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Essential Energy Renews Credit Facility With National Bank of Canada, Others

June 17, 2016, 07:40 AM
Filed Under: Energy Services

Essential Energy Services Ltd. has entered into a renewed credit facility agreement with a syndicate of lenders, including National Bank of Canada, The Toronto-Dominion Bank, HSBC Bank Canada and Canadian Western Bank (the "Lenders"). The credit facility provides Essential an extension of the current revolving secured credit facility to May 31, 2019, revised terms and conditions and relaxation of financial covenants.

The primary amendments to the Credit Facility include, among others, the following:

  • a voluntary reduction in the commitment from $100 million to $40 million;
  • a voluntary reduction in the accordion feature from $35 million to $20 million;
  • extension of the maturity date to May 31, 2019;
  • revisions to the financial covenants, as detailed in the Financial Covenants section below;
  • addition of an equity cure provision, as detailed in the Equity Cure section below;
  • addition of a monthly borrowing base, as detailed in the Borrowing Base section below; and
  • restrictions on dividends and acquisitions when funded debt to EBITDAS is greater than 3.00x or when the covenant is waived.

"This is the first credit facility amendment that Essential has requested in this prolonged downturn", said Garnet Amundson, President and CEO. "We are pleased with the revisions and thank our Lenders for their support and commitment to our business. The reduced facility size provides sufficient liquidity to meet our near-term plans and offers cost savings in the form of lower amendment and standby fees."

Essential Energy Services Ltd. provides oilfield services to oil and natural gas producers, primarily in western Canada. Essential offers completion, production and abandonment services to a diverse customer base. Services are offered with masted coil tubing, fluid and nitrogen pumping, services rigs and the sale and rental of downhole tools and equipment. Essential offers the largest masted coil tubing fleet in Canada.

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