ClearStream Energy Services Inc. (“
ClearStream” or
the “
Company”) (TSX: CSM) today announced that it
has completed the refinancing of its asset-based revolving credit
facility (the “
Refinancing”). ClearStream
established a new $25 million asset-based revolving credit facility
with a three-year term (the “
ABL Facility”) to
replace its existing $15 million asset-based revolving credit
facility that was to mature on April 14, 2022 (the “
Former
ABL Facility”).
ABL Facility
The ABL Facility provides for maximum borrowings
up to $25 million with The Toronto-Dominion Bank (the
“Lender”). The amount available under the ABL
Facility will vary from time to time based on the borrowing base
determined with reference to the accounts receivable and
inventories of ClearStream and certain of its subsidiaries. The
obligations under the ABL Facility are secured by, among other
things, a first ranking lien on all of the existing and after
acquired accounts receivable and inventories of the Company and the
other guarantors, being certain of the Company's direct and
indirect subsidiaries. The maturity date of the ABL Facility is
April 14, 2025.
The financial covenants applicable under the ABL
Facility are: (a) the Company must maintain a fixed charge
coverage ratio equal to or greater than 1.00:1.00 for each twelve
month period calculated and tested as of the last day of each
fiscal quarter; and (b) the Company must not expend or become
obligated for any capital expenditures in an aggregate amount
exceeding $10 million during any fiscal year.
As at April 14, 2022, no amounts were drawn
on the ABL Facility.
Term Loan Facility
Pursuant to the terms of the Fifth Amended and
Restated Credit Agreement dated March 23, 2021 (the
“Fifth ARCA”), ClearStream had access to (a) the
Former ABL Facility and (b) a term loan facility providing for
maximum borrowings of up to $40.5 million (the “Term
Loan Facility”) with Canso Investment Counsel Ltd., in its
capacity as portfolio manager for and on behalf of certain accounts
that it manages (“Canso”).
As a result of the Refinancing, the Fifth ARCA
has been amended and restated by a Sixth Amended and Restated
Credit Agreement (the “Sixth ARCA”) to, among
other things: (a) remove the Former ABL Facility;
(b) extend the maturity date of the Term Loan Facility from
September 30, 2022 to the date that is the earlier of (i) 180
days following the maturity date of the ABL Facility, (ii)
October 14, 2025, and (iii) the date on which the Term
Loan Facility is terminated earlier pursuant to its terms;
(c) change the interest rate charged on the Term Loan Facility
to a fixed rate of 8% (previously a floating rate of prime plus
4.5%, increasing to prime plus 6.0% if the Former ABL Facility was
more than 50% drawn); and (d) appoint Computershare Trust
Company of Canada as administrative agent.
The obligations under the Term Loan Facility are
secured by, among other things, a lien on all of the existing and
after acquired accounts receivable and inventories of the Company
and the other guarantors, being certain of the Company's direct and
indirect subsidiaries.
As at April 14, 2022, $40.5 million
was outstanding under the Term Loan Facility. The Term Loan
Facility is required to be used for specific purposes and cannot be
redrawn once repaid.
BDC Secured Loans
On June 26, 2019, the Company received
$19 million from two secured loans (the “BDC
Loans”) with the Business Development Bank of Canada
(“BDC”) as a partial source of funds for the
acquisition of certain assets of the production services division
of AECOM Production Services Ltd. (the “PSD
Business”).
The BDC Loans are secured by a first security
interest on the real property and equipment acquired through the
acquisition of the PSD Business and a security interest in all
other present and future property, subject to the priorities
granted to existing lenders under the ABL Facility, Senior Secured
Debentures (as defined below) and other existing commitments.
The loan agreements with BDC require the Company
to maintain a fixed charge coverage ratio equal to or greater than
1.00:1.00 on annual basis.
As at April 14, 2022, $15.4 million
was outstanding under the BDC Loans. No substantive
amendments were made to the BDC Loans as a result of the
Refinancing.
