Business
Western Energy Services Corp. Buys Grenville Energy Partnership Equipment and Secures New Credit Facility
Western Energy Services Corp. Buys Grenville Energy Partnership Equipment and Secures New Credit Facility.
About this update from Western Energy Services Corp.
[{"type":"text","content":"\n\n\n\n/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES/\n\n\nCALGARY, March 28 /CNW/ - Western Energy Services Corp. ("Western") is\npleased to announce that it has entered into an agreement with Grenville\nEnergy Partnership ("Grenville") to acquire all of Grenville's oilfield\nservice equipment (the "Equipment") for the purchase price of $12.5 million.\nThe Equipment consists of all oilfield service equipment owned by Grenville\nand operated by Western pursuant to its joint venture with Grenville, which\njoint venture will terminate on closing. The purchase price will be paid using\n$4.1 million from a new credit facility Western has negotiated with a Canadian\nchartered bank, with the balance being paid by the issuance of a convertible\ndebenture (the "Debenture").\n\n\nJim McQuarrie, President and CEO of Western, states, "This transaction is\na key step in our plan to refocus Western into the more stable and less\ncyclical market of production optimization through stimulation services. The\nGrenville equipment purchase will double the size of our equipment fleet,\nincrease our top and bottom lines, and eliminate the complexity and extra\ncosts of operating under the joint venture agreement. Significantly, the debt\nservice costs of the new credit facility will be less than Western's revenue\nsharing obligations to Grenville under the joint venture agreement."\n\n\nThe effective date of the purchase is January 1, 2007 and is expected to\nclose within the next 30 days. The transaction is subject to the approval of\nthe TSX Venture Exchange and Western entering into formal documentation with\nits bank.\n\n\nThe Debenture has a one year maturity, bears interest at 8%, payable\nmonthly, is convertible at the option of the holder into common shares of\nWestern at $0.20 per share, may be repaid by Western at any time without\npenalty and is secured on a subordinated basis to Western's bank and its\nbridge loan lender by equipment having a book value of approximately\n$17 million. Western can force the conversion of the Debenture into common\nshares upon raising at least $5 million in equity or having its shares trade\nat an average of $0.30 or more for 20 consecutive trading days or meeting\ncertain earnings tests during fiscal 2007. If Western forces the conversion of\nthe Debentu...