BMO, Others Provide Petrowest Facility
Petrowest announced it entered into a new three-year credit agreement with Bank of Montreal and a syndicate comprised of Royal Bank of Canada, ATB Financial and Canadian Western Bank. The facility includes a $50 million revolving reducing term loan (which has been drawn to $38 million) and a $40 million revolving credit facility (which has been drawn to $20 million). The new facility also has an accordion feature which may increase availability under either the term loan or the revolving credit facility by a maximum of $30 million, subject to borrowing base availability.
The interest rates for the term loan and the revolving credit facility under the new facility are, at the election of Petrowest, the prime rate or the discount rate for bankers’ acceptances plus an applicable margin based on Petrowest’s leverage position. The amortization period for the term loan under the new facility is six years, with quarterly scheduled repayments.
The new facility requires Petrowest to comply with customary covenants including, among others, financial covenants that provide that Petrowest may not (a) make unfinanced capital expenditures for any fiscal year in excess of $21.0 million; (b) have a leverage ratio greater than 2.501; (c) have a consolidated fixed charge coverage ratio less than 1.251; (d) have a working capital ratio less than 1.251; and (e) secure finance lease liabilities in excess of $25.0 million.
Lloyd Wiggins, Petrowest’s CFO, stated, “We are pleased to have entered into a new credit facility which will provide Petrowest with enhanced financial flexibility to accommodate our growth. Wiggins further stated that we appreciate the support from our lenders and we look forward to continuing to build these relationships.”
The existing syndicated term facility (balance of $26.8 million due in 2016) and the existing revolving facility are being paid out with the proceeds from the New Facility.
Petrowest is an Alberta corporation involved in pre-drilling and post-completion energy services as well as industrial and civil infrastructure projects.