Crown Capital Partners Inc. (TSX: CRWN) said it supports the application for receivership by Petrowest Corporation (TSX: PRW).
Petrowest announced that on August 13, 2107, its banking syndicate provided a notice demanding immediate repayment of all amounts owing under the credit facilities. The bridge loan from subordinated lenders arranged on May 19, 2017 is fully drawn and no additional sources of credit or funding are available. Accordingly, Petrowest board of directors have consented to the appointment of a receiver and intend on resigning immediately upon such appointment.
Crown Capital Fund IV, LP has a total of $25 million of loans outstanding to Petrowest, including a $15.0 million term loan entered in September 2015 and a $12.0 million bridge loan granted on May 19, 2017.
Crown Capital loans are secured by a general security agreement over all present and after-acquired property of Petrowet subject to first priority on the general security agreement held by the Syndicated Credit Facility.
Crown Capital said the key to the successful recovery of Crown’s loans is the maintenance of Petrowest’s Civil and Rental divisions as going concerns. Crown is working to formalize an offer to acquire all the assets of the Civil and Rental divisions through the assumption of a portion of Crown Capital Fund IV, LP’s outstanding debt.
On March 30, 2017 Petrowest announced the intention to sell the Civil operating division, which includes R Bee Crushing and SOS Oilfield Safety. As of June 30, 2017, Petrowest listed assets held for sale as $46.9 million and liabilities held for sale as $9.7 million.
“We look forward to finalizing our offer to acquire the Civil and Rental divisions as soon as possible,” said Chris Johnson, President and CEO of Crown. “We believe these are well run operations with long histories of profitable operation that meet our high quality investment standards.”