders") under the third amended and restated credit agreement (as amended, the "Credit Agreement") dated December 23, 2013.
Pursuant to the Forbearance Agreement, the Senior Lenders have agreed to forbear from exercising their rights or remedies in connection with certain existing events of default under the Credit Agreement, including realizing on their security granted in connection with the Credit Agreement, until the earlier of February 3, 2014, or the occurrence of an additional event of default within the meaning of the Forbearance Agreement (the "Forbearance Period").
Any breach of any covenant or representation or warranty in the Forbearance Agreement, or the occurrence of a further event of default under the Credit Agreement, will terminate the Forbearance Period.
Tuscany has been engaged in discussions with its Senior Lenders regarding a restructuring of the loans outstanding under the Credit Agreement. Tuscany believes that a significant majority of its Senior Lenders support this restructuring, which would include a Chapter 11 or 15 filing in a U.S. court under the U.S. Bankruptcy Code and relief under the Companies' Creditors Arrangement Act ("CCAA") accompanied by the extension of new funds from certain of the Senior Lenders pursuant to a new debtor-in-possession credit facility (the "DIP Facility").
Assuming the Company enters into such DIP Facility, the Company expects that its operations in Brazil, Colombia and Ecuador will not be affected and will continue to carry on business in the normal and ordinary course.
Continued listing of the common shares of Tuscany (the "Common Shares") on the Toronto Stock Exchange ("TSX") is subject to compliance with the applicable requirements of the TSX Company Manual. Under section 708 of the TSX Company Manual, if Tuscany files for relief under the CCAA and Chapter 11 or 15 of the U.S. Bankruptcy Code or any other creditor arrangement, bankruptcy or similar proceedings are instituted, the TSX may, in its discretion, immediately halt trading on the TSX of, and thereafter delist, the Common Shares.
Tuscany, a corporation headquartered in Calgary, Alberta, is engaged in the business of providing contract drilling and work‐over services along with equipment rentals to the oil and gas industry. Tuscany is currently focused on providing services to oil and natural gas operators in South America. Tuscany has operating centers in Colombia, Brazil, and Ecuador.
Statements in this news release contain forward-looking information within the meaning of applicable securities laws, including, without limitation, statements with respect to the restructuring of the assets and liabilities of the Company, future financial condition and results of operations, access to capital and expectations with respect to liquidity, capital resources and ability to continue as a going concern, plans to restructure or refinance indebtedness under the Credit Facility or otherwise complete a restructuring, and the future listing and trading of the Common Shares on the TSX. Readers are cautioned that assumptions used in the preparation of such information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of Tuscany. These risks include, but are not limited to: Tuscany's level of indebtedness; Tuscany's ability to make the January 24, 2014 principal and interest payment under the Credit Agreement; Tuscany's ability to pursue a strategic restructuring, refinancing or other transaction which may be necessary for Tuscany to continue as a going concern, and which ability may be limited in light of Tuscany's current liquidity situation; any determination by Tuscany to make a filing for relief under the CCAA and Chapter 11 or Chapter 15 of the U.S. Bankruptcy Code or the filing of an involuntary petition for bankruptcy against Tuscany, and the impact of any such
filing on Tuscany's business and operations; Tuscany's ability to generate sufficient cash flow from operations or obtain adequate financing to fund Tuscany's capital expenditures and meet working capital needs and Tuscany's ability to continue as a going concern; Tuscany's ability to comply with the terms and conditions of the Credit Agreement and Forbearance Agreement, and in the event that we are unable to comply with such terms and conditions, Tuscany's ability to pay any accelerated indebtedness; a significant reduction in the borrowing base under the Credit Agreement; the volatility of Tuscany's stock price, the ability of Tuscany's common stock to remain listed and traded on the TSX, counterparty completion risks, regulatory approval risk, the risks associated with the oil and gas industry, commodity prices and exchange rate changes, regulatory changes, successful exploitation and integration of technology, customer acceptance of technology, changes in drilling activity and general global economic, political and business conditions. Industry related risks could include, but are not limited to; operational risks, delays or changes in plans, health and safety risks and the uncertainty of estimates and projections of costs and expenses and access to capital. The risks outlined above should not be construed as exhaustive. The reader is cautioned not to place undue reliance on this forward-looking information. Tuscany does not undertake any obligation to update or revise any forward-looking statements except as expressly required by applicable securities laws.
The listing of Tuscany's common shares on the Colombian Stock Exchange does not imply a certification by the BVC of the value or the solvency of Tuscany.
The Toronto Stock Exchange has not reviewed, nor does it accept responsibility for the adequacy or accuracy of this release.