Secure Energy Services Inc. announced it has entered a new $470 million first lien credit facility led by Alberta Treasury Branches (ATB) with a syndicate of ten financial institutions and Canadian Chartered banks. In addition, the Corporation has entered into a new $130 million second lien credit facility led by National Bank of Canada with a syndicate of three financial institutions and Canadian Chartered banks. The combined facilities total $600 million, and replace the Corporation's previous $700 million syndicated facility. The reduction in the total facility allows the Corporation to optimize its debt structure to reduce costs associated with standby fees on undrawn amounts while maintaining target levels of liquidity.
The First Lien Facility consists of a four year $445 million revolving credit facility and a $25 million revolving operating facility with a maturity date of June 30, 2021. The First Lien Facility is secured by substantially all of the Corporation's assets and includes customary terms, conditions and covenants, including that the consolidated senior funded debt to EBITDA ratio does not exceed 3.5 to 1.0, the consolidated total funded debt to EBITDA ratio does not exceed 5.0 to 1.0 and the consolidated EBITDA to financing charges ratio is not less than 2.5 to 1.0. Amounts borrowed under the First Lien Facility will bear interest at the Corporation's option of either the Canadian prime rate plus 0.45% to 2.00% or the banker acceptance rate plus 1.45% to 3.00%, depending, in each case, on the ratio of consolidated senior funded debt to EBITDA.
The Second Lien Facility is a four year plus one month $130 million term credit facility with a maturity date of July 31, 2021. The Corporation has entered into interest rate swaps to fix the interest rate at 5% for the first three years and 5.5% in the fourth year. The financial covenants are consistent with the First Lien Facility, and the security provided by the Corporation is the same as the First Lien Facility but is subordinate to the First Lien Facility lenders.
"The addition of a term facility to our capital structure creates the financial flexibility we require to continue our business strategy of adding production related services that deliver stable operating cash flow", said Allen Gransch, Chief Financial Officer of Secure, "These credit facilities also provide significant borrowing capacity while still maintaining a strong balance sheet."