CALGARY, Alberta, April 14, 2022 (GLOBE NEWSWIRE) — ClearStream Energy Services Inc. (“ClearStream“or the”Company”) (TSX: CSM) announced today that it has completed the refinancing of its asset-based revolving credit facility (the “Refinancing”). ClearStream has established a new three-year, $25 million asset-based revolving credit facility (the “ABL installation”) to replace its $15 million asset-based revolving credit facility that was scheduled to mature on April 14, 2022 (the “Former ABL facility”).
The ABL Facility provides for maximum borrowings of up to $25 million from The Toronto-Dominion Bank (the “Lender”). The amount available under the ABL Facility will vary from time to time depending on the borrowing base determined based on the accounts receivable and inventory of ClearStream and certain of its subsidiaries. The obligations under the ABL Facility are secured by, among other things, a first lien on all existing and subsequently acquired accounts receivable and inventory of the Company and other guarantors, being certain of the direct and indirect subsidiaries of the Company. The maturity date of the ABL facility is April 14, 2025.
The financial covenants applicable under the ABL Facility are as follows: (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 at from the last day of each fiscal quarter; and (b) the Company shall not expend or become obligated for capital expenditures in an aggregate amount greater than $10 million in any fiscal year.
As of April 14, 2022, no amount had been 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 it manages (“Canso”).
Following the Refinancing, the Fifth ARCA was amended and restated by a Sixth Amended and Restated Credit Agreement (the “Sixth ARCA”) to, among other things: (a) remove the Old ABL Installation; (b) extend the maturity date of the Term Loan Facility from September 30, 2022 to 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 earlier terminated in accordance with 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%, to prime plus 6.0% if the old ABL facility was more than 50% utilized); and (d) appoint Computershare Trust Company of Canada as administrative agent.
Obligations under the Term Loan Facility are secured by, among other things, a lien on all existing and subsequently acquired accounts receivable and inventory of the Company and other guarantors, being certain of the direct and indirect subsidiaries of the Company.
As of April 14, 2022, $40.5 million was outstanding under the term loan facility. The term loan facility must be used for specific purposes and cannot be drawn upon repayment.
BDC Guaranteed 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 financing source for the acquisition of certain assets of the production services division of AECOM Production Services Ltd.Business PSD”).
BDC’s loans are secured by a first ranking security interest in the real estate and equipment acquired in connection with the acquisition of the PSD business and a security interest in all other current and future assets, subject to priorities. granted to Existing Lenders under the ABL Facility, Secured Senior Debentures (as defined below) and Other Existing Commitments.
Loan agreements with BDC require the Company to maintain a fixed charge coverage ratio equal to or greater than 1.00:1.00 on an annual basis.
As of April 14, 2022, $15.4 million was outstanding under BDC loans. No material changes were made to 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 an indenture between ClearStream, as issuer, and Computershare Trust Company of Canada, as trustee of the debentures, as amended and supplemented (the “Senior trust agreement”).
The Senior Secured Debentures are secured by first lien on all property of the Company and its guaranteeing subsidiaries, except for certain limited classes of security over which the Company has granted a first lien. in favor 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 covenants limiting the ability of the Company and its subsidiaries to make certain distributions and dispositions , incur debt, grant privileges and limitations with respect to acquisitions, mergers, investments, non-arm’s length transactions, reorganizations and hedging arrangements (subject to certain exceptions).
As of April 14, 2022, ClearStream had $111.2 million principal amount of 8% senior secured debentures outstanding. Following the refinancing, minor amendments were made to the senior guarantee deed 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 on SEDAR at www.sedar.com.
About ClearStream Energy Services Inc.
With a heritage of excellence and over 50 years of experience, ClearStream provides solutions to the energy and industrial markets including: oil and gas, petrochemicals, 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 customers moving forward. . For more information on ClearStream, please visit www.clearstreamenergy.ca or contact:
Notice Regarding Forward-Looking Information
Certain information contained in this press release may constitute “forward-looking information” within the meaning of Canadian securities laws. In some instances, forward-looking information may be identified by terms such as “may”, “shall”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predicted”, “potential”, “continue” or the negative form of these terms or other similar expressions relating to matters which are not historical facts. Specifically, this press release contains forward-looking information regarding: 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 global COVID pandemic. -19, risks related to the integration of acquired businesses, capital market conditions, economic conditions, commodity prices, dependence on key personnel, interest rates, regulatory changes, ability to meet working capital and capital expenditure needs, weather factors and labor availability. These factors should not be considered exhaustive. Risks and uncertainties relating to ClearStream’s business are discussed in more detail in ClearStream’s disclosure documents, including its Annual Information Form and MD&A and Discussion of Operating and Financial Results, filed with the authorities. securities regulators in Canada and available at www.sedar.com. In making this forward-looking information, management has assumed that business and economic conditions affecting ClearStream will continue materially in the normal course, including, without limitation, with respect to general levels of economic activity, regulatory , taxes and interest rates. Although the forward-looking information is based on what management of ClearStream believes 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 such forward-looking information, and the assumptions of direction may turn out to be incorrect.
This forward-looking information is made as of the date of this press release, and ClearStream undertakes no 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 regarding the future. Readers are cautioned that this information may not be suitable for other purposes.