CALGARY, May 19, 2017 /CNW/ - Petrowest Corporation ("Petrowest" or the "Company") (TSX:PRW) announces the achievement of certain important milestones in its restructuring and refinancing efforts. Over the next several months the Company plans to reposition itself as a highly focused provider of heavy construction and infrastructure services with a strong balance sheet. To fully achieve this goal, Petrowest has embarked on a multi-pronged process to dispose of non-core assets, to reduce debt levels, and to right-size the organization in the context of the future business plan.
Petrowest is pleased to announce that Mr. Sami Saad, current President and Chief Operating Officer, has been appointed as Chief Executive Officer in replacement of Mr. Rick Quigley, effective today. Mr. Garry Wetsch, Board member, stated "We are delighted that Sami has agreed to accept increased responsibility for the on-going development and implementation of the new business strategy for the Company and we have full confidence in his ability to continue to effect positive change that will result in Petrowest becoming a leading company in the businesses we operate as well as managing our investment in the Site C partnership." Mr. Saad has a long history in the construction and EPC sectors, and stated "I am looking forward to maximizing the opportunities inherent in Petrowest that result from its people, its large asset base and its strong history in providing heavy earth construction services to the oil & gas industry and to the government and municipal infrastructure sectors in western Canada. My goal is to ensure Petrowest operates safely, profitably and with a strong commitment to community all while providing shareholders with attractive growth in value."
Board of Director Changes
As the Company enters into a new phase of growth and development, the Board has determined that it should be reconstituted to better meet the go-forward needs. Specifically, the Board has concluded the appropriate number of members should be reduced from the current seven, and that new members should be added with skills and experience that can provide effective oversight in the context of the new business strategy. As the initial step in this process, Mr. James Coleman, Mr. Dan Tsubouchi, and Mr. Paul Shelley have announced their resignation effective May 18, 2017. The Board will consist of four current members being Mr. Garry Wetsch, Mr. Roy Larson, Mr. Gerry Romanzin and Mr. Rick Quigley who will be joined by Mr. Sami Saad, CEO. An additional board member will be nominated by Crown Capital and added to the Board in due course.
Mr. Gerry Romanzin stated "On behalf the Company, its employees and shareholders I wish to acknowledge the contribution of the retiring Board members. The past two years have been very difficult for our industry and our Company, and their steady-handed guidance was able to get us through this period to the point where we are now on a clear path to recovery. Each has served with a high level of skill and professionalism and Petrowest is grateful for their time with us."
Petrowest continues to advance its non-core asset and division disposition program. The Company is in negotiations with respect to the sale of its R Bee Crushing division which operates western Canada's largest rock crushing business. In addition, surplus equipment has been identified that will be offered for sale either at auction or privately, and other non-core assets are in various stages of marketing. While there is no certainty that any sale of assets will be completed, the used heavy equipment market in Canada is strong driven in part by an uptick in oil & gas activity, increased infrastructure work and a strong U.S. dollar.
The Company has arranged for financing necessary to complete the restructuring plan. The existing bank syndicate has agreed to extend the waiver period from May 19, 2017 to September 30, 2017. The amount of credit available under the existing bank facilities has been set at $38 million which is the amount currently outstanding. It is anticipated that proceeds from the sale of non-core assets will be sufficient to fully repay the bank loans on or before September 30, 2017.
The Company announces that it has closed today a financing with Crown Capital for a $12 million Bridge Loan that matures on November 30, 2017. The Bridge Loan is expected to be repaid with proceeds received on the sale of non-core assets that exceed amounts applied to the repayment of the senior bank debt. The Bridge Loan will be used to fund the Company's working capital needs through the restructuring period. In addition, Crown has agreed to refinance the existing $15 million Term Loan maturing September 2018 with a new $15 million Term Loan maturing May 2020 which was issued today. In connection with the Crown financings Petrowest has issued 7.3 million common shares to Crown and its affiliates and has cancelled the 4.3 million common share purchase warrants previously issued to Crown.
