CALGARY, Aug. 7, 2019 /CNW/ - New West Energy Services Inc. (TSX Venture: NWE), an oil and gas and environmental services company focused on Western Canada, today announced that it has completed a restructuring of its operations.
As previously announced, as a result of NWE's significant working capital deficit, management had been engaged in discussions with its primary secured creditor and equipment financing partner, Nations Equipment Finance of Norwalk, Connecticut, in respect of possible restructuring options to ensure the ability of NWE to continue as a going concern. NWE's operations have been conducted through one wholly-owned subsidiary, BearStone Environmental Solutions Inc.
BearStone's business was divided into three business segments: vacuum and water truck operations servicing the drilling sector from Medicine Hat, Alberta; fluid transportation operations servicing the completions and production sectors from Grande Prairie, Alberta; and environmental services to the oil and gas industry in Western Canada.
In the second quarter, BearStone ceased its fluid transportation operations in Grande Prairie as a result of a significant decrease in revenue associated with this segment stemming from the continuing decline in completions activity in northwestern Alberta. This decline in completions was primarily due to producers delaying their capital spending programs, or even shifting them outside of Alberta, due to lack of market access, continued infrastructure constraints and production restrictions on oil from the Government of Alberta's mandated curtailment rules.
Effective yesterday, pursuant to an Amended and Restated Asset Purchase and Sale Agreement ("APA") among NWE, BearStone, Silverpoint Energy Services Inc. (a wholly-owned subsidiary of NWE) and Nations, BearStone sold to Silverpoint all the equipment associated with its vacuum and water truck services business operated out of Medicine Hat. Silverpoint is expecting to also give offers of employment to substantially all the employees of BearStone working in this area as well as those working in environmental services.
Going forward, Silverpoint will be NWE's sole operating subsidiary and will focus on vacuum and water truck services out of Medicine Hat, as well as environmental services out of the company's headquarters in Calgary.
As consideration for the equipment acquisition, Silverpoint has assumed $2,733,911, of BearStone's current secured indebtedness to Nations, subject to downward adjustment under certain conditions. Silverpoint has also borrowed from Nations an additional $315,000 to pay wages to the closing date of those BearStone employees who are being hired by Silverpoint. The total indebtedness is for a term of five years.
Nations has also made available to Silverpoint a revolving operating line of credit of up to $1.5 million, based upon eligible accounts and other considerations, to be used for general corporate purposes. Silverpoint may draw down on, and repay, the loan from time to time as needed. The line of credit is also for a term of five years
Pursuant to an order of the Court of Queen's Bench in Alberta, KPMG has been appointed receiver over the assets and undertakings of BearStone. The Court has also approved the sale by BearStone to Silverpoint of the above-mentioned equipment pursuant to the Asset Sale and Purchase Agreement.
Silverpoint is also in negotiations with other third-party secured lenders to assume approximately $400,000 of BearStone's indebtedness towards such lenders in exchange for Sliverpoint acquiring certain of BearStone's drilling services equipment.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Note Regarding Forward-Looking Information
Certain statements in this news release may constitute "forward-looking information" within the meaning of applicable securities laws that involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements or industry results to be materially different from any future results, performance or achievements or industry results expressed or implied by such forward-looking information and financial outlook. Forward-looking information is identified by the use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", "will", "would", and similar terms and phrases, including references to assumptions. Such information may involve, but is not limited to, comments with respect to strategies, expectations, planned operations or future actions. Forward-looking information in this news release includes, without limitation, statements with respect to: the use of proceeds of its loans; the use of the acquired equipment; planned changes in NWE's business and revenues; negotiations with other third-party secured lenders to assume indebtedness, the competitive environment in which NWE operates; and the assessment of future plans and operations. Actual events or results may differ materially. The forward-looking information in this news release is based on assumptions which includes, but is not limited to: NWE realizing the expected benefits of its loans and acquired equipment; the general state of the economy and the oil and gas industry not worsening; NWE not losing any key personnel; NWE sustaining or increasing their level of revenues and EBITDAC; NWE growing its businesses long term and managing its growth; NWE complying with existing regulations and not becoming subject to more stringent regulations; and, NWE's insurance being sufficient to cover losses that may occur as a result of its operations. The forward-looking information in this news release is subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical results or results anticipated by the forward-looking information. The factors which could cause results to differ from current expectations include, but are not limited to: failure to realize the expected benefits of its loans and acquired equipment; potential undisclosed liens associated with the acquired equipment; NWE's results being dependent upon the general state of the economy and the oil and gas industry; NWE being dependent on key personnel, the loss of which could harm its business; NWE may not be able to sustain or increase their revenues or EBITDAC; NWE may be unable to grow its business long term or to manage any growth; NWE may be unable to integrate the acquired equipment into its business; competition in NWE's markets may lead to reduced revenues and EBITDAC; NWE may fail to comply with existing regulations or become subject to more stringent regulations; NWE's insurance may be insufficient to cover losses that may occur as a result of NWE's operations; the market price of NWE's common shares will fluctuate; and, there is a possibility of dilution of existing holders of NWE's common shares due to future financings or acquisitions. Although NWE has attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements in this news release, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Also, many of the factors are beyond the control of NWE. Accordingly, readers should not place undue reliance on the forward-looking information in this news release. The forward-looking information is made as of the date of this news release, and NWE does not assume any obligation to publicly update or revise such forward-looking information to reflect new information, subsequent or otherwise, except as may be required by applicable law. The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement.
SOURCE New West Energy Services Inc.
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