/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR
DISSEMINATION IN THE UNITED
STATES/
Resulting in reduced debt, extension of
maturity of credit facilities and new capital
CALGARY, AB, March 22, 2022 /CNW/ - Western Energy
Services Corp. (the "Company" or "Western") (TSX:
WRG) announces that, following an extensive review process by its
board of directors (the "Board"), it has entered into
agreements to effect a comprehensive recapitalization to
restructure a portion of its outstanding debt and raise new capital
(collectively, the "Restructuring Transaction"). The
Restructuring Transaction will provide the Company with an improved
capital structure and extends the pending maturities of the
Company's secured credit facilities. The Restructuring Transaction
includes the following:
- The Company has entered into a debt restructuring agreement
(the "Debt Restructuring Agreement") with Alberta Investment
Management Corporation ("AIMCo"), the lender under its
second lien term loan facility (the "Second Lien Facility"),
the principal amount of which is approximately $218.5 million, including interest
originally due on January 4, 2022
that was paid "in kind" by being added to the outstanding principal
amount. Under the Debt Restructuring Agreement, subject to the
completion of the other components of the Restructuring Transaction
described below and the satisfaction of certain other conditions,
the Company will convert $100 million
of the principal amount outstanding under the Second Lien Facility
into common shares of the Company ("Common Shares") at a
conversion price of $0.05 per share,
subject to adjustment as described below (the "Debt
Exchange"). On completion of the Debt Exchange, the Second Lien
Facility will be amended to, among other things, extend its
maturity date from January 31, 2023
to the fourth anniversary of the closing date of the Debt
Exchange.
- The Company has entered into a commitment letter with certain
of the lenders under its senior secured credit facilities (the
"Senior Facilities") under which the lenders have agreed to
consent to the Debt Exchange and the amendments to the Second Lien
Facility, and to amend the terms of the Senior Facilities to, among
other things, reduce the amount available under the Senior
Facilities from $60 million to
$45 million and extend the maturity
date of the Senior Facilities from July 1,
2022 to the third anniversary of the Debt Exchange.
- As a condition to the completion of the Debt Exchange, the
Company will conduct a rights offering of Common Shares to eligible
shareholders to raise proceeds of $31.5
million (the "Rights Offering"). The subscription
price for each right will be determined based on the market price
of the Common Shares at the commencement of the Rights Offering
using the formula described in more detail below (the
"Subscription Price"). G2S2 Capital Inc. ("G2S2"),
G2S2's subsidiary Armco Alberta Inc. ("Armco"), Ronald P. Mathison and Matco Investments Ltd.
("Matco"), currently the Company's largest shareholders,
have entered into a standby purchase agreement (the "Standby
Purchase Agreement") with the Company wherein they have agreed
to exercise in full their basic subscription privilege and, in the
case of each of Armco and Matco (collectively, the "Standby
Purchasers"), subscribe for any shares not subscribed for by
other eligible shareholders under the Rights Offering (the
"Standby Commitment"), either directly or through an
affiliate. The proceeds of the Rights Offering will be applied to
reduce the principal amount outstanding under the Second Lien
Facility by $10 million, with the
remaining $21.5 million being applied
to fund maintenance and growth capital for the Company and for
general corporate purposes.
Further details regarding the terms of the transaction
agreements in respect of the Restructuring Transaction are provided
below.
"This transaction is the outcome of extensive efforts by
Western, working in collaboration with its key stakeholders and
under the oversight of a special committee of independent members
of our Board, to improve the Company's financial condition and
capital structure in order to address our significant existing debt
burden," said Alex MacAusland, Chief
Executive Officer and President of Western. "Our debt has proven to
be challenging in light of the extended downturn experienced by
energy service providers, in addition to the impacts of the
COVID-19 pandemic over the last two years. Addressing our current
liquidity issues will provide Western with the opportunity to build
value in the anticipated recovery in our industry. We are
pleased with the support for the proposed transaction from our
lenders, significant shareholders, Board and management, and in
particular that AIMCo is prepared to continue to support the
Company's business by converting a substantial portion of its debt
position to equity, while the proposed rights offering will provide
existing shareholders with the opportunity to participate in the
recapitalization."
