NWE's operations have been conducted through one wholly-owned subsidiary, BearStone Environmental Solutions
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.
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.
Source: Company Press Release