Source Energy Services Completes New Credit Facilities and Bond Redemption

CALGARY, Alberta, Dec. 20, 2024 – Source Energy Services Ltd. (Source) (TSX: SHLE) has announced significant updates regarding its financial structure. The company has successfully refinanced its credit facilities, securing a new five-year $135 million (USD) term loan, referred to as the Term Loan, through Silver Point Finance, LLC. In addition, Source has also set up a $40 million (CND) revolving asset-backed loan facility with the Canadian Imperial Bank of Commerce (CIBC). This funding will be used to redeem existing senior secured notes and pay off current borrowings.

Refinancing Highlights

Through this refinancing package, Source Energy Services aims to achieve several key benefits, including:

• Lower borrowing costs.
• Increased financial flexibility.
• Improved liquidity with access to undrawn funds from the CIBC ABL and an available cash balance of around $10 million.
• Maintenance of its current leverage position.
• Extended debt maturities until 2029.

CEO Remarks

Derren Newell, Chief Financial Officer of Source, expressed optimism regarding the refinancing efforts: "The new credit facilities strengthen our balance sheet and enhance our liquidity, allowing us to focus on executing our long-term growth strategies while continuing to reduce our debt levels." He also acknowledged the support from Silver Point and CIBC for this new chapter in the company’s journey.

Details About the Loans

The Term Loan provided by Silver Point will mature on December 20, 2029, and carries an interest rate tied to Term SOFR plus an applicable margin. It includes standard covenants and principal amortization typical for such financing options.

On the other hand, the CIBC ABL facility, which matures on December 20, 2027, remains undrawn at the time of this announcement. It allows for borrowing in either Canadian or U.S. dollars with interest rates determined based on various benchmarks, including Prime and SOFR. The facility also employs a borrowing base formula relating to accounts receivable and inventory.

Redemption of Senior Secured Notes

Alongside the new financing, Source Energy Services issued a notice to redeem its outstanding senior secured notes, with a total principal value of $140.5 million. The redemption is set to occur on January 20, 2024, at a price equal to the principal amount along with accrued interest. Beneficial holders needing specifics regarding this redemption should contact their brokerage or financial institution.

Company Background

Source Energy Services focuses on the integrated production and distribution of frac sand and other bulk completion materials. The company utilizes its mines and processing facilities located in Wisconsin and Peace River, in addition to its terminal network and logistics capabilities to ensure reliable deliveries to customers.

Conclusion

With these recent developments, Source Energy Services continues to strengthen its financial foundation, making it well-positioned for future growth and operational success.

finance, loans, redeemption