pcJ News Briefs – Alberta Investment Management Corporation (AIMCo), on behalf of certain of its clients, has entered into a strategic financing relationship with Western Energy Services Corp. (TSX: WRG) which comprises a $215 million second lien senior secured term loan facility and a private placement of 9,100,000 common shares of Western at a price of $1.25 per common share for gross proceeds of $11,375,000.
Concurrently Western Energy Services Corp. has engaged Peters & Co. Limited for a bought deal of 9,100,000 common shares at a price of $1.25 per common share for gross proceeds of $11,375,000
photo credit: Western Energy Services Corp.
WESTERN ENERGY SERVICES CORP. ANNOUNCES CONCURRENT DEBT AND EQUITY FINANCINGS
NOT FOR DISTRIBUTION TO THE UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
FOR IMMEDIATE RELEASE: September 22, 2017
CALGARY, ALBERTA ‐ Western Energy Services Corp. (“Western”) (TSX:WRG) is pleased to announce that it has entered into agreements with Alberta Investment Management Corporation (“AIMCo”) providing for a $215 million second lien senior secured term loan facility and a private placement (the “Private Placement”) of 9,100,000 common shares of Western (“Common Shares”) at a price of $1.25 per Common Share, for aggregate gross proceeds of $11,375,000 (together the “AIMCo Financings”).
Western has concurrently entered into an agreement with a syndicate of underwriters (the “Underwriters”) led by Peters & Co. Limited, pursuant to which the Underwriters have agreed to purchase, on a bought deal basis, 9,100,000 Common Shares at a price of $1.25 per Common Share, for aggregate gross proceeds of $11,375,000 (the “Bought Deal Financing”).
Additionally, Western has received commitments from certain of its lenders to effect amendments to its senior secured credit facilities (the “Credit Facility”). Upon closing of the proposed amendments to the Credit Facility, the maturity date will be extended to December 2020.
Western expects that the net proceeds of the AIMCo Financings and the Bought Deal Financing, along with cash on hand and funds available under the Credit Facility, will be used to redeem its outstanding 77/8% senior unsecured notes (the “Senior Notes”).
Second Lien Term Loan
AIMCo, on behalf of certain of its clients, has agreed to provide Western with a $215 million second lien senior secured term loan facility (the “Term Loan”). Funds under the Term Loan will be made available to Western in a single draw, which is to occur no later than February 15, 2018. The Term Loan will mature five years from the date that Western elects to draw the funds (the “Draw Date”). Interest will be paid semi-annually, at the rate of 7.25% per annum. Amortization payments equal to 1% of the principal amount will be payable annually, in equal quarterly installments, beginning on July 1, 2018, with the balance due on maturity. Western may not prepay the Term Loan prior to the second anniversary of the Draw Date, except with payment of a make-whole premium. At any time following the second anniversary of the Draw Date and prior to the third anniversary of the Draw Date, Western may prepay the Term Loan at a price equal to 105% of the principal amount repaid. Thereafter, Western may prepay the Term Loan with no prepayment premium. Amounts borrowed under the Term Loan that are repaid or prepaid will not be available for reborrowing.
In conjunction with the closing of the Term Loan, Western has agreed to issue to AIMCo 7,099,546 warrants to purchase Common Shares (the “Warrants”). Each Warrant will entitle AIMCo to acquire one Common Share at an exercise price per Common Share equal to a 45% premium to the volume weighted average price of the Common Shares for the five trading days ended prior to the date of issue of the Warrants, at any time prior to three years following the date of issue of the Warrants. Provided the volume weighted average price of the Common Shares is greater than the exercise price of the Warrants for 60 consecutive calendar days, Western will have the option to require AIMCo to exercise all or any portion of the Warrants at any time or from time to time.
Closing of the Term Loan is subject to completion of definitive loan documentation and satisfaction of certain conditions, including the approval of the Warrants by the Toronto Stock Exchange and the concurrent closing of the Private Placement, the Bought Deal Financing and the amendments to the Credit Facility.
Peters & Co. Limited acted as financial advisor to Western in connection with the Term Loan.
Western has also entered into an agreement with AIMCo whereby AIMCo has committed to purchase, on a private placement basis, 9,100,000 Common Shares at a price of $1.25 per Common Share for aggregate gross proceeds of $11,375,000. Completion of the Private Placement is subject to certain conditions, including the receipt of all necessary regulatory approvals (including that of the Toronto Stock Exchange) and the concurrent closing of the Bought Deal Financing and the Term Loan. Common Shares issued under the Private Placement will be subject to a hold period of four months.
On a pro forma basis upon completion of the Private Placement and Bought Deal Financing, AIMCo will own approximately 10% of Western’s outstanding Common Shares (approximately 16% of Western’s outstanding Common Shares if the Warrants are exercised in full).
Bought Deal Financing
Western has entered into an agreement for a bought deal financing through a syndicate of Underwriters led by Peters & Co. Limited pursuant to which the Underwriters have agreed to purchase, on a bought deal basis, 9,100,000 Common Shares at a price of $1.25 per Common Share for aggregate gross proceeds of $11,375,000.
The Common Shares will be distributed by way of a short form prospectus in all provinces of Canada, except Quebec, and in the United States and certain other jurisdictions as Western and the Underwriters may agree on a private placement basis. Completion of the Bought Deal Financing is subject to certain conditions, including the receipt of all necessary regulatory approvals (including that of the Toronto Stock Exchange) and the concurrent closing of the Term Loan and Private Placement.
Closing of the AIMCo Financings and Bought Deal Financing are expected to occur on or about October 17, 2017. Proceeds of the AIMCo Financings and Bought Deal Financing will be used, along with other funding, to redeem Western’s outstanding Senior Notes.
Capital Structure Update
Western intends to redeem its Senior Notes due on January 30, 2019 no earlier than January 30, 2018, at which time the Senior Notes will be redeemable at par. Further updates on the timing and the mechanics of the Senior Note redemption will be provided in due course.
“Since the beginning of the downturn in the oilfield service industry, we have focused on managing our business to maximize returns for our stakeholders,” said Alex MacAusland, President & CEO. “These financings represent a continuation of this effort, positioning Western with an appropriate capital structure to succeed in the current business environment. We are pleased to have this opportunity to partner with AIMCo, and look forward to our continued evolution as a strong and focused oilfield service company.”
“On behalf of our clients, AIMCo is very pleased to be able to enter into this agreement with Western,” states Kevin Uebelein, AIMCo CEO. “Our team of investment professionals are attuned to the challenges that face Alberta’s energy industry and we are confident that the highly-experienced executive team at Western Energy Services have put in place a strategic direction that will see the company realize the full benefit of future growth opportunities.”
Western is an oilfield service company which provides contract drilling services in Canada through its Horizon Drilling division and in the United States through its wholly‐owned subsidiary, Stoneham Drilling Corporation. In Canada, Western also provides well servicing through its Eagle Well Servicing division and provides oilfield rental services through its Aero Rental Services division.
AIMCo is one of Canada’s largest and most diversified institutional investment managers with more than $100 billion of assets under management. Established on January 1, 2008, AIMCo’s mandate is to provide superior long‐term investment results for its clients. AIMCo operates at arms‐length from the Government of Alberta and invests globally on behalf of 32 pension, endowment and government funds in the Province of Alberta.
For more information, please contact: Alex R.N. MacAusland, President and CEO, or Jeffrey K. Bowers, Senior VP Finance and CFO at 403.984.5916.