/NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA/
CALGARY, Jan. 17, 2017 /CNW/ - Cathedral Energy Services
Ltd. (TSX: CET) ("Cathedral" or the "Company") is pleased to
announce that the previously announced sale of its flowback and
production testing assets to Ideal Completions Group LLC ("Ideal")
was completed on January 16,
2017.
The net proceeds of the sale, estimated to be $17.2 million, will initially be used to reduce
the amount owing under the Company's credit facility along with
supplementing working capital and capital investment required to
support Cathedral's growing directional drilling business.
Post-closing, Cathedral's bank debt is estimated to be
approximately $11.3 million.
Cathedral also announces it has negotiated certain amendments to
its credit facility ("Amended Facility") with The Bank of Nova
Scotia ("BNS") and Export Development Canada
("EDC"). Under the Amended Facility, Cathedral's total
credit facility availability is $23 million. The lenders have
also agreed to extend the maturity date of Cathedral's credit
facility to December 2018.
The financial covenants associated with the Amended Facility are
as follows:
Quarter
ending:
|
Maximum Funded Debt
to Bank
EBITDA Ratio (Note 1)
|
Minimum Debt Service
Ratio (Note 1)
|
December 31, 2016
(Note 2)
|
Waived
|
Waived
|
March 31, 2017 (Note
3)
|
3.50
|
2.00
|
June 30,
2017
|
3.50
|
2.50
|
September 30,
2017
|
3.50
|
1.75
|
December 31,
2017
|
3.25
|
3.00
|
March 31, 2018 to
December 31, 2018
|
3.00
|
3.00
|
Notes:
|
1.
|
Funded Debt to Bank
EBITDA Ratio and Debt Service Ratio are defined in accordance with
the Amended Facility agreement.
|
2.
|
Requirement for
minimum Bank EBITDA for the quarter ended December 31, 2016 of $2.5
million.
|
3.
|
Minimum liquidity
availability requirement of $2 million for the period ending June
30, 2017.
|
4.
|
Minimum Working
Capital Ratio not less than 1.25 to 1.00.
|
Over the past 2 years, Cathedral has taken action to
aggressively reduce expenses while preserving the key employee base
required to ramp up our business as activity levels improve.
During that same time period, Cathedral has worked proactively with
its lending partners to accommodate their requirements and preserve
upside value in our business. Since the end of 2014,
Cathedral has reduced bank debt by approximately $44.8 million (80%) and has remained cash flow
positive except for the traditional slow activity level second
quarter. To assist with securing additional liquidity, in
August 2016, the Company arranged for
EDC to join its lending syndicate and EDC continues to be
supportive of Cathedral's strategy. The Company entered into
a strategic alternatives process in September 2016 with a view to improving its
balance sheet and provide funds to support growth opportunities in
its directional drilling business. This has been accomplished
through the sale of Cathedral's production testing division to
Ideal.
Cathedral management is very pleased with both our financial and
operational accomplishments since the beginning of the industry
downturn and believe we are now well positioned to secure the
growth opportunities available to the Company with industry
activity levels improving.
Further details on Cathedral's credit facility are outlined in
the Company's financial disclosure located on SEDAR under
Cathedral's profile at www.sedar.com.
FORWARD-LOOKING INFORMATION
This press release
contains certain statements or disclosures relating to Cathedral
that are based on the expectations of Cathedral as well as
assumptions made by and information currently available to
Cathedral which may constitute forward-looking information under
applicable securities laws. In particular, statements related to
net proceeds of the sale, estimated to be $17.2 million and funds will initially be used to
reduce the amount owing under the Company's credit facility along
with supplementing working capital and capital investment may
contain forward-looking information. Many factors could cause the
performance or achievement by Cathedral to be materially different
from any future results, performance or achievements that may be
expressed or implied by such forward-looking information, including
without limitation, the risk that the Disposition is delayed or is
not completed for any reason, and the risk that the net proceeds of
the Disposition are less than anticipated. Cathedral's Annual
Information Form and other documents filed with securities
regulatory authorities (accessible through the SEDAR website
(www.sedar.com) describe the risks, material assumptions and other
factors that could influence actual results and which are
incorporated herein by reference. Cathedral disclaims any intention
or obligation to publicly update or revise any forward-looking
information, whether as a result of new information, future events
or otherwise, except as may be expressly required by applicable
securities laws.
Cathedral Energy Services Ltd. (the "Company" or
"Cathedral"), based in Calgary, Alberta is incorporated
under the Business Corporations Act (Alberta) and operates in the U.S. under
Cathedral Energy Services Inc. The Company is publicly traded
on the Toronto Stock Exchange under the symbol "CET".
Cathedral, is a trusted partner to North American energy companies
requiring high performance directional drilling services. We work
in partnership with our customers to tailor our equipment and
expertise to meet their specific geographical and technical
needs. Our experience, technologies and responsive personnel
enable our customers to achieve higher efficiencies and lower
project costs. For more information,
visit www.cathedralenergyservices.com.
SOURCE Cathedral Energy Services Ltd.