Upon completion of the Restructuring Transaction, the Company
expects that the principal amount under the Second Lien Facility
will be reduced to approximately $108.5
million, with annual interest payments reduced from
approximately $15.0 million to
approximately $9.0 million. The
Company expects, assuming there will be no significant changes in
its business from that conducted currently, that it will be able to
fund future interest payments through cash generated from its
operations. Taking this into account, and considering the
anticipated receipt of the $21.5
million balance of the proceeds from the Rights Offering and
the extension of the maturity of the Senior Facilities and Second
Lien Facility by three years and four years, respectively, from the
closing date of the Debt Exchange, the Company expects that it will
have a sustainable capital structure following the completion of
the Restructuring Transaction.
Given the very large number of Common Shares to be issued
pursuant to the Debt Exchange and the Rights Offering, the Company
anticipates that it will seek approval at its next annual general
meeting, expected to be held in June
2022, for a consolidation of its Common Shares. Whether the
Company proceeds with a consolidation, and the consolidation ratio,
will be determined in advance of the annual general meeting.
Board and Special Committee Review and Fairness
Opinion
The Restructuring Transaction followed a detailed review process
under which management of the Company and the Board carefully
considered all available options to address the pending maturities
of the Senior Facilities and the Second Lien Facility, as well as
the potential for events of default under such facilities prior to
their maturities, all with a view to providing for a viable capital
structure to allow Western to continue its business and to preserve
value for its shareholders.
AIMCo has no representatives on the Board. George Armoyan, a director of the Company, is a
principal shareholder and officer of G2S2 and Armco. Ronald Mathison, the Chair of the Board, is a
principal shareholder and officer of Matco and Lorne Gartner, a director of the Company, has a
commercial relationship with Matco through mutual investments. The
Board formed a special committee of directors who are fully
independent of any relationship with AIMCo, Matco, G2S2 or Armco
(the "Special Committee") to assist in this review and
consideration. The Special Committee took an active role in
reviewing and overseeing the negotiation of the terms of the Debt
Exchange and the Rights Offering, as well as other aspects of the
Restructuring Transaction. The Special Committee engaged
Osler, Hoskin & Harcourt LLP
as independent counsel, and engaged ATB Capital Markets Inc.
("ATB Capital Markets") as financial advisor to advise the
Special Committee and assist it with the review and consideration
of the Restructuring Transaction and whether any other alternatives
were available to address the Company's debt situation and preserve
value for shareholders. The Special Committee and the Board, having
examined the possibility of other financing alternatives and
alternative transactions, are of the view that, given the Company's
significant debt position and the pending maturities of the Senior
Facilities and the Second Lien Facility, together with a continued
challenging environment in the energy services industry, the
Restructuring Transaction is the best option available to the
Company which preserves value for shareholders.
ATB Capital Markets has provided an opinion (the "Fairness
Opinion") to the Special Committee that the Restructuring
Transaction, including the Debt Exchange, is fair, from a financial
point of view, to the Company. The Fairness Opinion is subject to
the assumptions made and the limitations and qualifications
included in the written opinion of ATB Capital Markets.
Based upon, among other things, (a) ATB Capital Markets'
fairness opinion and advice from the Special Committee's and the
Company's legal advisors, (b) the Special Committee's careful
consideration of the terms of the Restructuring Transaction and the
impact on the Company of a failure to proceed with the
Restructuring Transaction, (c) the fact that the Restructuring
Transaction provides the Company with a more stable capital
structure to continue to operate viably as a going concern,
(d) consideration of whether there were any potential
financing or other alternatives to address the Company's maturing
debt, and (e) the fact that the Rights Offering will provide all
eligible shareholders with the right, but not the obligation,
to participate in the restructuring by subscribing for Common
Shares on a pro rata basis at a significant discount to the
conversion price of the Debt Exchange with AIMCo, the Special
Committee has determined that the Restructuring Transaction is fair
and reasonable to the Company, is in the best interests of the
Company and its current shareholders other than AIMCo and the
Standby Purchasers, and, accordingly, has unanimously recommended
to the Board that the Restructuring Transaction be
approved.
Based on the recommendation of the Special Committee and the
factors considered by the Special Committee, the Board unanimously
approved the transactions constituting the Restructuring
Transaction, with Messrs. Armoyan and Mathison abstaining with
respect to the Standby Purchase Agreement.
