- Company says it has support of group of lenders, shareholders
- Application being made under Canada Business Corporations Act
Tervita Corp., the Canadian oilfield services company focused on waste management, is planning a debt-for-equity swap to reduce its total leverage by about C$2 billion ($1.5 billion).
Holders of 63 percent of its senior unsecured notes and 90 percent of its subordinated unsecured notes have agreed to the proposal, according to a statement on Wednesday from the closely-held company. Tervita also has secured agreement from 69 percent of its shareholders, the Calgary-based company said.
The plan comes after months of talks with creditors as the company struggled to make debt payments amid a crude market slump that has exceeded two years. Tervita last month agreed to sell its production services unit for C$42.8 million as part of restructuring efforts. The asset sale came two weeks after Tervita missed an interest payment on its 10.875 percent unsecured notes maturing in 2018.
“We are extremely pleased to announce this transaction,” Chris Synek, president and chief executive officer of Tervita, said in the statement. “This deal will strengthen Tervita, allowing us to sustain and grow our position as one of Canada’s leading and most trusted environmental solutions providers."
Tervita is seeking to recapitalize through the Canada Business Corporations Act. That’s a restructuring process in which the company involved keeps control of its operations, rather than a court-appointed monitor or receiver. Tervita said it plans to apply to the court by Oct. 14 for approval to hold meetings required for creditors and shareholders to consider and vote on the plan.
Holders of unsecured notes would receive 80 percent of the new common shares and those who execute the support agreement by Oct. 14 would get 20 percent. Holders of subordinated notes would receive a payment of C$20 million and an additional C$5 million for executing the agreement by that date. The company’s annual cash interest expense would be reduced by about C$200 million, and it would issue C$475 million of new debt, or replace or reinstate its revolving credit facility.
Legal advisers in connection with the deal are Osler, Hoskin & Harcourt LLP and Fasken Martineau DuMoulin LLP and the financial adviser is Barclays Capital Inc., Tervita said.