Enservco Corporation Reduces Debt and Strengthens Balance Sheet
March 28 2022 - 8:00AM
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 retired its $13.8 million senior revolving credit
facility with East West Bank for total consideration of
approximately $9.4 million, which includes an initial payment of
$8.4 million in cash and future payments of up to $1.0 million from
a limited portion of net proceeds from receivables financing.
As a result of the refinancing, Enservco’s debt
was substantially reduced and predominantly reclassified as
long-term liabilities with four- to six-year terms. Equally
important, the refinancing will have minimal impact on aggregate
monthly debt and lease obligations, thus substantially improving
and stabilizing the Company’s capitalization.
“We appreciate East West Bank’s support over
recent years and willingness to work with the Company to de-lever
the business and strengthen our balance sheet,” said Executive
Chairman Rich Murphy. “Over the past 18 months we have
significantly reduced our total debt while substantially reducing
costs, relocating equipment to optimize margins and increasing
market share, putting the Company in a stronger position to pursue
its growth objectives as our industry improves. We believe that the
higher commodity price environment bodes well for the Company in
the foreseeable future.”
The refinancing included:
- A $6.225 million master equipment lease
- A receivables factoring line of up to $10 million
- A $1.2 million convertible subordinated note
Specifically, the Company’s Heat Wave Hot Oil
Service unit entered into a Master Lease Agreement with Utica
Leaseco, LLC, whereby Utica provided a $6,225,000 master equipment
lease collateralized by Enservco equipment. The lease has a
51-month term at an effective rate in the range of 13.50% to 15.46%
based on performance metrics. After 12 months, the Company has the
option to prepay $1.0 million of the obligation.
Heat Waves further entered into an Invoice
Purchase Agreement with LSQ, which will provide receivables
factoring to the Company for a term of 18 months. The agreement
calls for LSQ to advance up to 85% on up to $10 million of accounts
receivable factored by Heat Waves at an effective annual interest
rate of approximately 7.3%. LSQ provided for $2.4 million in
immediate financing at the close of the refinance under the
accounts receivable factoring facility, of which $1.2 million was
used in the initial payment to East West Bank, and $1.2 million was
used to pay off a working capital loan provided during the first
quarter of 2022 by Cross River Partners, an entity controlled by
Rich Murphy, Enservco’s Executive Chairman.
The third component of the refinancing includes
the issuance by the Company of a $1.2 million Convertible
Subordinated Note to Cross River Partners. The note has a six-year
term, bears interest at 7% per annum and has interest only
quarterly payments commencing June 30, 2022.
About Enservco Through its
various operating subsidiaries, Enservco provides a 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, West Virginia, Utah,
Michigan, Illinois, Florida, New Mexico and
Louisiana. 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, 2020, and subsequently filed documents with the SEC.
Forward looking statements in this news release include ability of
the Company to achieve its growth objectives, the sustainability of
higher oil prices, the specific amount of debt reduction, ability
to de-lever the business and strengthen its balance sheet, and
sustainability of improvement and stabilization of the Company’s
capitalization. In addition, we believe the higher oil price
environment bodes well for the Company in the and the ability raise
additional equity. Enservco disclaims any obligation to update any
forward-looking statement made herein, except as required by
law.
Contact:
Marjorie Hargrave President and CFO Enservco
Corporation mhargrave@enservco.com
Pfeiffer High Investor Relations, Inc. Jay
Pfeiffer Phone: 303-880-9000 Email: jay@pfeifferhigh.com
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