Crown Capital Partners to fully recover $25M loan to Petrowest

Crown Capital Partners Inc. (TSX: CRWN) has provided an update on the restructuring of Petrowest Corporation (TSX: PRW) that Crown Capital Fund IV is expected to fully recover its $25 million loan to Petrowest through interest in a newly formed RBee Aggregate Consulting Ltd. and cash proceeds from Petrowest assets sale.

Crown Capital Fund IV, LP and a syndicate partner have a total of $27 million of loans outstanding to Petrowest, $25 million of which is due to Crown IV LP. Crown Capital Partners has an effective interest of approximately 36.5% in Crown IV LP.

Since the application for receivership on August 15, 2017 and appointment of Ernst & Young Inc. as court-appointed receiver, substantially all the assets of Petrowest have been prepared for sale or monetized.

  • The Court of Queen’s Bench of Alberta has approved the following:
    RBee Aggregate Consulting Ltd., a newly established company owned by Crown IV LP and management of the operations of RBee Crushing, will acquire Petrowest’s Civil division as a going concern. The total consideration offered is $29.0 million, which includes the assumption of approximately $17.3 million of Crown IV LP’s loans to Petrowest, subject to closing adjustments. The balance of the consideration will be funded with third-party bank debt. The collective investment of Crown IV LP and its syndicate partner in RBee will comprise a combination of a 50% equity interest in RBee with a cost base of $5 million and a $12.3 million interest-bearing, second-lien loan;
  • RBee has made a bid to acquire Petrowest’s Rental division as a going concern. The total consideration offered is $3.6 million, which includes the assumption of $2.2 million of Crown IV LP and its syndicate partner’s loans to Petrowest. The balance of the consideration will be funded with third-party bank debt;
  • Timber Pro Logging Ltd. will acquire Petrowest’s Cutbank transportation division as a going concern for an undisclosed price; and
  • Century Services Corp. has made a bid for substantially all Petrowest’s equipment from discontinued operations. The cash consideration offered is $18.8 million.

Proceeds from the above transactions, combined with the collection of general accounts receivable and sale of smaller assets, is expected to generate net proceeds in the range of $60 million to $70 million, of which approximately 90% of the low end of the range has been confirmed by completed sales and/or guaranteed bids. Using the low end of the range, net of professional fees, priority payables and payments to the senior bank syndicate, Crown IV LP expects to recover, through its ownership interest in and loans to RBee and from other cash proceeds on the sale of Petrowest’s assets, the full amount of its outstanding loans to Petrowest.

“We’re delighted to be proceeding with the acquisition of the Civil division in partnership with RBee management. RBee is a well-run operation with a long history of profitability,” said Chris Johnson, President and CEO of Crown. “We are hopeful RBee’s bid for the Rental division is also successful.”

photo credit: RBee Crushing

Ted Liu

Ted Liu, M.Sc. (Mining, Queen's), MBA (Finance, Toronto), is the Editor of Private Capital Journal, CanadaMetals.ca, TechWire.ca, and the former Editor of Canadian Private Equity. Ted has been passionately tracking Canadian private capital industry since 1992, having most recently served as Research Director for The Canadian Venture Capital and Private Equity Association (CVCA).

Ted is the architect of CVCA infobase, and is the architect of CPE Media's Financings.ca, Canada's most sophisticated and advanced all private capital and public market financing database.