TORONTO, July 29, 2020 (GLOBE NEWSWIRE) -- Shawcor Ltd. (TSX: SCL) announced today that it has entered into an amending agreement with its existing syndicate of lenders under its credit facility that provides covenant relief through December 31, 2021.
Steve Orr, Chief Executive Officer of Shawcor commented “The confidence and support of the Company’s lender partners made this amendment possible. With the amendment finalized, a very important element is in place that will assist Shawcor in managing through near term uncertainty, executing on its strategy through 2021 and beyond, and remaining an industry leader”.
As previously announced on June 25, 2020, all lenders in Shawcor’s banking syndicate had waived compliance with the leverage and interest coverage ratios under the credit facility for Shawcor’s second fiscal quarter ending June 30, 2020 should Shawcor be in default thereof.
The principal amendments to the credit facility are:
- a waiver of the maximum Net Debt to EBITDA covenant (the “Leverage Ratio”) for the fiscal quarter ended September 30, 2020 (“Q3 2020”) and a change in the maximum Leverage Ratio to:
- 5.75 to 1.00 for the fiscal quarter ended December 31, 2020 (“Q4 2020”)
- 6.50 to 1.00 for the fiscal quarter ended March 31, 2021 (“Q1 2021”)
- 5.75 to 1.00 for the fiscal quarter ended June 30, 2021 (“Q2 2021”)
- 5.50 to 1.00 for the fiscal quarter ended September 30, 2021 (“Q3 2021”)
- 5.00 to 1.00 for the fiscal quarter ended December 31, 2021 (“Q4 2021”)
- 3.50 to 1.00 for all fiscal quarters thereafter;
- a waiver of the minimum EBITDA to Interest covenant (the “Interest Coverage Ratio”) for Q3 2020 and a change in the minimum Interest Coverage Ratio to:
- 2.25 to 1.00 for Q4 2020
- 2.00 to 1.00 for Q1 2021
- 2.25 to 1.00 for Q2 2021
- 2.50 to 1.00 for Q3 2021
- 2.75 to 1.00 for Q4 2021
- 3.00 to 1.00 for all fiscal quarters thereafter;
- for the purposes of the amended Leverage Ratio and Interest Coverage Ratio, EBITDA shall be calculated as follows:
- for Q4 2020: (Q4 2020 EBITDA) x 4
- for Q1 2021: (Q4 2020 EBITDA + Q1 2021 EBITDA) x 2
- for Q2 2021: (Q4 2020 EBITDA + Q1 2021 EBITDA + Q2 2021 EBITDA) x 4/3
- thereafter, on a trailing 12 month basis;
- until receipt by the banking syndicate of reporting for the period ended December 31, 2020, the addition of a minimum monthly liquidity test, calculated as aggregate unrestricted cash held in lender’s accounts plus undrawn availability under the credit facility, of $290 million;
- a first priority security interest in favour of the banking syndicate is to be provided against the majority of the personal property of the Borrowers and Guarantors under the credit facility; and
- increased interest rates and standby and other fees.
The Company will incur fees and expenses of approximately $1.4 million in Q3 and Q4 2020 to implement these amendments. For further information regarding the credit facility amendments, please see the text of the amendments which will be filed shortly at www.sedar.com.
Shawcor Ltd. is a global company serving various sectors of the Infrastructure, Energy and Transportation markets through three reporting segments: Pipeline and Pipe Services, Composite Systems and Automotive and Industrial. The Company operates through a global network of fixed and mobile manufacturing and service facilities and is valued for its integrity, technology and proven capability to execute the most complex projects in its industry.
This news release contains forward-looking information within the meaning of applicable securities laws. Words such as "may", "will", "should", "anticipate", "plan", "expect", "believe", "predict", "estimate" or similar terminology are used to identify forward-looking information. Specifically, this news release contains forward-looking information in respect of the timing and costs necessary to implement the amendments to the Company’s credit facility. This forward-looking information is based on assumptions, estimates and analysis made in the light of the Company's experience and its perception of trends, current conditions and expected developments, including the timely completion of all steps necessary to implement the security interest in favour of the banking syndicate as required by the amendment, as well as other factors that are believed by the Company to be reasonable and relevant in the circumstances. Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from those predicted, expressed or implied by the forward-looking information and readers are cautioned not to unduly rely on forward looking information. The forward-looking information is provided as of the date of this news release and the Company does not assume any obligation to update or revise the forward-looking information to reflect new events or circumstances, except as required by law.
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Source: Shawcor Ltd.