08:06:09 EDT Thu 28 Mar 2024
Enter Symbol
or Name
USA
CA



Cathedral Energy Services Ltd
Symbol CET
Shares Issued 36,295,380
Close 2017-01-16 C$ 0.92
Market Cap C$ 33,391,750
Recent Sedar Documents

Cathedral Energy completes asset sale to Ideal

2017-01-17 09:49 ET - News Release

Mr. Scott MacFarlane reports

CATHEDRAL ENERGY SERVICES ANNOUNCES CLOSING OF FLOWBACK AND PRODUCTION TESTING DIVISION SALE AND AMENDMENTS TO CREDIT FACILITY

Cathedral Energy Services Ltd.'s previously announced sale of its flowback and production testing assets to Ideal Completions Group LLC was completed on Jan. 16, 2017.

The net proceeds of the sale, estimated to be $17.2-million, will initially be used to reduce the amount owing under the company's credit facility, along with supplementing working capital and capital investment required to support Cathedral's growing directional drilling business. After closing, Cathedral's bank debt is estimated to be approximately $11.3-million.

Cathedral also announces it has negotiated certain amendments to its credit facility with Bank of Nova Scotia and Export Development Canada (EDC). Under the amended facility, Cathedral's total credit facility availability is $23-million. The lenders have also agreed to extend the maturity date of Cathedral's credit facility to December, 2018.

The financial covenants associated with the amended facility are as shown in the attached table.

Quarter ending              Maximum financed-debt-to-       Minimum debt service
                                 bank-EBITDA ratio (1)                 ratio (1)

Dec. 31, 2016 (2)                              Waived                    Waived
March 31, 2017 (3)                               3.50                      2.00
June 30, 2017                                    3.50                      2.50
Sept. 30, 2017                                   3.50                      1.75
Dec. 31, 2017                                    3.25                      3.00
March 31, 2018, to
Dec. 31, 2018                                    3.00                      3.00

Notes:
(1) Financed-debt-to-bank-EBITDA (earnings before interest,
taxes, depreciation and amortization) ratio and debt service ratio
are defined in accordance with the amended facility agreement.
(2) Requirement for minimum bank EBITDA for the quarter ended
Dec. 31, 2016, of $2.5-million.
(3) Minimum liquidity availability requirement of $2-million for
the period ending June 30, 2017.
(4) Minimum working capital ratio not less than 1.25 to 1.00.

Over the past two years, Cathedral has taken action to aggressively reduce expenses while preserving the key employee base required to ramp up the company's business as activity levels improve. During that same time period, Cathedral has worked pro-actively with its lending partners to accommodate their requirements and preserve upside value in the company's business. Since the end of 2014, Cathedral has reduced bank debt by approximately $44.8-million (80 per cent) and has remained cash flow positive except for the traditional slow-activity-level second quarter. To assist with securing additional liquidity, in August, 2016, the company arranged for EDC to join its lending syndicate, and EDC continues to be supportive of Cathedral's strategy. The company entered into a strategic alternatives process in September, 2016, with a view to improving its balance sheet and provide funds to support growth opportunities in its directional drilling business. This has been accomplished through the sale of Cathedral's production testing division to Ideal.

Cathedral management is very pleased with both the company's financial and operational accomplishments since the beginning of the industry downturn and believes the company is now well positioned to secure the growth opportunities available to the company with industry activity levels improving.

Further details on Cathedral's credit facility are outlined in the company's financial disclosure located on SEDAR under Cathedral's profile.

Cathedral Energy Services, based in Calgary, Alta., is a trusted partner to North American energy companies requiring high performance directional drilling services.

We seek Safe Harbor.

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