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.
Restructuring
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.