Details Regarding the Restructuring Transaction
Debt Exchange and Amendments to
the Second Lien Facility
Pursuant to the Debt Restructuring Agreement, immediately
following the completion of the Rights Offering and the Standby
Commitment, Western and AIMCo will complete the Debt Exchange
involving the conversion of $100
million principal amount of the loan provided under the
Second Lien Facility into Common Shares at a conversion price of
$0.05 per Common Share, subject to
adjustment as described below. The Debt Exchange will be completed
pursuant to an exemption from prospectus requirements. AIMCo
currently holds approximately 19.18% of the Common Shares and will
not be participating in the Rights Offering. In addition,
$10 million of the proceeds from the
Rights Offering will be paid to AIMCo to further reduce the
principal amount outstanding under the Second Lien Facility.
The conversion price will be reduced below $0.05 if the Subscription Price under the Rights
Offering is less than $0.016.
In that case, the conversion price will be calculated as
$0.05 multiplied by a fraction, the
numerator of which is the Subscription Price and the denominator of
which is $0.016. For example,
if the Subscription Price in the Rights Offering is determined to
be $0.015 per share as described
below under "Rights Offering and Standby Commitment", the
conversion price in the Debt Exchange would be $0.05 x ($0.015/$0.016) =
$0.046875 per share.
Assuming that the conversion price is $0.05 per share and the Rights Offering
Subscription Price is $0.016 per
share, approximately 2,000,000,000 Common Shares will be issuable
to AIMCo in connection with the Debt Exchange and AIMCo will hold
approximately 49.69% of the outstanding Common Shares following
completion of the Restructuring Transaction. The aggregate number
of Common Shares to be issued under the Restructuring Transaction
is subject to adjustment as described below. See "Rights
Offering and Standby Purchase Agreement" and "Number of
Shares Issuable" below for further information on the
Subscription Price for the Rights Offering and the issuance of
Common Shares in connection with the Restructuring Transaction.
AIMCo and the Company have agreed that, upon completion of the
Debt Exchange and the repayment of $10
million of the principal amount of the Second Lien Facility
from the proceeds of the Rights Offering, the Second Lien Facility
will be amended to provide for an extension of the maturity of the
remaining principal amount of the Second Lien Facility from
January 31, 2023 to a date that is
four years from the closing date of the Debt Exchange; and an
increase in the interest rate from 7.25% to 8.5%.
A term sheet setting forth the proposed terms and conditions of
the amended Second Lien Facility is included as a schedule to the
Debt Restructuring Agreement. Completion of the amendments to the
Second Lien Facility will be subject to settlement of a definitive
form of amended and restated credit agreement between the Company
and AIMCo having the terms and conditions set forth in such term
sheet.
Completion of the Debt Exchange is subject to a number of
conditions, including the completion of the Rights Offering and the
Standby Commitment, receipt of approval of the Debt Exchange and
other components of the Restructuring Transaction by the Toronto
Stock Exchange ("TSX"), there being no material adverse
change to the Company, and other customary closing conditions.
In connection with entering into the Debt Restructuring
Agreement, the Company satisfied the $7.8 million amount of interest under the Second
Lien Facility that was due on January 4,
2022 (which due date was initially extended to February 28, 2022 and then further extended to
March 21, 2022, as previously
disclosed by the Company) by exercising its right to pay such
interest "in kind" by increasing the principal amount outstanding
under the Second Lien Facility.
Amendment to Senior
Facilities
The Company has also entered into a commitment letter with HSBC
Bank Canada and ATB Financial, two of the lenders under the Senior
Facilities, to provide for amendments to the Senior Facilities to
take effect upon completion of the Debt Exchange. At the time the
amendments become effective, the third lender in the syndicate for
the Senior Facilities, will cease to be a member of the Company's
bank lending syndicate. The amendments to the Senior Facilities
will include:
- an extension of the maturity of the Senior Facilities from
July 1, 2022, to a date that is three
years following the closing date of the Debt Exchange;
- a reduction in the amount available under the syndicated
revolving facility of the Senior Facilities from $50 million to $35
million, with no change to the amount of the $10 million operating facility; and
- revisions to certain financial covenants, including: (i) a
reduction of the debt to capitalization ratio from 0.6:1 or less to
0.5:1 or less, (ii) a new requirement for trailing twelve months
EBITDA of $19.3 million in the first
quarter of 2022 and $16.4 million in
each of the second and third quarters of 2022, in each case, if the
Senior Facilities are drawn above $25
million during such fiscal quarter or the net book value of
property, plant and equipment is less than $250 million for the prior fiscal quarter, (iii)
a new debt service coverage ratio of 1.1:1 at the end of the fourth
quarter of 2022 and 1.15:1 at the end of each fiscal quarter
thereafter, in each case, if the Senior Facilities are drawn above
$25 million during such fiscal
quarter or the net book value of property, plant and equipment is
less than $250 million for the prior
fiscal quarter, and (iv) removal of the current ratio, minimum
liquidity requirement and senior debt to capitalization ratio. In
addition, payment of interest on the Second Lien Facility from the
use of the proceeds of the Senior Facilities will be allowed.
