Secure Energy refinances via C$600 million of four-year facilities

By Susanna Moon

Chicago, July 5 – Secure Energy Services Inc. obtained C$600 million of four-year credit facilities to replace its C$700 million syndicated facility.

Secure Energy closed a C$470 million first-lien credit facility led by Alberta Treasury Branches with a syndicate of 10 financial institutions and Canadian chartered banks and a C$130 million second-lien credit facility led by National Bank of Canada with a syndicate of three financial institutions and Canadian chartered banks.

The reduced size of the facilities will allow the company “to optimize its debt structure to reduce costs associated with standby fees on undrawn amounts while maintaining target levels of liquidity,” according to a company announcement.

The first-lien facility consists of a C$445 million revolving credit facility and a C$25 million revolving operating facility due June 30, 2021 with interest at either the Canadian prime rate plus 45 basis points to 200 bps or the banker’s acceptance rate plus 145 bps to 300 bps, each based on leverage.

The first-lien loans are secured by substantially all of the company’s assets and requires a consolidated senior funded debt to EBITDA ratio of no more than 3.5 times, a consolidated total funded debt to EBITDA ratio of no more than 5 times and a consolidated EBITDA to financing charges ratio at least 2.5 times.

The second-lien facility is due July 31, 2021 and the company has entered into interest rate swaps to fix the interest rate at 5% for the first three years and 5.5% in the fourth year.

The financial covenants are consistent with the first-lien facility, and the security provided by the company is subordinate to the first-lien lenders.

“The addition of a term facility to our capital structure creates the financial flexibility we require to continue our business strategy of adding production related services that deliver stable operating cash flow,” Allen Gransch, chief financial officer of Secure, said in the company’s press release.

“These credit facilities also provide significant borrowing capacity while still maintaining a strong balance sheet.”

Secure is a Calgary, Alta.-based energy services company.

© 2015 Prospect News.
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