Trican Well negotiates amendments to revolver’s financial covenants

By Marisa Wong

Morgantown, W.Va., June 1 – Trican Well Service Ltd. said it has reached an agreement in principle with its bank lenders under its revolving credit facility and the holders of its senior notes to make changes to its credit agreements.

These amendments are subject to the closing of a C$40 million bought-deal financing, according to a press release.

Trican is planning the following changes to the financial covenants under its lending agreements:

• Removal of all prior financial ratio covenants until the first quarter of 2017; and

• New leverage ratio covenants as follows: 5 times for the quarters ending March 31, 2017, June 30, 2017 and Sept. 30, 2017, 4 times for the quarter ending Dec. 31, 2017 and 3 times for the quarters ending March 31, 2018 and after; and

• New interest coverage ratios as follows: 2 times for the quarters ending March 31, 2017, June 30, 2017 and Sept. 30, 2017, 2.5 times for the quarter ending Dec. 31, 2017 and 3 times for the quarters ending March 31, 2018 and after.

The agreed upon amendments contain an equity cure provision. Trican can apply 50% of the gross proceeds from equity offerings in the calculation of EBITDA for the leverage ratio and interest coverage covenants, provided the equity cure provision is not used more than twice in any four-quarter period and the aggregate amount of any equity cure does not exceed C$20 million.

Trican intends to use the equity cure provision in connection with the C$40 million common stock offering, and the bought-deal financing will be deemed to have occurred during the quarter ending March 31, 2017 for the purposes of calculating EBITDA.

Under the agreed upon amendments, Trican would also reduce its revolver commitment to C$250 million, which would remain capped at C$175 million until the company records a quarter of C$25 million in EBITDA.

After applying the proceeds from the stock offering and the cash consideration from disposition of Trican’s completion tools business, management estimates that Trican will have about C$122 million drawn on the revolver, the release noted.

The amendments are expected to take effect on or before the anticipated closing date of the equity offering.

Based in Calgary, Alta., Trican provides specialized products, equipment and services used for oil and gas exploration.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.