/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE
SERVICES OR DISSEMINATION IN THE UNITED
STATES./
CALGARY, AB, July 21, 2021 /CNW/ - Tidewater Midstream and
Infrastructure Ltd. ("Tidewater Midstream") is pleased to
announce the creation of Tidewater Renewables Ltd. ("Tidewater
Renewables") as a wholly owned subsidiary. Tidewater Renewables
has been formed to become a multi-faceted, energy transition
company focusing on the production of low carbon fuels. The
creation of and the initial public offering of Tidewater Renewables
is a result of a thorough evaluation of financing alternatives with
the goal of funding Tidewater Renewables' portfolio of clean fuel
projects while allowing Tidewater Midstream to continue to
deleverage through 2021. A preliminary prospectus qualifying the
initial public offering of Tidewater Renewables common shares to
the public (the "Offering") was filed today.
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Tidewater Renewables intends to pursue a growth strategy focused
on building out its three proposed operating business units: (i)
renewable diesel, (ii) renewable hydrogen, and (iii) renewable
natural gas through the ownership, development, and operation of
clean fuels projects and related infrastructure, utilizing proven
technologies. Upon its formation, Tidewater Renewables will
acquire certain pre-existing operating assets as well as a number
of growth projects from Tidewater Midstream that will provide an
initial platform for the renewable diesel, renewable hydrogen, and
renewable natural gas business units (the "Acquired
Assets"). The Acquired Assets include existing logistics
(loading, unloading and rail assets for feedstock coming in and
renewable fuels going out at Prince George Refinery ("PGR"),
processing activities (existing processing capacity and hydrogen
production required for the co-processing projects at PGR), storage
(tankage for storage and blending for renewable diesel at PGR and
storage reservoirs for renewable natural gas located at the Brazeau
River Complex), and utilities that will facilitate the operation
of the renewable fuels growth projects as they come on line.
Tidewater Renewables expects the Acquired Assets to generate
approximately $40 million of run-rate
EBITDA primarily from take-or-pay contracts with an average term of
ten to fifteen years and Tidewater Midstream as the counterparty,
and from select other non-take-or-pay activities.
Tidewater Renewables initial growth projects will target the
production of renewable diesel via: i) the Canola Co-Processing
Project (canola-based) utilizing existing PGR infastructure and
expected to come online in Q4 2021, ii) the FCC Co-Processing
Project (wood-based biocrude) also utilizing existing PGR
infastructure and expected to come online in Q2 2023, and iii) the
Renewable Diesel & Renewable Hydrogen Complex, which is a
separate but co-located asset to PGR, that management expects to be
online in Q1 2023. Management anticipates the Canola Co-Processing
Project to generate approximately $5
million of EBITDA in 2022 on a full year run rate basis, the
FCC Co-Processing Project to generate approximately $6 million of EBITDA in 2023 on a full year run
rate basis, and the Renewable Diesel & Renewable Hydrogen
Complex to generate approximately $90
– 95 million of EBITDA in 2023 on a full year run rate basis based
on certain operating assumptions fully described in the
prelliminary prospectus. Additional projects include initiatives in
the renewable natural gas and renewable hydrogen business units and
are in the planning stages. For additional detailed information on
Tidewater Renewables' current and future projects please refer to
the preliminary prospectus.
Consideration to Tidewater Midstream for the Acquired Assets is
$180 million of cash made up of net
proceeds from the initial public offering and drawn amounts on a
newly created Tidewater Renewables $150
million bank line, as well as a majority equity stake in
Tidewater Renewables after closing the Offering (equity stake to be
determined by ultimate price and size of the Offering). Net
proceeds from the Offering will be entirely used to fund a portion
of the acquisition of the Acquired Assets from Tidewater
Midstream.