A term sheet setting forth the proposed terms of the amended
Senior Facilities is included as a schedule to the commitment
letter and the Debt Restructuring Agreement. Completion of the
amendments to the Senior Facilities will be subject to settlement
of a definitive form of credit agreement between the Company and
the continuing lenders having the terms set forth in such term
sheet.
Rights Offering and Standby
Purchase Agreement
As a condition to the completion of the Debt Exchange, the
Company is required to conduct the Rights Offering to offer Common
Shares to its existing shareholders to raise proceeds of
$31.5 million. The Rights Offering
will be conducted in accordance with applicable securities laws and
the rules and procedures of the TSX. The Subscription Price at
which each Common Share is issuable upon the exercise of rights
issued pursuant to the Rights Offering ("Rights") will be
determined as set out in the Debt Restructuring Agreement as being:
the lesser of (i) $0.016, (ii) the
volume-weighted average trading price of the Common Shares on the
fifth trading day following public announcement of the
Restructuring Transaction less a 25% discount, rounded to three
decimal places, and (iii) the "market price" of the Common Shares
determined in accordance with National Instrument 41-101 as of the
last trading day immediately prior to filing the final prospectus,
rounded to three decimal places, less $0.001. For example, if the volume-weighted
average trading price for the five days following the
announcement of the Restructuring Transaction is $0.02 per share, the Subscription Price in the
Rights Offering would be a 25% discount to that price, or
$0.015 per share. As noted above, in
respect of the Debt Exchange, if the Subscription Price is less
than $0.016, then the conversion
price in the debt exchange would be reduced proportionally, such
that the conversion price in the Debt Exchange would be
$0.05 x ($0.015/$0.016) =
$0.046875 per share.
Assuming that the Subscription Price is $0.016 per share, approximately 1,968,750,000
Common Shares will be issuable to shareholders under the Rights
Offering. The aggregate number of Common Shares to be issued under
the Restructuring Transaction is subject to adjustment as described
below. See "Number of Shares Issuable" below for further
information.
Western, the Standby Purchasers, G2S2 and Ronald Mathison have entered into the Standby
Purchase Agreement pursuant to which the Standby Purchasers have
provided the Standby Commitment to purchase at the Subscription
Price any Common Shares issuable upon exercise of Rights that are
not otherwise subscribed for by holders of Rights. The Standby
Purchasers are not entitled to receive any fee or reimbursement of
expenses in connection with the Standby Commitment.
G2S2 currently holds approximately 25% of the outstanding Common
Shares and Matco, together with its controlling shareholder
Ronald Mathison, holds approximately
19.93% of the Common Shares. Armco and Matco have committed to
subscribe, directly or through an affiliate, for 55.6% and 44.4%,
respectively, of any unsubscribed Common Shares under the Rights
Offering. The Rights Offering, and the Standby Purchasers' ability
and obligation to participate in the Rights Offering, including in
respect of the Standby Commitment, is subject to certain conditions
including, but not limited to, the receipt of all necessary
approvals, including the approval of the TSX, which has been
notified of the Rights Offering and the Debt Exchange. AIMCo has
agreed under the Debt Restructuring Agreement that it will not
exercise its basic subscription privilege under, or otherwise
participate in, the Rights Offering.
