NOT FOR DISTRIBUTION THROUGH
UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATIONIN THE UNITED
STATES
ClearStream Energy Services Inc.
(TSX:CSM) (TSX:CSM.DB.A) (the “
Company”) is
pleased to announce today the completion of its previously
announced refinancing transaction (the “
Refinancing
Transaction”). In connection with the Refinancing
Transaction, Canso Investment Counsel Ltd.
(“
Canso”) (in its capacity as portfolio manager
for and on behalf of certain accounts that it manages, the
“
Canso Accounts”), has commenced the process of
effecting the exchange of certain of the Company’s existing debt
for newly created series 1 preferred shares of the Company (the
“
Preferred Shares”) and has subscribed for
additional Preferred Shares of the Company on a private placement
basis. In connection with the foregoing, the Company has: (i)
amended the trust indenture (the “
Senior Secured
Indenture”) governing its 8.00% senior secured debentures
due 2026 (the “
Senior Secured Debentures”); (ii)
amended the trust indenture (the “
Convertible Secured
Indenture”) governing its 10.00% second lien secured
convertible debentures due 2026 (the “
Convertible Secured
Debentures” and, together with the Senior Secured
Debentures, the “
Secured Debentures”); and (iii)
amended and restated its existing asset-based lending facility (the
“
Credit Agreement”).
Further details regarding the foregoing
Refinancing Transaction are set out below. Copies of all material
documents and contracts, including the Refinancing Agreement (as
defined below), the Second Senior Supplemental Indenture (as
defined below), the Second Convertible Supplemental Indenture (as
defined below) and terms of the Preferred Shares, have been, or
will be (as applicable), filed for public inspection on the
Company’s SEDAR profile at www.sedar.com.
Amendments to Trust Indentures
The Company has adopted certain amendments to
the Senior Secured Indenture and the Convertible Secured Indenture,
respectively, in order to effect the exchange of Senior Secured
Debentures and Convertible Secured Debentures for Preferred Shares
pursuant to the terms of the refinancing agreement dated December
27, 2017 between the Company and Canso, for and on behalf of the
Canso Accounts (the “Refinancing Agreement”). The
amendments, which received the written consent of the holders of at
least 66 2/3% of the outstanding principal amount of each of the
Senior Secured Debentures and the Convertible Secured Debentures,
were adopted pursuant to a second supplemental senior secured
indenture to the Senior Secured Indenture effective as of January
12, 2018 (the “Second Senior Supplemental
Indenture”) and a second supplemental convertible secured
indenture to the Convertible Secured Indenture effective as of
January 12, 2018 (the “Second Convertible Supplemental
Indenture”).
Pursuant to the terms of the Second Convertible
Supplemental Indenture, holders of Convertible Secured Debentures
may: (i) at any time prior to February 1, 2018, exchange all or any
part of the outstanding principal amount of such Convertible
Secured Debenture for either (A) 1 Preferred Share for each $1,000
principal amount of Convertible Secured Debentures so exchanged; or
(B) a cash amount that does not exceed 100% of the principal amount
of Convertible Secured Debentures so exchanged; (ii) at any time on
or after February 1, 2018, exchange all, but not part, of the
outstanding principal amount of such Convertible Secured Debenture
for 1 Preferred Share for each $1,000 principal amount of
Convertible Secured Debenture so exchanged; or (iii) at any time on
or after February 1, 2018 but prior to March 31, 2018, exchange
all, but not part, of the outstanding principal amount of such
Convertible Secured Debentures for a cash amount that does not
exceed 100% of the principal amount of Convertible Secured
Debentures so exchanged. Holders of Convertible Secured Debentures
exchanged for cash are not entitled to receive any accrued and
unpaid interest in respect of such Convertible Secured Debentures
for the period from and including the most recently completed
interest payment date up to the date of the exchange. Holders of
Convertible Secured Debentures exchanged for Preferred Shares are
entitled to receive any accrued and unpaid interest in respect of
such Convertible Secured Debentures for the period from and
including the most recently completed interest payment date up to
and excluding the date of exchange. Any interest will be paid
shortly after the date of exchange. Beneficial holders of
Convertible Secured Debentures are encouraged to contact their
broker as soon as possible should they wish to exchange their
Convertible Secured Debentures in accordance with the terms of the
Second Supplemental Convertible Indenture. A registered holder of
Convertible Secured Debentures desiring to exchange its Convertible
Secured Debenture shall surrender such Convertible Secured
Debenture to BNY Trust Company of Canada (in its capacity as the
debenture trustee of the Company, the “Debenture
Trustee”) at its principal offices at 320 Bay Street, 11th
Floor, Toronto, Ontario, M5H 4A6, together with the exchange form
attached as Schedule “H” to the Second Convertible Supplemental
Indenture and available at the Company’s website and on the
Company’s SEDAR profile at www.sedar.com, or any other written
notice in a form satisfactory to the Debenture Trustee.
