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Trican Restructures Debt


Trican Well Services Ltd. announced February 25 it had reached restructuring terms in principle with its lenders to relieve it from any loan covenants for the rest of the year plus several other changes. A debt to market capitalization test will no longer apply. EBITDA for the last two quarters of 2015 and the first quarter of 2016 must be at least $50 million and EBITDA for the first quarter of next year $20 million. The senior debt to EBITDA ratio for Q2 2016 must be no greater than five with this test dropping on a quarterly basis over the next year to three by Q2 2017. Interest to EBITDA must be above 2.5 in Q2 2016 rising to 3.0 over the rest of next year. Total credit will be reduced, interest rates during the covenant relief period will rise, and to prevent further interest rate increases certain debt must be reduced by $150 million in the next 13 months.

While the exact details are available through the company’s public disclosure avenues, the summary is simple: lenders are working hard to get Trican through this difficult period but the company must perform to rigid and timely EBITDA performance and debt management performance criteria. How hard are the banks trying? Nobody qualified for five times EBITDA a year ago.

Trican CEO Dale Dusterhoft reported that as a result of cost cutting measures introduced in the first and second quarters of 2015, third quarter financial performance will be improved over the first half of the year.

Trican has sold its Russian operation to pay down debt so it now operates primarily in Canada and the U.S.