The Company plans to file a preliminary short form prospectus
with respect to the Rights Offering with the securities regulatory
authorities in all of the provinces of Canada. The Rights Offering will commence
following settlement of all comments of such securities regulatory
authorities and the TSX and filing of the final short form
prospectus. Further detailed information regarding the Rights
Offering, including the Subscription Price, will be included in the
final prospectus to be mailed to all eligible shareholders of the
Company. The Rights are expected to be listed for trading on the
TSX and will be exercisable for not less than 21 days following the
date of mailing to shareholders of the final prospectus.
The Company expects that the Chief Executive Officer and Chief
Financial Officer will exercise all or a portion of their
respective basic subscription privilege under the Rights Offering.
In connection therewith, the Company has agreed to provide a loan
to each of them which would match the amount of funds contributed
personally by each of them, to a maximum amount equal to half of
each of their pro rata share in the Rights Offering. The loans will
be payable five years after their effective date, will bear
interest at a variable rate which is higher than the lowest
marginal borrowing rate available to the Company under its
indebtedness, and will be payable monthly. The loans will be
secured by a lien on all of the Common Shares subscribed for by
each of them under the Rights Offering, including shares purchased
with the respective officer's own funds. The Company will fund the
amount of the loan from the Company's cash on hand.
It is anticipated that the Rights Offering will be completed in
late April or in May 2022, with
completion of the Debt Exchange and related transactions to occur
concurrently with completion of the Rights Offering and the Standby
Commitment.
Number of Shares
Issuable
The determination of the Subscription Price is subject to the
formula described above under the heading "Rights Offering and
Standby Purchase Agreement". In the event the Subscription
Price is less than $0.016 per share,
the number of shares issuable under the Rights Offering will
increase. In addition, the conversion price of the Debt Exchange
will be adjusted downward in accordance with the formula described
above, and additional Common Shares will be issuable under the Debt
Exchange. The following is an illustrative example:
Subscription
Price
|
$0.016
|
$0.015
|
$0.01
|
Debt Conversion
Price(1)
|
$0.05
|
$0.046875
|
$0.03125
|
Maximum Shares Issuable
on Debt Exchange
|
2,000,000,000
|
2,133,333,333
|
3,200,000,000
|
Maximum Shares Issuable
on Rights Offering
|
1,968,750,000
|
2,100,000,000
|
3,150,000,000
|
Total Number of
Shares Issuable for Debt Restructuring
|
3,968,750,000
|
4,233,333,333
|
6,350,000,000
|
|
Note:
|
(1)
|
Pursuant to the terms
of the Debt Restructuring Agreement, in the event the Subscription
Price is less than $0.016 per share, the conversion price will be
reduced in accordance with the formula described above under the
heading "Debt Exchange and Amendments to the Second Lien
Facility".
|
Investor Rights Agreement and
Registration Rights Agreement
The Debt Restructuring Agreement provides that as a condition
precedent to completion of the Debt Exchange, the Board will
appoint two persons designated by AIMCo to be directors of the
Company, and that the Company and AIMCo will enter into an investor
rights agreement (the "Investor Rights Agreement"). Under
the Investor Rights Agreement, AIMCo will be granted the right to
appoint two nominees for election as directors of the Company for
so long as AIMCo's shareholding percentage of the Company's Common
Shares is 30% or greater. The form of Investor Rights Agreement
provides that each of G2S2, Ronald
Mathison and Matco (and any affiliate holding Common Shares)
will agree to not vote any of the Common Shares they respectively
hold (a) against the election of an AIMCo nominee to serve as a
director, or (b) in favour of any proposal or resolution to remove
any AIMCo nominee as a director. During the term of the Investor
Rights Agreement, if AIMCo elects not to designate one or more
directors or its nominees are not elected to the Board, AIMCo will
be entitled to board observer rights in lieu thereof. Neither of
the Standby Purchasers will be granted any nomination rights under
the Investor Rights Agreement.
It is also a condition precedent to completion of the Debt
Exchange that the Company and AIMCo enter into a registration
rights agreement (the "Registration Rights Agreement")
pursuant to which AIMCo will be granted the right to cause the
Company to file a prospectus to facilitate the sale of its Common
Shares in a public offering, or to allow it to participate in a
public offering of Common Shares by the Company, in each case
subject to certain customary restrictions and limitations. The
Registration Rights Agreement will terminate when AIMCo and its
permitted transferees beneficially own, in the aggregate, less than
10% of the then outstanding Common Shares. Neither of the Standby
Purchasers will be granted any registration rights under the
Registration Rights Agreement.
