Critical Control Energy Services executed definitive loan agreements with Invico Diversified Income Limited Partnership, a funding vehicle managed by Invico Capital, for new senior secured financing.
Proceeds from the facilities will be used to fully repay the Critical Control’s current operating line and for term loans and additional working capital.
“Industry trends for oil and gas service companies were weaker than we anticipated in 2018, which, combined with increased competition in certain portions of our business resulted in weaker corporate performance and necessitated this financing,” said Alykhan Mamdani, president and CEO of Critical Control. “We have taken cost cutting measures in both Canada and the US to reduce our costs in 2019, which, combined with a more focused execution of our software based strategic plan and the flexibility afforded by this interim financing, will enable us to regain positive cash flow in the fourth quarter of 2018.”
The facilities are for a period of 3 years and can be repaid on 90 days’ notice after one year. The facilities include a term loan of $7 million at 15% interest per annum, which will be interest-only until December 31, 2019 with principal payments thereafter calculated based on 80% of free cash flow after all expenses, capitalized payments and interest.
The remainder of the facilities will be in the form of a flexible factoring operating line, enabling the company to draw 90% of its invoices for a period of 120 days. Effective interest on the factor facility will be at 1.5% per month, but will only be incurred when required for working capital. Management expects to be able to draw a maximum of $3.7 million at closing under the factor facility.
Closing is subject to completion of legal registrations and is expected to occur on or before November 12, 2018.
Critical Control provides solutions for the collection, control and analysis of measurement and operational data related to oil and gas wells across North America.
Invico Capital is a Calgary, Alberta-based alternative investment fund management firm which provides alternative investing and financing solutions to private and public companies. It currently manages approximately $360 million in private capital.
