(Canadian dollars, except as noted)
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 (the "Trust") and Precision Drilling
Corporation ("Precision") announced today a series of financing
transactions to raise up to approximately $380 million which will
be used to strengthen the Trust's balance sheet by refinancing and
restructuring the debt incurred in the acquisition of Grey Wolf,
Inc. that was completed in December of 2008. A summary of the
financing transactions is set forth below:
- The Trust and Precision have entered into an agreement with
Her Majesty the Queen, in Right of the Province of Alberta (the
"Investor"), represented by Alberta Investment Management
Corporation ("AIMCo"), pursuant to which the Investor has agreed to
purchase by way of private placement:
-- $175.0 million aggregate principal amount of senior unsecured
notes ("Notes") of Precision bearing interest at 10% per annum and
having an eight-year life;
-- 35,000,000 Trust units at a subscription price of $3.00 per
Trust unit for gross proceeds of $105.0 million; and
-- 15,000,000 purchase warrants of the Trust entitling the
Investor to acquire up to an additional 15,000,000 Trust units at a
price of $3.22 per trust unit for a period of five years from the
date of issue.
- The Trust also intends to initiate a Rights Offering for up to
approximately $103.0 million that will allow unitholders, including
the Investor, to purchase Trust units at a price of $3.00 per unit
in their proportionate ownership share on the same terms as the
Investor.
The financing transactions will enable the repayment of
Precision's unsecured bridge facility loans of $296 million (US$235
million) which bear interest at approximately 17% and allow
Precision's secured facilities to be fully syndicated and thereby
provide certainty to the cost of debt.
The financing transactions, coupled with the Trust's February
2009 unit offering, are expected to reduce Precision's blended
interest rate, based upon current market rates, to approximately
8.4% from 10.8%, reduce Precision's cash interest expense by
approximately $70 million on an annual basis, reduce the Trust's
overall leverage and support the Trust's objective of returning to
an investment grade credit.
"We are extremely pleased with our new relationship with AIMCo
and the Alberta institutions which it represents", stated Kevin
Neveu, President and Chief Executive Officer of Precision Drilling
Corporation. "We view AIMCo as a long-term partner which, through
its $280 million investment in the Trust sees the value in
Precision's strategy to provide high value high performance
drilling and well services globally. This integrated financing plan
provides us with a reasonable cost of capital and removes many of
the uncertainties associated with the Trust's existing credit
situation. These uncertainties included potential higher interest
carrying costs on the unsecured debt along with potentially higher
original issue discounts on the unsyndicated portions of the
secured facilities. This plan reinforces the Trust's liquidity,
lowers debt levels, significantly reduces interest costs, removes
the need for Precision to access high cost debt markets further and
strengthens Precision's capitalization. The measures provide
additional financial strength to comply with debt covenants and
resources to fund operational and investment initiatives through
the current economic cycle and the rebound that is anticipated to
follow."
The unit subscription price to the Investor approximated market
at the time the proposal to invest in the Trust was made by AIMCo
on March 17, 2009. The Notes will bear interest at 10% per annum,
well below the 17% currently being paid on the unsecured bridge
facility, and will have an eight year term with one-third of the
original principal amount outstanding payable on the sixth, seventh
and eighth anniversaries of the closing date of the Notes.
Following the completion of due diligence, the finalization of the
terms of the transaction and the preparation of definitive
documentation, the private placement was approved by the board of
directors of AIMCo on April 17 and by the board of directors of
Precision and the board of trustees of the Trust on April 19, 2009.
Closing of the private placement and the Notes is expected to occur
on or about April 22, 2009.
Further details regarding the rights offering, including the
record date for participation in the rights offering by Trust
unitholders, will be made available prior to the end of April.
Trust unitholders of record on the record date, including the
Investor, will be entitled to participate in the rights offering.
The rights offering is expected to be completed prior to the end of
May.
Upon completion of the transactions, the Trust expects to retain
strong liquidity through its working capital position, five-year
secured term loan amortization and an undrawn revolving credit
facility with total available capacity of up to US$260 million.