Shareholder Approval and Regulatory Considerations
Under the rules of the TSX, the issuance of Common Shares to
AIMCo in the Debt Exchange requires the approval of a majority of
shareholders of the Corporation, excluding shares held by AIMCo,
which is the interested party in respect of the Debt Exchange.
Specifically, as the Debt Exchange would (a) result in the issuance
of shares at a discount to the market price exceeding the maximum
discount under section 607(e) of the TSX Company Manual, (b)
include consideration to an insider of the Company exceeding 10% of
the market capitalization of the Corporation and materially affect
control of the Company, and (c) involve the issuance of more than
25% of the number of outstanding Common Shares by way of a private
placement at less than the market price, the Debt Exchange requires
shareholder approval under sections 607(e), 604(a) and 607(g) of
the TSX Company Manual, respectively. Shareholders representing a
majority of such Common Shares have executed a written consent
approving the Debt Exchange and have otherwise agreed to vote their
Common Shares in a manner to approve the Restructuring Transaction
to the extent required. These shareholders include G2S2, Matco,
Ronald Mathison and all of the other
directors and senior executive officers of Western. The TSX has
advised the Company that it will be permitted to rely on that
written consent of shareholders as evidence of the required
majority shareholder approval in accordance with section 604(d) of
the TSX Company Manual, and accordingly that it will not be
required to hold a formal special shareholder meeting to seek
approval of the Debt Exchange.
Under Multilateral Instrument 61-101 – Protection of Minority
Security Holders in Special Transactions ("MI 61-101")
of certain Canadian securities regulators, the Debt Exchange
constitutes a "related party transaction" because AIMCo holds more
than 10% of the outstanding Common Shares of the Company. The
Company intends to rely upon the exemption from the requirement to
prepare a formal valuation in connection with the Debt Exchange
pursuant to the exemption contained in section 5.5(g) of MI 61-101
related to the financial hardship of the Company. In connection
with satisfying the criteria of that exemption, the Special
Committee of independent directors of the Board, consisting of
Messrs. John Rooney and Donald Copeland, have determined unanimously
that the Company is in serious financial difficulty, the Debt
Exchange is designed to improve the financial position of the
Company, and the terms of the Debt Exchange are reasonable in the
circumstances of the Company. The Board has also made these
determinations. On the same basis, the Company intends to rely on
the exemption in section 5.7(e) of MI 61-101 from the requirement
to obtain minority shareholder approval.
In addition, as each of G2S2 and Matco (in Matco's case,
together with Ronald Mathison)
beneficially own and have control over more Common Shares than
AIMCo, are not interested parties in respect of the Debt Exchange,
are at arm's length to AIMCo and support the transaction, the Debt
Exchange is exempt from the formal valuation and minority approval
requirements under sections 5.5(e) and 5.7(c), respectively, of MI
61-101.
Further, to the extent that the Standby Purchase Agreement
constitutes a related party transaction with respect to G2S2, Matco
and Ronald Mathison, each as an
insider of the Company, the provisions in Part 5 of MI 61-101 would
not apply to the Standby Commitment provided thereunder in
accordance with section 5.1(k) of MI 61-101. The proposed loans to
the executive officers also constitute related party transactions
under MI 61-101 in respect of the Company. Each of G2S2 and Matco
(in Matco's case, together with Ronald
Mathison) beneficially own and have control over more Common
Shares than each of the executive officers, are not interested
parties in respect of such loans, are at arm's length to the
executive officers and support the loan transaction. Accordingly,
the loans to the executive officers are also exempt from the formal
valuation and minority approval requirements under sections 5.5(e)
and 5.7(c), respectively, of MI 61-101.
The Debt Restructuring Agreement (which includes the proposed
form of the Investor Rights Agreement and the Registration Rights
Agreement, as well as the term sheets for the amendments to the
Second Lien Facility and the Senior Facilities) and the Standby
Purchase Agreement in respect of the Rights Offering (in each case
subject to redactions for certain confidential and/or commercially
sensitive information contained in such agreements) will be filed
on SEDAR under Western's profile (www.sedar.com).
