New West Energy Services Announces Equipment Acquisition, Debt Refinancing and New Revolving Line of Credit
NEW WEST ENERGY SERVICES INC. (TSX VENTURE:NWE) today announced that it has entered into agreements with a U.S.-based organization (the "Lender") to acquire a diversified fleet of oil and gas fluid transportation equipment, refinance its current debt obligations and obtain a new revolving line of credit.
Gerry E. Kerkhoff, President and Chief Executive Officer of NWE stated, "New West has seen increasing revenues from its waste management, environmental and transportation services with near-full utilization of our equipment fleet. Our revenue base, however, has been limited by our fleet size and operating line of credit and, while the oil and gas industry is still struggling, our improving results and now larger fleet and increase in available operating capital make us optimistic for future growth. This transaction further diversifies our services into the completions and production sectors of the oil and gas industry and allows us to take on larger projects with corresponding higher revenues. We believe that this deal is strategically important for New West and will create increasing value for our shareholders as the conditions in the oil patch improve."
Pursuant to a term loan and security agreement, the Lender has advanced to NWE's wholly-owned operating subsidiary, Bearstone Environmental Solutions Inc., approximately $1.2 million (the "First Loan") to repay amounts owing under a term loan with Bearstone's previous lender, and approximately $4.8 million (the "Second Loan") to acquire a fleet of operating equipment, including various combinations of bulk fluid transport trailers, tractors and tank trucks capable of hauling water for fracking operations as well as drilling and production fluids.
The First Loan is for a term of five years at an interest rate of 7% per annum and the Second Loan is for a term of six years at an interest rate of 7.2 percent per annum.
Pursuant to a revolving term loan and security agreement, the Lender has also made available to Bearstone a revolving term credit facility of up to $3 million (the "Revolving Loan") based upon eligible accounts and other considerations and will be used to pay out an existing revolving credit facility with Bearstone's previous lender in the amount of approximately $620,000 and for general corporate purposes. Bearstone may draw down on, and repay, the loan from time to time as needed.
The Revolving Loan is for a term of three years and carries an interest rate on the unpaid principal balance at the prime rate in Canada (provided that such rate shall not be below 2.7%), plus 4.3% per annum.
The loan agreements include customary events of default. Upon the occurrence of an event of default, the amounts due by Bearstone under the loan agreements may be accelerated and the applicable interest rate increased. NWE has guaranteed the performance of all obligations of Bearstone under the loan agreements.
As part of the transaction, NWE has issued to the Lender a common share purchase warrant that will entitle the Lender to purchase up to six million common shares at a price of $0.05 per share for a period of three years. The warrants and underlying common shares are subject to a four-month hold period and the final approval of the TSX Venture Exchange.
About New West Energy Services
NWE management and operations personnel have over 20 years of experience in oil and gas services throughout western Canada. NWE is a recognized leader in comprehensive environmental services and waste management, including transportation and disposal, and operate through their main service centres in Beaverlodge and Medicine Hat, Alberta, and have their head office in Calgary, Alberta.
SOURCE: New West Energy Services Inc.
The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.