Senior Secured Debentures
On March 23, 2016, ClearStream issued 8% senior
secured debentures due March 23, 2026 (the “Senior Secured
Debentures”) on a private placement basis to Canso
pursuant to a trust indenture between ClearStream, as issuer, and
Computershare Trust Company of Canada, as debenture trustee, as
amended and supplemented (the “Senior Secured
Indenture”).
The Senior Secured Debentures are secured by
first-ranking liens over all of the property of the Company and its
guarantor subsidiaries, other than certain limited classes of
collateral over which the Company has granted a prior-ranking lien
in favour of the ABL Facility, the Term Loan Facility and the BDC
Loans.
The Senior Secured Debentures provide for
certain events of default and covenants of the Company, including
financial and reporting covenants and restrictive covenants
limiting the ability of the Company and its subsidiaries to make
certain distributions and dispositions, incur indebtedness, grant
liens and limitations with respect to acquisitions, mergers,
investments, non-arm’s length transactions, reorganizations and
hedging arrangements (subject to certain exceptions).
As at April 14, 2022, ClearStream had
$111.2 million principal amount of 8% Senior Secured
Debentures outstanding. As a result of the Refinancing, minor
amendments were made to the Senior Secured Indenture to reflect the
ABL Facility and the Sixth ARCA.
Copies of the agreements governing the ABL
Facility, the Term Loan Facility, the BDC Loans and the Senior
Secured Debentures will be available shortly through SEDAR at
www.sedar.com.
About ClearStream Energy Services Inc.
With a legacy of excellence and experience
stretching back more than 50 years, ClearStream provides solutions
to the Energy and Industrial markets including: Oil & Gas,
Petrochemical, Mining, Power, Agriculture, Forestry, Infrastructure
and Water Treatment. With offices strategically located across
Canada and a dedicated workforce, we provide maintenance,
construction, wear technology and environmental services that keep
our clients moving forward. For more information about ClearStream,
please visit www.clearstreamenergy.ca or contact:
Randy WattChief Financial OfficerClearStream
Energy Services Inc.(587) 318-0997rwatt@clearstreamenergy.ca |
Barry CardInterim Chief Executive
OfficerClearStream Energy Services Inc.(587)
318-0997bcard@clearstreamenergy.ca |
Advisory Regarding Forward-Looking
Information
Certain information included in this press
release may constitute “forward-looking information” within the
meaning of Canadian securities laws. In some cases, forward-looking
information can be identified by terminology such as “may”, “will”,
“should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”,
“predict”, “potential”, “continue” or the negative of these terms
or other similar expressions concerning matters that are not
historical facts. Specifically, this press release contains
forward-looking information relating to: the refinancing of
ClearStream’s asset-based revolving credit facility.
Forward-looking information involves significant
risks and uncertainties. A number of factors could cause actual
events or results to differ materially from the events and results
discussed in the forward-looking information, including, but not
limited to, the success of our response to the COVID-19 global
pandemic, risks related to the integration of acquired businesses,
conditions of capital markets, economic conditions, commodity
prices, dependence on key personnel, interest rates, regulatory
change, ability to meet working capital requirements and capital
expenditure needs, factors relating to the weather and availability
of labour. These factors should not be considered exhaustive. Risks
and uncertainties about ClearStream’s business are more fully
discussed in ClearStream’s disclosure materials, including its
annual information form and management’s discussion and analysis of
the operating and financial results, filed with the securities
regulatory authorities in Canada and available at www.sedar.com. In
formulating the forward-looking information herein, management has
assumed that business and economic conditions affecting ClearStream
will continue substantially in the ordinary course, including,
without limitation, with respect to general levels of economic
activity, regulations, taxes and interest rates. Although the
forward-looking information is based on what management of
ClearStream consider to be reasonable assumptions based on
information currently available to it, there can be no assurance
that actual events or results will be consistent with this
forward-looking information, and management’s assumptions may prove
to be incorrect.
This forward-looking information is made as of
the date of this press release, and ClearStream does not assume any
obligation to update or revise it to reflect new events or
circumstances except as required by law. Undue reliance should not
be placed on forward-looking information. Forward-looking
information is provided for the purpose of providing information
about management's current expectations and plans relating to the
future. Readers are cautioned that such information may not be
appropriate for other purposes.
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