Tidewater Renewables will be led by Joel
A. MacLeod, as Executive Chairman and Chief Executive
Officer, Joel K. Vorra, as
President and Chief Financial Officer and Krasen V. Chervenkov, Executive Vice-President,
Business Development and Strategy. As part of the transaction,
Tidewater Renewables will enter into a Shared Services Agreement
pursuant to which Tidewater Midstream will provide certain
administrative and management services required to operate,
administer and maintain the Acquired Assets.
Upon completion of the Offering, Tidewater Renewables intends to
have a majority-independent Board of Directors and is expected to
enter into a Governance Agreement with Tidewater Midstream.
Pursuant to the Governance Agreement, the Board of Directors will
have an independence sub-committee composed of the board members
that are independent from Tidewater Midstream which will be tasked
with determining material matters related to Tidewater Midstream
including material contracts, commercial agreements and any
disputes between Tidewater Midstream and Tidewater Renewables.
Strategic & Financial Benefits Accruing to Tidewater
Midstream
- Establishes a pure-play, publicly traded vehicle for pursuing
and funding growth opportunities in the renewable fuels sector
- Transaction unlocks significant value from energy transition
assets for Tidewater Midstream shareholders
- Tidewater Midstream retains material ownership of Tidewater
Renewables
-
- Upon completion of the Offering, Tidewater Midstream expects to
hold a majority interest in Tidewater Renewables
- Tidewater Midstream retains over $160
million of run-rate EBITDA from its existing midstream,
marketing and extraction and downstream core business and a
majority equity interest in the $40
million of run-rate EBITDA contained within Tidewater
Renewables
-
- Following the completion of the Offering, Tidewater Midstream
will retain full control and ownership of its existing core assets
including the Brazeau River Complex, the Pipestone Gas Plant and
the Prince George Refinery
- Provides proceeds of approximately $180
million to repay debt and support Tidewater Midstream
delevering efforts. The combination of the Offering and the closing
of the Pioneer Pipeline disposition enables Tidewater Midstream to
significantly reduce leverage and improves Tidewater Midstream's
balance sheet:
-
- Immediately achieves Tidewater Midstream's previous
twelve-month leverage target of 3.0x to 3.5x total debt to EBITDA
with a near term target of under 3.0x
- Provides access to material pools of capital targeting energy
transition and ESG focused equities
Completion of the Offering is subject to, and conditional upon,
the receipt of all necessary approvals, including regulatory
approvals. The Offering is expected to close in August 2021. CIBC Capital Markets and National
Bank Financial are acting as co-lead underwriters for the
Offering.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy, nor shall there be any sale or any
acceptance of an offer to buy these securities in any province or
territory of Canada prior to the
time that a receipt for the final prospectus or other authorization
is obtained from the securities commission or similar regulatory
authority in such province or territory. Copies of the preliminary
prospectus are available on SEDAR at http://www.sedar.com/.
The shares of Tidewater Renewables have not been, nor will they
be, registered under the U.S. Securities Act of 1933, as amended,
or under any securities laws of any state or other jurisdiction of
the United States, and have not
been and may not be offered, sold or delivered, directly or
indirectly, in the United States
or to, or for the account or benefit of, ''U.S. persons'' (as
defined in Regulation S under the United States Securities Act of
1933, as amended) absent registration or an exemption from
registration under the United States Securities Act of 1933, as
amended. This press release does not constitute an offer to sell or
a solicitation of an offer to buy any of the Tidewater Renewables'
shares in the United States or to,
or for the account or benefit of, U.S. persons, nor will there be
any offer, solicitation of an offer to buy or sale of any of the
shares in any jurisdiction in which such offer, solicitation or
sale would be unlawful.
About Tidewater Midstream
Tidewater Midstream is traded on the TSX under the symbol "TWM".
Tidewater Midstream's business objective is to build a diversified
midstream and infrastructure company in the North American natural
gas, natural gas liquids and crude oil and refined product space.
