(TSX:TWM)
/THIS PRESS RELEASE IS NOT FOR DISTRIBUTION IN
THE UNITED STATES OR TO U.S. NEWS
AGENCIES/
CALGARY,
AB, Aug. 16, 2022 /CNW/ - Tidewater Midstream
and Infrastructure Ltd. ("Tidewater" or the "Company") (TSX: TWM)
is pleased to announce the successful closing of its previously
announced refinancing plan, consisting of a $130 million increase in the size of its Senior
Credit Facility to $550 million and
an approximately $92.5 million equity
offering, fully funding the redemption of its $125 million senior unsecured notes due
December 19, 2022 and repayment of
its $20 million second lien term loan
due October 31, 2022. The
completion of the refinancing plan simplifies the balance sheet,
lowers Tidewater's leverage and cost of capital, extends the
Company's debt maturity profile and provides significant additional
liquidity from the increase in the size of the Senior Credit
Facility. Proceeds from the offering coupled with underwriter's
over-allotment option exercise have enabled Tidewater to cancel its
initially proposed second lien facility, helping to reduce the
Company's cost of capital and simplify its capital structure.
The refinancing plan consisted of a bought deal equity offering
of 48,392,000 units of the Company (the "Units" as defined below)
at a price of $1.20 per Unit (the
"Offering Price") for aggregate gross proceeds of approximately
$58 million (the "Public Offering"),
a concurrent offering of 28,750,000 Units to Birch Hill Private
Equity Partners Management Inc., LP and certain affiliated entities
controlled by Birch Hill, (collectively, "Birch Hill"), funds
managed and advised by Kicking Horse Capital Inc. ("Kicking Horse
Funds" and "Kicking Horse" respectively) and officers of the
Company at the Offering Price for aggregate gross proceeds of
$34.5 million on a non-brokered
private placement basis (the "Private Placement") (the Private
Placement, together with the Public Offering, the "Offering"). The
Company increased the size of its credit facility by approximately
30% to $550 million, with the facility's maturity date remaining
unchanged at August 18, 2024 through an expanded syndicate of
lenders that include two of Canada's largest banks. The previously
announced upsizing of the Public Offering coupled with
Underwriters' (as defined below) over-allotment option exercise
have enabled Tidewater to cancel its initially proposed second lien
facility from Birch Hill.
Each Unit is comprised of one common share of the Company (each
a "Common Share") and one-half of one common share purchase
warrant (each full warrant, a "Warrant"). Each Warrant entitles
the holder to acquire one Common Share from the Company at a price
of $1.44 per Common Share until
August 16, 2024. The Warrants issued
in connection with the Public Offering are expected to begin
trading on or about August 16, 2022.
Public Offering
The Public Offering was sold on a bought deal basis to a
syndicate of underwriters led by CIBC Capital Markets, National
Bank Financial Inc., RBC Dominion Securities Inc., and ATB Capital
Markets Inc. and including Canaccord Genuity Corp., Acumen Capital
Finance Partners Limited, iA Private Wealth Inc., Raymond James
Ltd., INFOR Financial Inc. and PI Financial Corp. (collectively,
the "Underwriters").
The Offering was completed pursuant to a short form prospectus
dated August 9, 2022 (the
"Prospectus") filed in each of the provinces of Canada, and in the
United States on a private placement basis to qualified
institutional buyers pursuant to an exemption from registration
requirements in Rule 144A of the United States Securities Act of
1933, as amended (the "U.S. Securities Act"). The Offering is
subject to the final acceptance of the TSX, which has
conditionally accepted the Offering.
Private Placement
In connection with the financing plan and the investment by
Kicking Horse in the Private Placement, Thomas P. Dea has joined the Board of Directors
of the Company. Mr. Dea is the President and Chief Executive
Officer of Kicking Horse, a Toronto-based investment manager focused on
concentrated investment strategies in public equities, distressed
debt, and special situations.
The Company and Kicking Horse have entered into a board
nomination agreement whereby the Company will agree to nominate Mr.
Dea, or another Kicking Horse nominee, so long as the Kicking
Horse Funds hold at least 2% of the issued and outstanding
Common Shares.
