Enservco Signs Non-Binding Letter of Intent with Lender to Amend its Senior Revolving Credit Facility for Substantial Debt Re...
September 17 2020 - 8:30AM
Enservco Corporation (NYSE American: ENSV), a diversified national
provider of specialized well-site services to the domestic onshore
conventional and unconventional oil and gas industries, today
announced it has signed a non-binding letter of intent (“LOI”) with
East West Bank (“EWB”) to amend its existing senior revolving
credit facility to reduce bank debt by $16 million, amend the
current facility into a term loan and provide a new working capital
revolving line of credit in exchange for equity in Enservco.
Under the LOI, the parties will seek to enter into a definitive
agreement providing that:
EWB would reduce the current loan balance by $16 million in
exchange for eight million shares of Enservco restricted common
stock and 15 million common stock purchase warrants. The current
credit facility would be amended to reflect a term loan with a
balance of approximately $17 million and a new working capital
revolving line of credit with no initial balance and a limit of $1
million, both bearing interest at an annual rate of 8.25%, of which
3% will accumulate and be paid at maturity on October 15, 2021. The
term loan would be interest only with potential for principal
payments in the event Enservco reaches certain profit metrics and
would mature in October 2021. The revolving line of credit would be
based on Enservco’s eligible receivables.
The restricted common stock issued to EWB will be registered for
resale by Enservco with the SEC to be tradeable within six months.
The warrants will be exercisable beginning October 15, 2021, at a
price of $0.25 per common share, an approximate 92% premium to
Enservco’s closing stock price on September 16, 2020.
Enservco and EWB seek to close the debt restructuring in October
2020.
The financial impact on Enservco of this proposed amendment and
the recent Cross River conversion of half of its subordinated debt
and accrued interest into equity is expected to be substantial.
Upon completion, based on its balance sheet as of June 30, 2020,
Enservco will have reduced its total debt by nearly 52% – from
$35.5 million to $18.5 million. In addition, the Company’s
stockholders’ equity would experience a positive swing of
approximately $17.5 million.
“We are delighted to announce this progress with East West Bank,
which has been a great partner for us over the years and has worked
diligently with us to improve the financial strength and viability
of the Company during these challenging times,” said Executive
Chairman Rich Murphy, whose investment firm, Cross River Partners,
is Enservco’s largest shareholder. “We believe that reducing total
debt by half and realizing a significant positive swing in
stockholders’ equity will represent a meaningful boost in value for
the Company and its stockholders. The conversion of debt into
equity by both East West Bank and Cross River will demonstrate
confidence in the future of our business. We are excited to focus
our time and attention on building our business.”
About Enservco
Through its various operating subsidiaries, Enservco provides a
wide range of oilfield services, including hot oiling, acidizing,
frac water heating and related services. The Company has a broad
geographic footprint covering seven major domestic oil and gas
basins and serves customers in Colorado, Montana, New Mexico, North
Dakota, Oklahoma, Pennsylvania, Ohio, Texas, Wyoming and West
Virginia. Additional information is available at
www.enservco.com
Cautionary Note Regarding Forward-Looking
Statements
This news release contains information that is "forward-looking"
in that it describes events and conditions Enservco reasonably
expects to occur in the future. Expectations for the future
performance of Enservco are dependent upon a number of factors, and
there can be no assurance that Enservco will achieve the results as
contemplated herein. Certain statements contained in this release
using the terms "may," “intends,” "expects to," and other terms
denoting future possibilities, are forward-looking statements. The
accuracy of these statements cannot be guaranteed as they are
subject to a variety of risks, which are beyond Enservco's ability
to predict, or control and which may cause actual results to differ
materially from the projections or estimates contained herein.
Among these risks are those set forth in Enservco’s annual report
on Form 10-K for the year ended December 31, 2019, and subsequently
filed documents with the SEC. Forward looking statements in this
news release that are subject to risk include the LOI is
non-binding and only reflects the intent of the parties, the
Company’s ability to complete the debt restructuring with East West
Bank, the potential for any transaction to have a substantial
financial impact and represent a meaningful boost in value, and the
Company’s ability to build its business or raise additional equity.
It is important that each person reviewing this release understand
the significant risks attendant to the operations of Enservco.
Enservco disclaims any obligation to update any forward-looking
statement made herein, except as required by law.
Contacts:
Jay PfeifferPfeiffer High Investor Relations,
Inc.Phone: 303-880-9000Email: jay@pfeifferhigh.com
Marjorie HargraveChief Financial OfficerEnservco
Corporationmhargrave@enservco.com
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