TORONTO, May 10, 2016 (GLOBE NEWSWIRE) -- Shawcor Ltd. (TSX:SCL) is announcing today that it has entered into amending agreements with its Senior Note holders and the syndicate of lenders under its bank credit facility (the “Credit Facility”) in order to improve the Company’s ability to handle the risks and be in a position to take advantage of the opportunities posed by the current market environment.
The principal amendments to the agreements with the Senior Note holders and to the Credit Facility are:
a) an increase in the Company’s permitted Total Debt to EBITDA covenant (the “Leverage Ratio”) (currently a maximum of 3.00 to 1.00) to 4.25 to 1.00 for the fiscal quarters ending September 30, 2016 and December 31, 2016;
b) at the Company’s option, an increase in the Leverage Ratio to 3.75 to 1.00 and 3.5 to 1.00 for the quarters ending March 31, 2017 and June 30, 2017, respectively;
c) increased interest rates and standby and other fees payable to Senior Note holders and under the Credit Facility during any period when the Company is permitted an increased Leverage Ratio (an “Increased Leverage Period”);
d) a reduction in the size of the Credit Facility from US$400 million to US$325 million; and
e) a change to the definition of Total Debt, which currently excludes up to US$75 million in letters of credit which are performance guarantees (“Performance Guarantees”), to exclude up to US$100 million in Performance Guarantees on a permanent basis and up to US$150 million in Performance Guarantees on a temporary basis during any Increased Leverage Period.
On a further note, subsequent to the Company’s announcement on April 5, 2016 that it had repurchased US$75 million of its Senior Notes, the Company has acquired an additional US$2.9 million of its Senior Notes and at the date hereof has approximately US$272.1 million in Senior Notes outstanding, approximately C$160 million in cash and cash equivalents and approximately C$400 million of unutilized credit facilities (net of standard letters of credit for performance, bid and surety bonds of approximately C$84 million).
The Company will incur fees and expenses to implement these amendments of approximately US$1.5 million in the second quarter of 2016. Thereafter, the Company expects that the increased interest rates, standby fees and other amounts payable to the Senior Note holders and under the Credit Facility during the Increased Leverage Period will be more than offset by lower interest charges resulting from the overall debt reduction reflected in the US$77.9 million repurchase of Senior Notes and by lower standby fees resulting from the US$75 million reduction in the Credit Facility.
For further information regarding the Senior Note and Credit Facility amendments, please see the text of the amendments filed at www.sedar.com.
Shawcor is a global energy services company specializing in products and services for the pipeline and pipe services segment of the oil and gas industry and related products for petrochemical and industrial markets. The Company operates through a global network of fixed and mobile manufacturing and service facilities and is valued for its integrity, technology and proven capability to execute the most complex projects in our industry.
This news release contains forward-looking information within the meaning of applicable securities laws. This forward looking information is based on assumptions, estimates, and analysis made in the light of the Company’s experience and its perception of trends, current conditions and expected developments, as well as other factors that are believed by the Company to be reasonable and relevant in the circumstances. Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from those predicted, expressed, or implied by the forward-looking information. The forward-looking information is provided as of the date of this news release and the Company does not assume any obligation to update or revise the forward-looking information to reflect new events or circumstances, except as required by law.