In addition, Kicking Horse shall be entitled to participate in
future share issuances in order to maintain a share ownership
position of approximately 4%. The Company has entered into a
similar agreement with Birch Hill
which allows Birch Hill to
participate in future share issuances in order to maintain its
current share ownership position of approximately 23%. Each
of the subscribers under the Private Placement has until
September 16, 2022 to acquire up to
an additional 15% of the Units they acquired under the Concurrent
Private Placement (the "Placement Over-Allotment Option"). As
such, up to an additional aggregate of 4,312,500 Units may be
issued by the Company prior to September 16,
2022 under the Placement Over-Allotment Option.
The involvement of management and Birch Hill in the Offering are "related party
transactions" within the meaning of MI 61-101 and the Company is
relying on the exemptions in sections 5.5(a) and 5.7(a) [Fair
Market Value Not More Than 25% of Market Capitalization] of MI
61-101 in connection with such transactions, as the aggregate fair
market value of such transactions does not exceed 25% of the
Company's current market capitalization, as determined in
accordance with MI 61-101. Readers are directed to the Material
Change Report filed on SEDAR on August 8,
2022 for further information relating to the "related party
transactions" involving Birch Hill
and management. Readers are also directed to the Early Warning
Report filed on SEDAR by Birch
Hill on August 2, 2022 for
more information regarding the Birch
Hill holdings.
Stifel FirstEnergy acted as financial advisor to the special
committee of the board of directors in relation to the Company's
refinancing plan.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of the
securities in the United States or
in any other jurisdiction in which such offer, solicitation or sale
would be unlawful. The securities have not been registered under
the U.S. Securities Act of 1933, as amended, and may not be offered
or sold in the United States
absent registration or an applicable exemption from the
registration requirements thereunder.
ABOUT TIDEWATER
Tidewater is traded on the TSX under the symbol "TWM".
Tidewater's business objective is to build a diversified midstream
and infrastructure company in the North American natural gas,
natural gas liquids, crude oil, refined product, and renewable
energy value chain. Its strategy is to profitably grow and create
shareholder value through the acquisition and development of
conventional and renewable energy infrastructure. To achieve its
business objective, Tidewater is focused on providing customers
with a full service, vertically integrated value chain through the
acquisition and development of energy infrastructure, including
downstream facilities, natural gas processing facilities, natural
gas liquids infrastructure, pipelines, railcars, export terminals,
storage, and various renewable initiatives. To complement its
infrastructure asset base, the Company also markets crude, refined
product, natural gas, NGLs and renewable products and services to
customers across North
America.
Tidewater is a majority shareholder in Tidewater Renewables, a
multi-faceted, energy transition company focusing on the production
of low carbon fuels. Tidewater Renewables' common shares are
publicly traded on the TSX under the symbol "LCFS".
NON-GAAP MEASURES
Throughout this press release and in other materials disclosed
by the Company, Tidewater uses a number of financial measures when
assessing its results and measuring overall performance. The intent
of non-GAAP measures and ratios is to provide additional useful
information to investors and analysts. Certain of these financial
measures do not have a standardized meaning prescribed by GAAP and
are therefore unlikely to be comparable to similar measures
presented by other entities. As such, these measures should not be
considered in isolation or used as a substitute for measures of
performance prepared in accordance with GAAP. 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.
Non-GAAP Financial Measures
Consolidated Adjusted EBITDA is calculated as income (or loss)
before finance costs, taxes, depreciation, share-based
compensation, unrealized gains/losses on derivative contracts,
non-cash items, transaction costs, lease payments under IFRS 16
Leases and other items considered non-recurring in nature
plus the Company's proportionate share of EBITDA in their equity
investments. Consolidated Adjusted 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 consolidated Adjusted
EBITDA is a measure widely used by securities analysts, investors,
lending institutions, and others to evaluate the financial
performance of the Company and other companies in the midstream
industry. The Company issues guidance on this key measure. As a
result, consolidated Adjusted EBITDA is presented as a relevant
measure in the MD&A to assist analysts and readers in assessing
the performance of the Company as seen from management's
perspective.
Capital Management Measures
Consolidated net debt is used by the Company to monitor its
capital structure and financing requirements. It is also used as a
measure of the Company's overall financial strength. Consolidated
net debt is defined as bank debt, notes payable and convertible
debentures, less cash. In addition to reviewing consolidated net
debt, management reviews deconsolidated net debt to highlight the
Company's financial flexibility, balance sheet strength and
leverage. Deconsolidated net debt is calculated as consolidated net
debt less the portion attributable to Tidewater Renewables.