The expected outcome of these transactions is shown in the
following table of the Trust's debt position on a pro forma basis
(in millions of Canadian dollars, unaudited).
Pro Forma Interest
3/31/09 Adjustments Pro Forma Rate
------------------------------------------------
Revolving Credit $110.1 ($110.1) - LIBOR +4.0%
Facility (a)
Term Loan A 410.6 (28.8) 381.8 LIBOR +4.0%
Term Loan B-1(b) 454.8 - 454.8 LIBOR +6.0%
Term Loan B-2(b) 128.8 - 128.8 LIBOR +8.0%
---------------------------------------------------------------------------
Total Senior Secured Debt $1,104.3 ($138.9) $ 965.4
Bridge Notes Facility 296.2 (296.2) - 17%
Unsecured Senior Notes - 175.0 175.0 10%
---------------------------------------------------------------------------
Total Debt $1,400.5 ($260.1) $1,140.4
(a) Pro forma the transactions US$260 million available.
(b) Subject to a LIBOR floor of 3.25%.
Mr. Neveu concluded, "We expect the financing transactions to
put the Trust back on path to return to an investment grade credit
over the next few years, allow Precision to weather current market
challenges and pave the way for future opportunities."
The Investor will, upon completion of the private placement,
hold approximately 15% (approximately 19% on a fully diluted basis
assuming the exercise of all purchase warrants) of the issued and
outstanding Trust units. AIMCo, as investment manager, maintains
investment control or direction over the Trust units and the
purchase warrants for the benefit of the Investor. The Trust units
and purchase warrants were acquired in the ordinary course of
business, for investment purposes only and not for the purpose of
exercising control or direction over the Trust. The address of the
Investor, through AIMCo, is Terrace Building, 9515 - 107 Street,
Edmonton, Alberta T5K 2C3.
Precision has scheduled a conference call and webcast to discuss
the financing transactions that will begin promptly at 10:00 a.m.
MT (noon ET) on April 20, 2009.
The conference call dial in numbers are 1-866-223-7781 or
416-340-8018
A live webcast of the conference call will be accessible on
Precision's website at www.precisiondrilling.com by selecting
"Investor Centre", then "Webcasts".
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND
STATEMENTS
Statements about the Trust's expectations and all other
statements in this news release, other than historical facts, are
"forward-looking information" within the meaning of applicable
Canadian securities legislation and "forward-looking statements"
within the meaning of the "safe harbor" provisions of the United
States Private Securities Litigation Reform Act of 1995
(collectively, "forward-looking information and statements"). These
forward-looking information and 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 the Trust's
control, which could cause actual results to differ materially from
such statements. Forward-looking information and statements in this
news release include, but are not limited to, statements about the
prospect for, and timing of the completion of, the proposed private
placement and rights offering, the use of the proceeds from
proposed private placement and rights offering, the ultimate
outcome of the rights offering, the anticipated repayment of
Precision's unsecured bridge facility and the syndication in full
of Precision's existing senior secured facilities, the anticipated
reduction in interest expense and interest rates, the availability
of Precision's revolving credit facility and the general effect of
the private placement and rights offering on the Trust and
Precision. Among the factors that could cause results to differ
materially from those indicated by such forward-looking information
and statements are a failure to complete the proposed private
placement and rights offering, the possibility of a reduced take up
under the rights offering and any failure to obtain any required
regulatory approvals. No assurance can be given that any of the
events anticipated by the forward-looking information and
statements will transpire or occur or, if any of them do so, what
benefits the Trust will derive from them.
ABOUT THE TRUST
The Trust is a leading provider of safe, high performance energy
services to the North American oil and gas industry. The Trust
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.
The Trust is headquartered in Calgary, Alberta, Canada. The
Trust 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".
The Toronto Stock Exchange has neither approved nor disapproved
the information contained herein.
Contacts: David Wehlmann, Executive Vice President, Investor
Relations Precision Drilling Corporation, Administrator of the
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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