Daily News: October 13, 2017

Pengrowth Energy Amends Covenants with RBC Led Bank Syndicate


Pengrowth Energy prepaid all of its outstanding term notes due in 2018 and finalized the terms of amending agreements with its lenders under its syndicated bank facility and the holders of its remaining term notes.

According to a related filing, Royal Bank of Canada is serving as administrative agent, RBC Capital Markets as lead arranger and sole bookrunner and Bank of Montreal as syndication agent. Bank of Nova Scotia, Canadian Imperial Bank of Commerce and Toronto-Dominion Bank served as co-documentation agents.

These agreements amend the existing financial covenants effective for the quarter ending September 30, 2017 through to and including the quarter ending September 30, 2019 (waiver period). The terms of the amending agreements are expected to provide Pengrowth with the financial flexibility and runway to restructure its remaining debt with covenant light debt and to develop a financing strategy for the ongoing development of its Lindbergh asset. Success on both fronts should enable Pengrowth to deliver long-term growth in reserves, production and cash flow for the company and its stakeholders.

The company has been active in the disposition market with significant success thus far in 2017, closing on approximately C$825 million ($660 million) of disposition proceeds year to date with another $150 million disposition (Swan Hills) scheduled to close in Q4/17. This success has allowed the company to materially reduce its outstanding debt while only reducing its reserve base by approximately 23% based on a proved plus probable December 31, 2016 GLJ reserve evaluation. The company has deployed its existing cash on hand to prepay all the term notes otherwise scheduled to mature on August 28, 2018.

Derek Evans, president and CEO of Pengrowth, said, “We have been committed to reducing our debt and strengthening our financial position in order to build a stronger foundation for growing the company going forward. The agreements with our lenders and noteholders mark a key milestone in our plan and provide us with additional financial runway. We remain focused on restructuring and strengthening the company’s financial position, including finding new sources of capital to replace our existing term notes with less covenant restrictive debt. With success, this financial plan is expected to allow us to execute on our development strategy, including the development of our Lindbergh Phase Two, which remains on hold awaiting stronger commodity prices. While we are happy to see the recent strengthening in crude oil prices, a decision to proceed with phase two is dependent on a higher long-term crude oil price environment for diluted bitumen sales. Once complete, Lindbergh is expected to ultimately deliver long-term growth in production and cash flow.”