This news release shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of
securities of the Company in any province, state or jurisdiction in
which such offer, solicitation or sale would be unlawful prior to
the registration or qualification under the securities laws of any
such province, state or jurisdiction. The securities referred to
herein have not been registered under the United States Securities
Act of 1933, as amended (the "U.S. Securities Act"), or any
U.S. state securities laws and may not be offered or sold in
the United States absent
registration under the U.S. Securities Act and all applicable state
securities laws or in compliance with an applicable exemption
therefrom.
Advisors
Blake, Cassels & Graydon LLP is acting as counsel to Western
in respect of the Restructuring Transactions, and Osler, Hoskin & Harcourt LLP is acting as
counsel to the Special Committee. ATB Capital Markets Inc. is
acting as financial advisor to the Special Committee.
Torys LLP is acting as legal counsel to AIMCo in respect of the
Restructuring Transaction, and Stifel FirstEnergy is acting as
financial advisor to AIMCo.
About Western
Western is an oilfield service company which provides contract
drilling services through its division, Horizon Drilling in
Canada, and its wholly owned
subsidiary, Stoneham Drilling Corporation in the United States. Additionally, Western
provides production services in Canada through its wholly-owned subsidiary
Western Production Services Corp. and through its division, Eagle
Well Servicing which provides well servicing, and its division Aero
Rental Services which provides oilfield rental services.
Forward-Looking Statements and Information
This press release contains forward–looking statements and
forward-looking information within the meaning of applicable
securities laws. The use of any of the words "expect",
"anticipate", "will", "outlook" and similar expressions are
intended to identify forward-looking information or statements.
More particularly and without limitation, this press release
contains forward-looking statements and information regarding the
Restructuring Transaction, including expectations regarding
completion of the debt refinancing, the Debt Exchange and Rights
Offering on the terms set forth herein; the final terms of the
amendments to the Second Lien Facility and amendments to the Senior
Facilities; the Company's ability to meet and reduce its debt
obligations and fund ongoing operations; the listing of the Rights
on the TSX and conduct of the Rights Offering; the determination of
the conversion price for the Debt Exchange and Subscription Price
for the Rights Offering; the size of the Rights Offering; the
intended use of proceeds of the Rights Offering; the participation
of certain security holders in the Rights Offering, including the
Standby Purchasers, G2S2, Ronald
Mathison and AIMCo; the pro forma security holdings of
certain shareholders of the Company following the Restructuring
Transaction; the expected closing date; the closing conditions of
the Restructuring Transaction; the terms of the Investor Rights
Agreement and Registration Rights Agreement; the Company's future
interest payments; the likelihood of a future share consolidation;
and the composition of the Company's Board following completion of
the Restructuring Transaction.
These forward-looking statements and information are based on
certain key expectations and assumptions made by Western in light
of its experience and its perception of historical trends, current
conditions and expected future developments, as well as other
factors that the Company believes are appropriate in the
circumstances. Although Western believes that the expectations and
assumptions on which such forward–looking statements and
information are based are reasonable, undue reliance should not be
placed on the forward-looking statements and information as Western
cannot give any assurance that they will prove to be correct. Since
forward-looking statements and information address future events
and conditions, by their very nature they involve inherent risks
and uncertainties. Actual results could differ materially from
those currently anticipated due to a number of factors and risks.
These include, but are not limited to; risks relating to the
Company's need for significant additional future capital and the
Company's ability to raise additional funding; risks relating to
the influence of significant shareholders of the Company over the
Company's business operations and share price; risks associated
with the potential further deterioration of industry conditions
that could negatively affect Western's performance and financial
condition; the risk that any of the conditions set forth in the
agreements providing for the Debt Restructuring are not satisfied
on a timely basis, including receipt of TSX approval on
satisfactory conditions, or other termination events under such
agreements occur; and Western's inability to meet its obligations
under its credit facilities such that further financing is not
available.
Readers are cautioned that the foregoing list of risks and
uncertainties is not exhaustive. Additional information on these
and other risk factors that could affect Western's operations or
financial results are included in Western's annual information form
and may be accessed through the SEDAR website (www.sedar.com). The
forward-looking statements and information contained in this press
release are made as of the date hereof and Western does not
undertake any obligation to update publicly or revise any
forward–looking statements or information, whether as a result of
new information, future events or otherwise, unless so required by
applicable securities laws.
SOURCE Western Energy Services Corp.