Its strategy is to profitably grow and create shareholder value
through the acquisition and development of oil and gas
infrastructure. Tidewater Midstream plans to achieve its business
objective by providing customers with a full service, vertically
integrated value chain, including gas plants, pipelines, railcars,
export terminals, storage and downstream facilities.
Cautionary Notes
Advisory Regarding Forward-Looking Statements
Certain statements in this news release are "forward-looking
information" within the meaning of applicable Canadian securities
legislation ("forward-looking statements"). Such forward-looking
statements relate to possible events, conditions or financial
performance of the Company based on assumptions about future
economic conditions and courses of action. All statements other
than statements of historical fact are forward-looking statements.
In some cases, forward-looking statements can be identified by
terminology such as "anticipate", "believe", "continue", "could",
"estimate", "expect", "forecast", "intend", "may", "objective",
"ongoing", "outlook", "potential", "project", "plan", "should",
"target", "would", "will" or similar words suggesting future
outcomes, events or performance. These statements involve known and
unknown risks, assumptions, uncertainties and other factors that
may cause actual results or events to differ materially from those
anticipated in such forward-looking statements. Although the
Company believes there is a reasonable basis for the expectations
and assumptions reflected in the forward-looking statements, undue
reliance should not be placed on the forward-looking statements
because the Company can give no assurances that they will prove to
be correct. The forward-looking statements contained in this news
release speak only as of the date hereof and are expressly
qualified by this cautionary statement.
Specifically, this news release contains forward-looking
statements relating to, but not limited to: goals and objectives of
Tidewater Renewables; plans to deleverage Tidewater through 2021;
anticipated growth strategy of Tidewater Renewables and proposed
operating business units; anticipated acquisition by Tidewater
Renewables of pre-existing operating assets and growth projects
from Tidewater and the composition thereof; projections with
respect to run-rate EBITDA projections of Tidewater Renewables'
acquired assets; anticipated sources of production for renewable
diesel; anticipated execution by Tidewater Renewables of certain
corporate governance agreements; projected composition of the Board
of Tidewater Renewables; the initial growth projects targeted by
Tidewater Renewables and the date such projects are expected to
come online; plans for Tidewater Renewables to pursue additional
projects; projected strategic financial benefits accruing to
Tidewater as a result of the successful execution of the Offering;
and, the anticipated closing and date of closing of the
Offering.
Such forward-looking statements are based on a number of
assumptions which may prove to be incorrect. In addition to other
assumptions identified in this document, assumptions have been made
regarding, among other things: Tidewater Renewable's ability to
execute on its business plan; the timely receipt of all
governmental and regulatory approvals or commitments; the
availability of capital to fund planned and future capital
expenditures; that third parties, counterparties and governments
will provide any necessary and expected support; that there are no
unforeseen events preventing the performance of contracts; ability
to negotiate and enter into new commercial arrangements relating to
the renewable initiatives with counterparties, customers and other
third parties; the viability, costs, results and environmental
impact Tidewater Renewable's renewable energy initiatives,
including both current and planned projects; the Company's
operating activities and results from operation based on key input
assumptions, including incremental and one-time project and
operating costs, revenue and EBITDA; ability to complete renewable
energy initiative projects within expected timeframes and costs;
availability of third party participation required for completion
of Tidewater Renewables' planned renewable energy projects; current
industry conditions, laws and regulations continuing in effect (or,
where changes are proposed, such changes being adopted as
anticipated); consumer use and demand for renewable diesel,
renewable hydrogen and other renewable resources; general demand
for renewable products; availability of capital for renewable
energy projects on commercially reasonable terms; counterparty
participation in renewable energy projects; and the availability
and amount of governmental carbon tax and fuel standards credits
applicable to the Company.