Beneficial holders of Convertible Secured
Debentures are encouraged to contact the Company at the number
noted below should they have any questions.
Private Placement of Preferred Shares
As part of the Refinancing Transaction, the
Company issued to the Canso Accounts 19,000 Preferred Shares on a
private placement basis (the “Private Placement”)
in aggregate principal amount of $19,000,000. The proceeds of the
Private Placement were used to fund the interest obligations of the
Company due and payable on January 2, 2018 under the Secured
Debentures, and will be used to fund the interest obligations under
the Secured Debentures due on June 30, 2018 and December 31, 2018,
among other things. The Preferred Shares issued pursuant to the
Private Placement will be subject to a statutory hold period of
four months plus a day from the date of issuance in accordance with
applicable securities legislation. The Company does not intend to
seek a listing of the Preferred Shares on the TSX. The Preferred
Shares issued pursuant to the Refinancing Transaction have not been
and will not be registered under the U.S. Securities Act of 1993,
as amended, or any state securities laws and may not be offered or
sold unless an exemption from registration is available.
The terms of the Preferred Shares, created
pursuant to articles of amendment of the Company dated January 4,
2018 (the “Articles of Amendment”), provide for a
10% fixed cumulative preferential cash dividend payable when the
Company shall have sufficient monies to be able to do so, including
under the provisions of applicable law and contracts affecting the
Company. The board of directors of the Company does not intend to
declare or pay any cash dividends until such time as the Company’s
balance sheet and liquidity position supports the payment. Any
accrued but unpaid dividends are convertible in certain
circumstances at the option of the holder into additional Preferred
Shares. Holders of the Preferred Shares will have the right, at
their option, to convert their Preferred Shares into Common Shares
at a price of $0.35 per Common Share, subject to adjustment in
certain circumstances. The Preferred Shares are redeemable by the
Company in cash at 110% of the purchase price for such shares, plus
accrued but unpaid dividends once all of the outstanding Senior
Secured Debentures have been repaid and are subject to repayment in
the event of certain change of control transactions.
Exchange of Secured Debentures for Preferred
Shares
Additionally, as part of the Refinancing
Transaction and pursuant to the terms of the Refinancing Agreement,
Canso, in its capacity as portfolio manager for Canso Accounts,
exchanged or is in the process of exchanging $75,000,000 principal
amount of Senior Secured Debentures for 75,000 Preferred Shares and
$33,565,000 principal amount of Convertible Secured Debentures for
33,565 Preferred Shares.
After completion of the exchange, approximately
$101,228,000 principal amount of Senior Secured Debentures and
$1,338,800 of Convertible Secured Debentures will remain
outstanding. It is anticipated that the outstanding Convertible
Secured Debentures will be delisted from the TSX within two to
three business days pending receipt of required documentation by
the TSX. Canso, for and on behalf of accounts that it manages, has
agreed to exchange its remaining Convertible Secured Debentures for
Preferred Shares once all other Convertible Secured Debentures are
exchanged for Preferred Shares or cash in accordance with the terms
of the Second Convertible Supplemental Indenture.