FORWARD LOOKING INFORMATION:
Certain information and statements contained in this news release constitute forward-looking information. The information and statements contained in this news release that are not historical facts are forward-looking statements. Forward-looking statements (often, but not always, identified by the use of words such as "seek", "plan", "continue", "estimate", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe", "expect", "may", "anticipate" or "will" and similar expressions) may include plans, expectations, opinions, or guidance that are not statements of fact.
Forward looking statements in this news release include the Company's plans to reposition itself as a highly focused provider of heavy construction and infrastructure services with a strong balance sheet, the addition of a board member to be nominated by Crown Capital and added to the Board in due course, the Company's expectations regarding the anticipated sale of the R Bee Crushing division and the sale of surplus equipment and other non-core assets, the Company's anticipation that proceeds from the sale of non-core assets will be sufficient to fully repay the bank loans on or before September 30, 2017, the Company's expectation that the Bridge Loan will be repaid with proceeds received on the sale of non-core assets that exceed amounts applied to the repayment of the senior bank debt. Readers should review the cautionary statement respecting forward-looking information that appears below. Any forward-looking statements are made as of the date hereof and Petrowest does not undertake to publicly update and review such statements to reflect new events, subsequent events or otherwise, except to the extent events and circumstances have occurred that are reasonably likely to cause actual results to differ materially from material forward-looking information for a period that is not yet complete or as otherwise required by law.
Forward-looking statements are based upon the opinions, expectations and estimates of management as at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward-looking statements. These factors include, but are not limited to, such things as changes in industry conditions (including the levels of capital expenditures made by government agencies and companies undertaking infrastructure projects and oil and gas explorers and producers), the credit risk to which Petrowest is exposed in the conduct of its business, fluctuations in prevailing commodity prices or currency and interest rates, the competitive environment to which the various business divisions are, or may be, exposed in all aspects of their business, the ability of Petrowest's various business divisions to access equipment (including parts) and new technologies and to maintain relationships with key suppliers, the ability of Petrowest's various business divisions to attract and maintain key personnel and other qualified employees, various environmental risks to which Petrowest's business divisions are exposed in the conduct of their operations, inherent risks associated with the conduct of the businesses in which Petrowest's business divisions operate, timing and costs associated with the acquisition of capital equipment, the impact of weather and other seasonal factors that affect business operations, availability of financial resources or third-party financing and the impact of new laws or changes in administrative practices on the part of regulatory authorities. Forward-looking information concerning the Company's plans to reposition itself as a highly focused provider of heavy construction and infrastructure services with a strong balance sheet is based on management's expectations for the future business plan following the restructuring and refinancing in the context of the current competitive environment in the heavy construction and infrastructure services sectors. Forward-looking information concerning the addition of a board member to be nominated by Crown Capital and added to the Board in due course is based on a term and condition of the Crown refinancing. Forward-looking information concerning the Company's expectations regarding the anticipated sale of the R Bee Crushing division and the sale of surplus equipment and other non-core assets is based upon the ongoing negotiations and marketing for sale thereof. Forward-looking information concerning the Company's anticipation that proceeds from the sale of non-core assets will be sufficient to fully repay the bank loans on or before September 30, 2017 is based on management's expectations that the asset disposition program will occur on terms favourable to Petrowest and within the range of sale proceeds estimated by management. Forward-looking information concerning the Company's expectation that the Bridge Loan will be repaid with proceeds received on the sale of non-core assets that exceed amounts applied to the repayment of the senior bank debt is based on management's expectations that the asset dispositions will occur on terms and within the time estimated by management.
Although management of Petrowest believes that the expectations reflected in such forward looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Accordingly, readers should not place undue reliance upon any of the forward-looking information set out in this news release. All of the forward looking statements of Petrowest contained in this news release are expressly qualified, in their entirety, by this cautionary statement. The various risks to which Petrowest is exposed are described under "Risk Factors" in Petrowest's Annual Information Form, available under Petrowest's profile on the SEDAR website at www.sedar.com.
Petrowest is a diversified infrastructure company with primary operations based in northeastern British Columbia and Alberta. Petrowest's operations are focused on industrial and civil infrastructure projects, gravel crushing and hauling activities, as well as pre-drilling and post-completion energy services.
SOURCE Petrowest Corporation