ClearStream Energy Services completed the refinancing of its asset-based revolving credit facility. ClearStream established a new $25 million asset-based revolving credit facility with a three-year term to replace its existing $15 million asset-based revolving credit facility that was to mature on April 14, 2022.
ABL Facility
The ABL facility provides for maximum borrowings up to $25 million with TD Bank. The amount available under the ABL facility will vary from time to time based on the borrowing base determined with reference to the accounts receivable and inventories of ClearStream and certain of its subsidiaries. The obligations under the ABL facility are secured by, among other things, a first ranking lien on all of the existing and after acquired accounts receivable and inventories of the company and the other guarantors, being certain of the company’s direct and indirect subsidiaries. The maturity date of the ABL facility is April 14, 2025.
The financial covenants applicable under the ABL facility are: the company must maintain a fixed charge coverage ratio equal to or greater than 1:1 for each 12-month period calculated and tested as of the last day of each fiscal quarter, and the company must not expend or become obligated for any capital expenditures in an aggregate amount exceeding $10 million during any fiscal year.
Term Loan Facility
Pursuant to the terms of the fifth amended and restated credit agreement dated March 23, 2021(Fifth ARCA), ClearStream had access to the former ABL facility and a term loan facility providing for maximum borrowings of up to $40.5 million with Canso Investment Counsel, in its capacity as portfolio manager for and on behalf of certain accounts that it manages.
As a result of the refinancing, the fifth ARCA has been amended and restated by a sixth amended and restated credit agreement (Sixth ARCA) to, among other things: remove the former ABL facility; extend the maturity date of the term loan facility from Sept. 30 to the date that is the earlier of: 180 days following the maturity date of the ABL facility, Oct. 14, 2025 and the date on which the term loan facility is terminated earlier pursuant to its terms; change the interest rate charged on the term loan facility to a fixed rate of 8% (previously a floating rate of prime plus 4.5%, increasing to prime plus 6% if the former ABL facility was more than 50% drawn); and appoint Computershare Trust Company of Canada as administrative agent.
The obligations under the term loan facility are secured by, among other things, a lien on all of the existing and after acquired accounts receivable and inventories of the company and the other guarantors, being certain of the company’s direct and indirect subsidiaries.
As at April 14, 2022, $40.5 million was outstanding under the term loan facility. The term loan facility is required to be used for specific purposes and cannot be redrawn once repaid.
BDC Secured Loans
On June 26, 2019, the company received $19 million from two secured loans with the Business Development Bank of Canada (BDC) as a partial source of funds for the acquisition of certain assets of the production services division of AECOM Production Services.
The BDC Loans are secured by a first security interest on the real property and equipment acquired through the acquisition of the production services division of AECOM Production Services and a security interest in all other present and future property, subject to the priorities granted to existing lenders under the ABL facility, senior secured debentures (as defined below) and other existing commitments.
The loan agreements with BDC require the company to maintain a fixed charge coverage ratio equal to or greater than 1:1 on annual basis.
As of April 14, 2022, $15.4 million was outstanding under the BDC Loans. No substantive amendments were made to the BDC loans as a result of the refinancing.
Senior Secured Debentures
On March 23, 2016, ClearStream issued 8% senior secured debentures due March 23, 2026 on a private placement basis to Canso pursuant to a trust indenture between ClearStream, as issuer, and Computershare Trust Company of Canada, as debenture trustee, as amended and supplemented.
The senior secured debentures are secured by first-ranking liens over all of the property of the company and its guarantor subsidiaries, other than certain limited classes of collateral over which the company has granted a prior-ranking lien in favor of the ABL facility, the term loan facility and the BDC loans.
The senior secured debentures provide for certain events of default and covenants of the company, including financial and reporting covenants and restrictive covenants limiting the ability of the company and its subsidiaries to make certain distributions and dispositions, incur indebtedness, grant liens and limitations with respect to acquisitions, mergers, investments, non-arm’s length transactions, reorganizations and hedging arrangements (subject to certain exceptions).
As at April 14, 2022, ClearStream had $111.2 million principal amount of 8% senior secured debentures outstanding. As a result of the refinancing, minor amendments were made to the senior secured indenture to reflect the ABL facility and the sixth ARCA.
