SAExploration expects ‘long-term upside’ from loan changes, note swap

By Devika Patel

Knoxville, Tenn., March 16 – SAExploration Holdings, Inc. completed a term loan extension and replaced its revolver with a new $20 million credit facility in 2017.

The company also concluded an exchange offer for its long-term notes for a debt reduction of $78 million in early 2018.

“Our primary focus for 2018 will be cash generation and preservation,” executive chairman and chief executive officer Jeff Hastings said on the company’s fourth quarter and year ended Dec. 31, 2017 earnings conference call on Friday.

“Last year, we undertook various initiatives to create and implement a more sustainable capital structure that provides the opportunity to generate long-term upside.

“We extended the maturity on our $29 million senior term loan facility to January 2020 and replaced our Wells Fargo revolver with a new $20 million credit facility that also matures in January of 2020.

“At the end of 2017, with the support of more than 85% of our holders, we launched another exchange offer for our long-term notes, which resulted in a further debt reduction of $78 million in the first quarter of 2018 and an estimated annual cash interest savings of approximately $7.8 million.

“We believe these strategic transactions have positioned SAE to capitalize on future growth during a market recovery,” Hastings said.

Adjusted EBITDA was $11 million for full year 2017, compared to $36.1 million in 2016.

Adjusted EBITDA was negative $6.8 million during the quarter, compared to negative $2.1 million in the fourth quarter of 2016.

As of Dec. 31, 2017, the company’s cash and cash equivalents were $3.6 million.

Total debt at face value at Dec. 31, 2017 was $121.9 million.

As of March 15, 2018, after the restructuring, the company’s total debt at face value was approximately $57.8 million.

The company entered into a second amendment to its June 2016 term loan agreement on Sept. 8, 2017 to extend the term loans held by its consenting lenders.

Specifically, the term loans were extended to Jan. 2, 2020, subject to an earlier maturity date of Jan. 2, 2019 if certain debt remains outstanding at that date.

The amendment also increased the interest rate for the extended loans to 10.5% a year through Feb. 8, 2018, then stepping up to 11.5% on Feb. 8, 2018 and to 12.5% on Aug. 8, 2018.

Additionally, the amendment provides for a mandatory prepayment with proceeds from any Alaska tax credit and provides for a call premium with respect to certain prepayments.

On Jan. 25, 2018, SAExploration took in tenders for a total of $78.04 million of notes in an exchange offer, made up of $78,037,389, or 91.8%, of the $84,989,643 of 10% senior second-lien notes due 2019 issued in July 2016 and $7,000, or less than 1%, of the $1.9 million of 10% senior secured notes due 2019 issued in July 2014 known as the stub notes.

SAExploration accepted all tendered notes for exchange.

The exchange offer expired on Jan. 24 and settlement was on Jan. 29.

For each $1,000 of tendered notes plus accrued interest from Jan. 15, holders received 21.8457 new common shares, 0.4058 series A preferred shares, 10.9578 series B preferred shares and 94.7339 series C warrants.

SAExploration began the exchange offering on Dec. 22, saying it would issue up to 1,883,964 new shares of common stock; 35,000 new shares of its series A perpetual convertible preferred stock; 945,000 new shares of its series B convertible preferred stock; and 8,169,822 warrants to purchase 8,169,822 shares of common stock.

The series B convertible preferreds are mandatorily convertible into 20,542,196 shares of common stock upon receipt of stockholder approval.

Concurrently with the exchange, SAExploration was soliciting consents from holders of the second-lien notes to release all of the collateral from the liens securing the notes and adopt some amendments to the note indenture.

Holders of at least two-thirds of the second-lien notes were required to approve the collateral release.

The company was also soliciting consents from holders of the stub notes to release all of the collateral from the liens securing the notes and adopt some amendments to the note indenture.

No additional consideration was paid for consents for either set of notes.

The amendments became operative when the exchange closed on Jan. 29.

The company announced on Dec. 20 that it had reached an agreement in principle with holders of 90% of the second-lien notes to exchange the notes for stock and equity instruments.

SAExploration also reached an agreement in principle to increase its revolver to $20 million to allow it to make the Jan. 15 interest payment on the notes.

SAExploration is a Houston-based oilfield services company.

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