Actual results achieved will vary from the information provided
herein as a result of numerous known and unknown risks and
uncertainties and other factors, including but not limited to:
general economic, political, market and business conditions,
including fluctuations in interest rates, foreign exchange rates
stock market volatility and supply/demand trends; the uncertain
impacts of COVID-19 on the Company's business, and the societal,
economic and governmental response to COVID-19; activities of
producers and customers and overall industry activity levels;
operational matters, including potential hazards inherent in the
Corporation's operations and the effectiveness of health, safety,
environmental and integrity programs; actions by governmental
authorities, including changes in government regulation, tariffs,
taxation and credit programs, including changes to the commitments
received from governmental authorities in respect of the renewable
energy initiatives; changes in operating and capital costs,
including fluctuations in input costs; ability to access sufficient
capital to fund renewable energy initiatives; and changes in demand
for renewable products.
The foregoing lists are not exhaustive. Additional information
on these and other factors which could affect the Company's
operations or financial results are included in the Company's most
recent annual information form and in other documents on file with
the Canadian Securities regulatory authorities.
The above summary of assumptions and risks related to
forward-looking statements in this news release has been provided
in order to provide shareholders and potential investors with a
more complete perspective on Tidewater's current and future
operations and such information may not be appropriate for other
purposes. There is no representation by Tidewater that actual
results achieved will be the same in whole or in part as those
referenced in the forward-looking statements and Tidewater does not
undertake any obligation to update publicly or to revise any of the
included forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required
by applicable securities law.
This news release contains financial outlook information about
projected results of operations, EBITDA and operating costs, which
are subject to the same assumptions, risk factors, limitations and
qualifications as set forth in the above paragraphs. The financial
outlook information was approved by management of Tidewater as of
the date of this news release and was provided for the purpose of
providing further information about the Company's anticipated
future business operations. Readers are cautioned that reliance on
such information may not be appropriate for other purposes.
Tidewater disclaims any intention or obligation to update or
revise any financial outlook information contained in this news
release, whether as a result of new information, future events or
otherwise, unless required by applicable securities law.
Non-GAAP Measures
This press release refers to "EBITDA" which does not have any
standardized meaning prescribed by generally accepted accounting
principles in Canada
("GAAP"). EBITDA is calculated as income or loss before
interest, taxes, depreciation, share-based compensation, unrealized
gains/losses, non-cash items, transaction costs, items that are
considered non-recurring in nature and the Corporation's
proportionate share of EBITDA in their equity investments.
Tidewater's management believes that EBITDA provides useful
information to investors as it provides an indication of results
generated from the Corporation's operating activities prior to
financing, taxation and non-recurring/non-cash impairment charges
occurring outside the normal course of business. EBITDA is used by
management to set objectives, make operating and capital investment
decisions, monitor debt covenants and assess performance. In
addition to its use by management, Tidewater also believes EBITDA
is a measure widely used by security analysts, investors and others
to evaluate the financial performance of the Corporation and other
companies in the midstream industry. Investors should be
cautioned that EBITDA should not be construed as alternatives to
earnings, cash flow from operating activities or other measures of
financial results determined in accordance with GAAP as an
indicator of the Corporation's performance and may not be
comparable to companies with similar calculations.
"Run Rate EBITDA" is defined as the expected EBITDA to be
generated by a specific Acquired Asset or specific growth project
corresponding to a full year of operations at full capacity. Run
Rate EBITDA excludes non-cash items including stock-based
compensation. The calculation of Run Rate EBITDA is based in
certain estimates and assumptions and should not be regarded as a
representation by the Corporation or any other person that the
Corporation will achieve such operating results. Prospective
investors should not place undue reliance on the Corporation's Run
Rate EBITDA and should make their own independent assessment of the
Corporation's future results or operations, cash flows and
financial condition.
For more information with respect to financial measures which
have not been defined by GAAP, including reconciliations to the
closest comparable GAAP measure, see the "Non-GAAP Measures"
section of Tidewater's most recent MD&A which is available on
SEDAR.
Additional information relating to Tidewater is available on
SEDAR at www.sedar.com and at www.tidewatermidstream.com.
SOURCE Tidewater Midstream and Infrastructure Ltd.