(TheNewswire)
Calgary, Alberta – TheNewswire - December 30, 2020 ( TSX:SHLE )
Source Energy Services Ltd. (together with itsaffiliates, “ Source ” or the “ Company ”) ispleased to announce the completion of its recapitalization transaction(the “ RecapitalizationTransaction ”) pursuant to a plan ofarrangement dated November 25, 2020 (the “ Plan of Arrangement ”) under the Canada Business Corporations Act . The Plan ofArrangement was approved by the Court of Queen’s Bench of Alberta onNovember 27, 2020.
“We are very pleased to have successfully completedthe Recapitalization Transaction with strong support from our keystakeholders,” said Brad Thomson, Chief Executive Officer of Source.“We have significantly improved our capital structure and addressedour liquidity challenges arising from the historic downturn in theWestern Canadian oil and gas industry. Completion of theRecapitalization Transaction will provide enhanced financial strengthand flexibility and better position Source to pursue our business andstrategic objectives. We thank all of our customers, suppliers,employees, shareholders and other stakeholders for their continuedcommitment to Source.”
As a result of the completion of the RecapitalizationTransaction, the Company has extended the maturity under its seniorsecured credit agreement to 2023 and issued new senior secured firstlien notes (the “ New SecuredNotes ”) that mature in 2025. TheRecapitalization Transaction achieves a $32.7 million reduction ofprincipal obligations and reduces Source’s near term cash interestexpense. Under the Plan of Arrangement, the Company’s 10.5% seniorsecured first lien notes due 2021 were exchanged for New Secured Notesin the aggregate principal amount of $142,238,201 and new commonshares of Source constituting 62.5% of the common shares outstandingon a fully diluted basis immediately following completion of theRecapitalization Transaction. The Company has the option, for allquarterly interest payments on the New Secured Notes due on or beforeFebruary 15, 2022, to pay interest in kind through the issuance ofadditional New Secured Notes rather than in cash.
Concurrently with the completion of theRecapitalization Transaction, Source and its lending syndicate haveamended and restated the Company’s senior secured credit agreementto enable Source to access incremental liquidity under an additionalrevolving facility in an initial principal amount of up to $20million.
Under the Recapitalization Transaction, the commonshares of Source outstanding immediately prior to the completion ofthe Recapitalization Transaction were consolidated on a twelve for onebasis and represent 37.5% of the common shares outstanding on a fullydiluted basis immediately following completion of the RecapitalizationTransaction.
Board of Directors
In connection with the completion of theRecapitalization Transaction, two new directors have been appointed toSource’s board of directors (the “ Board ”):
- Mr. Chris Johnson is the co-founder, CEO andPresident of Crown Capital Partners Inc. (TSX:CRWN) a publicalternative finance provider. Mr. Johnson brings a wealth of finance,M&A and corporate governance experience to the Board, gainedthrough his experience as financier and/or director of numerous publicand private companies. Mr. Johnson is a Certified FinancialAnalyst.
- Mr. Steven Sharpe is the Managing Director of TheEmBeSa Corporation, a consultancy dealing with corporaterestructuring. He is a seasoned business executive and corporatedirector with experience in a number of sectors including energy,technology, investment banking and hospitality. Mr. Sharpe currentlysits on the Advisory Board of the Pine River Institute, and is adirector of Dundee Corporation (TSX:DC.A), Essential Energy ServicesLtd. (TSX:ESN) and Crown Capital Partners Inc. (TSX:CRWN).
With the appointment of the two new directors, Mr. JimMcMahon and Mr. Mick MacBean have resigned from the Board. BradThomson stated, “We’ve been fortunate to have Jim and Mick on theSource Board and will miss the unique perspectives and experience thatthey provide as Board members. As a co-founder of Source, Jim has beenon the Board for many years and Mick joined the Source Board in early2019. These gentlemen have provided unwavering support to Sourcethrough incredibly volatile times faced by the oilfield servicessector. It has been an honour and a privilege to work with them.”
Source is a logistics company that focuses on thesupply and distribution of high quality Northern White frac sand.Source provides its customers with a full end-to-end solutionsupported by its Wisconsin mines and processing facilities, itsWestern Canadian terminal network and its “last mile” logisticscapabilities. In addition to its industry leading frac sand transloadterminal network and in-basin frac sand storage capabilities, Sourcealso provides storage and logistics services for other bulk oil andgas well completion materials that are not produced by Source. Sourcehas also developed Sahara, a proprietary wellsite mobile sand storageand handling system.
Source’s full-service approach allows customers torely on its logistics capabilities to increase reliability of supplyand to ensure the timely delivery of their requirements for frac sandand other bulk completion materials at the wellsite.
For further information, pleasecontact: | |
Media Inquiries: | Investor Relations Inquiries: |
Meghan Somers | Brad Thomson |
Communications Advisor | Chief Executive Officer |
(403) 262-1312 (ext. 295) | (403) 262-1312 (ext. 225) |
investorrelations @sourceenergyservices.com |
FORWARD-LOOKING STATEMENTS
Certain statements contained in this press release maycontain forward looking statements within the meaning of applicablesecurities laws. In certain cases and without limitation,forward-looking statements can be identified by the use of words suchas “seeks” or variations of such words and phrases, or state thatcertain actions, events or results “may” or “will” be taken,occur or be achieved or addressed. Such forward-looking statementsreflect Source’s beliefs, estimates and opinions regarding theRecapitalization Transaction and related transactions, Source’sfuture growth, results of operations, future performance (bothoperational and financial), and business prospects and opportunitiesat the time such statements are made, and Source undertakes noobligation to update forward-looking statements if these beliefs,estimates and opinions or circumstances should change. Forward-lookingstatements are necessarily based upon a number of estimates andassumptions made by Source that are inherently subject to significantbusiness, economic, competitive, political and social uncertaintiesand contingencies. Forward-looking statements are not guarantees offuture performance. In particular, this press release containsforward-looking statements pertaining, but not limited, toexpectations regarding the impact of the Recapitalization Transactionand the Plan of Arrangement.
By their nature, forward-looking statements involvenumerous current assumptions, known and unknown risks, uncertaintiesand other factors which may cause the actual results, performance orachievements of Source to differ materially from those anticipated bySource and described in the forward-looking statements.
With respect to the forward-looking statementscontained in this press release, assumptions have been made regarding,among other things, the impact of the Recapitalization Transaction andthe Plan of Arrangement.
Although Source has attempted to identify importantfactors that could cause actual actions, events or results to differmaterially from those described in the forward-looking statements,there may be other factors that cause actions, events or results notto be as anticipated, estimated or intended. There can be no assurancethat forward-looking statements will materialize or prove to beaccurate, as actual results and future events could differ materiallyfrom those anticipated in such statements. The forward-lookingstatements contained in this press release are expressly qualified bythis cautionary statement. Readers should not place undue reliance onforward-looking statements. These statements speak only as of the dateof this press release. Except as may be required by law, Sourceexpressly disclaims any intention or obligation to revise or updateany forward-looking statements or information whether as a result ofnew information, future events or otherwise.
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