Consolidated and deconsolidated net debt exclude working capital,
lease liabilities and derivative contracts as the Company monitors
its capital structure based on deconsolidated net debt to
deconsolidated Adjusted EBITDA, consistent with its credit facility
covenants.
FORWARD LOOKING STATEMENTS
Certain statements contained in this press release constitute
forward-looking statements and forward-looking information
(collectively referred to herein as, "forward-looking statements")
within the meaning of applicable Canadian securities laws. Such
forward-looking statements relate to future events, conditions or
future financial performance of Tidewater based on future economic
conditions and courses of action. All statements other than
statements of historical fact may be forward-looking statements.
Such forward-looking statements are often, but not always,
identified by the use of any words such as "seek", "anticipate",
"budget", "plan", "continue", "forecast", "estimate", "expect",
"may", "will", "project", "predict", "potential", "targeting",
"intend", "could", "might", "should", "believe", "will likely
result", "are expected to", "will continue", "is anticipated",
"believes", "estimated", "intends", "plans", "projection",
"outlook" and similar expressions. 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. The Company believes the expectations reflected in
those forward-looking statements are reasonable, but no assurance
can be given that these expectations will prove to be correct and
such forward-looking statements included in this press release
should not be unduly relied upon.
In particular, this press release contains forward-looking
statements pertaining to but not limited to the following:
- the Warrants issued in connection with the Offering are
expected to begin trading on or about August 16, 2022;
- the nomination of Mr. Dea, or another Kicking Horse nominee to
the board of directors of the Company;
- the subscribers under the Concurrent Private Placement
exercising the Placement Over-Allotment Option; and
- the Company issuing an additional aggregate of 4,312,500 Units
prior to September 16, 2022 under the
Placement Over-Allotment Option.
Although the forward-looking statements contained in this press
release are based upon assumptions which management of the Company
believes to be reasonable, the Company cannot assure investors that
actual results will be consistent with these forward-looking
statements. Any forward-looking information contained in this press
release represents expectations as of the date of this press
release and are subject to change after such date. However, the
Company is under no obligation (and the Company expressly disclaims
any such obligation) to update or alter any statements containing
forward-looking information, the factors or assumptions underlying
them, whether as a result of new information, future events or
otherwise, except as required by law. All the forward-looking
information in this press release is qualified by the cautionary
statements herein.
Forward-looking information is provided herein for the purpose
of giving information about the Offering referred to above. Readers
are cautioned that such information may not be appropriate for
other purposes. The trading of the Warrants and completion of the
proposed Placement Over-Allotment Option are subject to customary
closing conditions, termination rights and other risks and
uncertainties. Accordingly, there can be no assurance that the
proposed trading of the Warrants and completion of the proposed
Placement Over-Allotment will occur, or that they will occur on the
terms and conditions contemplated in this press release. Further
information about factors affecting forward-looking statements and
management's assumptions and analysis thereof is available in
filings made by the Company with Canadian provincial securities
commissions available on the System for Electronic Document
Analysis and Retrieval ("SEDAR") at www.sedar.com.
PRELIMINARY FINANCIAL INFORMATION
The Company's expectations for its net income estimates, its
Consolidated Adjusted EBITDA, Tidewater Renewables' net income and
Adjusted EBITDA (see "Non-GAAP Measures") are based on, among other
things, the Company's and Tidewater Renewables' anticipated
financial results for the three and six month period ended
June 30, 2022. The Company's and
Tidewater Renewables' anticipated financial results are unaudited
and preliminary estimates that: (i) represent the most current
information available to management as of the date of hereof; (ii)
are subject to completion of interim review procedures that could
result in significant changes to the estimated amounts; and (iii)
do not present all information necessary for an understanding of
the Company's or Tidewater Renewables' financial condition as of,
and the Company's or Tidewater Renewables' results of operations
for, such periods. The anticipated financial results are subject to
the same limitations and risks as discussed under "Forward Looking
Statements" above. Accordingly, the Company's and Tidewater
Renewables' anticipated financial results for such periods may
change upon the completion and approval of the financial statements
for such periods and the changes could be material.
SOURCE Tidewater Midstream and Infrastructure Ltd.