Precision Drilling Trust Announces Postponement of Senior Notes Offering and Provides Update on Financing
19 Februar 2009 - 1:00PM
Marketwired
This news release contains "forward-looking information and
statements" within the meaning of applicable securities laws. For a
full disclosure of the forward-looking information and statements
and the risks to which they are subject, see the "Cautionary
Statement Regarding Forward-Looking Information and Statements"
later in this news release.
Precision Drilling Trust ("Precision" or the "Trust") announced
today that its subsidiary, Precision Drilling Corporation, has
postponed its offering of US$250 million principal amount of senior
notes due 2015 due to currently unfavourable market conditions.
"The Trust closed the offering of 46,000,000 trust units
yesterday that provided gross proceeds of US$172 million," stated
Mr. Kevin Neveu, President & Chief Executive Officer of
Precision Drilling Corporation. "Precision will continue to use the
committed financing that it has in place. The unsecured financing
is committed through a bridge facility and under its terms, the
drawn portion will convert to long-term financing on or before
December 23, 2009, if not refinanced. The rate of interest
Precision is paying on the unsecured bridge facility is currently
fixed at 17% per annum."
Precision will use the equity proceeds, and if necessary draw on
the unsecured bridge facility, to purchase any of the Grey Wolf
convertible notes tendered to a change of control offer which
expires later in March. If all convertible notes tender to the
offer, Precision expects to draw an additional US$98 million for a
total of US$236 million on the unsecured bridge facility.
Precision also has a US$1.2 billion secured facility which
includes a revolving credit facility of US$400 million. At year end
2008, the Trust had cash of approximately US$50 million, with only
US$88 million drawn down under the revolving credit facility,
providing Precision with ample liquidity. The overall blended
floating cash interest rate before amortization of upfront costs on
the secured facility is currently 8% per annum.
Mr. Neveu continued, "Precision's management team is experienced
in operating through the cycles in the land drilling industry. As
such, we are taking all necessary steps to reduce expenses and
capital expenditures, in order to increase cash flow that will be
applied to reduce our debt balance going forward. We believe that
our cash flow generation, coupled with our equity offering, will
enable us to significantly reduce the overall debt balance by the
end of 2009. We also believe that the equity offering provides
additional assurance, positioning Precision to comply with its debt
covenants going forward."
The Trust presently has approximately 200 rigs operating in the
United States and Canada, with over 100 of those working under term
contracts. In 2009, Precision's term contracts provide for an
average of approximately 85 contracted rigs that are anticipated to
generate substantial profit margin per rig day, consistent with
peak levels achieved during 2008. This base of contracted rigs,
coupled with the well-to-well contracted rigs and cash generation
from other business units, is expected to provide the cash flow
necessary to significantly reduce debt during 2009.
Mr. Neveu concluded, "Precision is well positioned with its
diverse operating platform, strong working capital and liquidity
position plus committed financing to lead the eventual rebound in
land drilling rig activity."
About Precision
Precision is a leading provider of safe, high performance energy
services to the North American oil and gas industry. Precision
provides customers with access to an extensive fleet of contract
drilling rigs, service rigs, camps, snubbing units, wastewater
treatment units and rental equipment backed by a comprehensive mix
of technical support services and skilled, experienced
personnel.
Precision is headquartered in Calgary, Alberta, Canada.
Precision is listed on the Toronto Stock Exchange under the trading
symbol "PD.UN" and on the New York Stock Exchange under the trading
symbol "PDS".
Cautionary Statement Regarding Forward-Looking Statements
Statements about Precision's expectations and all other
statements in this news release, other than historical facts, are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements may also
constitute "forward-looking information" within the meaning of
applicable Canadian securities legislation. These forward-looking
statements rely on a number of assumptions concerning future events
and are subject to a number of uncertainties and factors, many of
which are outside of Precision's control, which could cause actual
results to differ materially from such statements. Forward-looking
statements or information in this news release include but are not
limited to: anticipated earnings and cash generation from
operations, the reduction of expenses and capital expenditures, the
ability to reduce debt as planned and the satisfaction of debt
covenants. Among the factors that could cause results to differ
materially from those indicated by such forward-looking statements
are: the principal amount of convertible notes tendered to the
"change of control" offer and changes in market conditions. Readers
are cautioned not to place undue reliance on forward-looking
information. No assurance can be given that any of the events
anticipated by the forward-looking information will transpire or
occur or, if any of them do so, what benefits Precision will derive
therefrom.
Contacts: David Wehlmann, Executive Vice President, Investor
Relations Precision Drilling Corporation, Administrator of
Precision Drilling Trust (403) 716-4575 (403) 716-4755 (FAX)
Precision Drilling Trust 4200, 150 - 6th Avenue S.W. Calgary,
Alberta T2P 3Y7 Website: www.precisiondrilling.com
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