Amendment and Restatement of Credit
Agreement
The Company also announces that, in connection
with the Refinancing Transaction, its subsidiary, ClearStream
Energy Holdings LP, as borrower, has entered into an amended and
restated credit agreement (the “New Credit
Agreement”) with (among others) the Company and certain of
its other direct and indirect subsidiaries, as guarantors, and Bank
of Montreal, as administrative agent (the “ABL
Agent”). The New Credit Agreement, among other things,
provides for certain borrowing base amendments and permits the
consummation of the transactions contemplated by the Refinancing
Agreement.
For further information please contact:
Gary Summach Chief Financial
Officer587-318-0997gsummach@clearstreamenergy.ca
About ClearStream Energy Services
Inc.
With a legacy of excellence and experience
stretching back more than 50 years, ClearStream provides solutions
to the Energy and Industrial markets including: Oil & Gas,
Petrochemical, Mining, Power, Agriculture, Forestry, Infrastructure
and Water Treatment. With offices strategically located across
Canada and over 3,000 employees, we construct, transport and
provide maintenance services that keep our clients moving forward.
For more information about ClearStream, please visit
www.ClearStreamEnergy.ca.
Forward-looking information
This press release contains forward-looking
information based on current expectations, including but not
limited to the Company's expectations in connection with the
Refinancing Transaction, benefits of the Refinancing Transaction,
the delisting of the Convertible Secured Debentures following the
Refinancing Transaction and the expected performance of the
Company. Forward-looking information is often, but not always,
identified by the use of the words “contemplate” and “anticipate”
and statements that an event or result “may”, “will”, “should”,
“could” or “might” occur and any similar expressions or negative
variations thereof. In providing forward-looking information in
this press release, management of the Company has made numerous
assumptions regarding the Refinancing Transaction which it believes
to be reasonable, including assumptions relating to: (i) the
Company’s existing and future business prospects and opportunities;
(ii) assumptions relating to the ability of the Company and its
subsidiaries to meet future obligations owing under the Secured
Debentures; (iii) the outcome of the Refinancing Transaction
including the expected use of proceeds; (iv) the exchange of
Secured Debentures and Convertible Secured Debentures for Preferred
Shares; and (v) existing and future business prospects and
opportunities of the Company. However, forward-looking information
entails various risks and uncertainties that could cause actual
results to differ materially from those reflected in the
forward-looking information. Specific risks that could cause actual
results to differ materially from those anticipated or disclosed
herein include, but are not limited to: (i) the inability of the
Company and its subsidiaries to observe its covenants or to meet
future payment obligations under the Secured Debentures, which will
primarily depend upon the future financial performance of
ClearStream; and (ii) the risk that the anticipated effects of the
Refinancing Transaction, if completed, may not result in the
outcomes expected by management. In addition, general risks
relating to capital markets, economic conditions, regulatory
changes, changes in interest rates as well as the management and
operations of the Company’s business may also cause actual results
to differ materially from those anticipated or disclosed herein.
These and other risks and uncertainties relating generally to the
Company’s business are more fully discussed in the Company’s
disclosure materials, including its annual information form and
MD&A, filed with the securities regulatory authorities in
Canada and available at www.sedar.com. Forward-looking statements
are not guarantees of future performance, and management’s
assumptions upon which such forward-looking information are based
may prove to be incorrect. Accordingly, there can be no assurance
that actual events or results will be consistent with the
forward-looking statements disclosed herein. In light of the
significant uncertainties inherent in forward-looking information,
any such forward-looking information should not be regarded as
representations by the Company that its objectives or plans
relating to the Refinancing Transaction or otherwise will be
achieved. Readers are cautioned not to place undue reliance on any
forward-looking information contained herein and that such
forward-looking information are provided solely for the purpose of
providing information about management's current expectations and
plans relating to the future. Readers are cautioned that such
information may not be appropriate for other purposes. In addition,
forward-looking information relates to the date on which they are
made. The Company disclaims any intention or obligation to update
or revise any forward-looking information contained herein, whether
as a result of new information, future events or otherwise, except
to the extent required by law.
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