Investors: 2009 Press Releases
HSE Enters Into New Senior Credit Facility
NEWS RELEASE - July 20, 2009
HSE Integrated Ltd. (“HSE” or the “Company”) today announced it has entered into an amendment of its existing credit facility with its senior lender that was scheduled to expire June 23, 2010. The new facility effectively replaces the existing facility and will expire in 364 days.
In the Management Discussion and Analysis that accompanied the financial results for the first quarter ended March 31, 2009 and released May 12, 2009, HSE disclosed that due to deteriorating business conditions, the possibility existed for a potential violation of a senior lending covenant in the next year. HSE also disclosed that discussions with its senior lender were underway and the Company anticipated a satisfactory conclusion. Although the Company was in compliance with its senior lending covenants at that time, management wanted to ensure it had adequate credit facilities available to sustain operations and capacity until such time that the economy improves. The current business environment is particularly challenging for HSE’s Oilfield health and safety services group which is heavily dependent upon the price of natural gas and related drilling, completion and workover activity.
Effective today, HSE has replaced its $25 million revolving facility and its $7.5 million operating facility with a $15 million operating facility. Although reduced, the structure of the loan is such that it is asset-based rather than cashflow-based. The original threeyear lending facility, signed in June of 2007, was created in the anticipation of continued growth and acquisitions. The replacement facility is intended to provide sufficient liquidity to see HSE through an extended Oilfield activity downturn without incurring any covenant violations. Should the need for additional credit be required for acquisitions or growth beyond that currently anticipated, the Company and its senior lender will deal with this on a case-by-case basis.
David Yager, Chairman and CEO, offered the following comments regarding HSE’s senior lending arrangements.
“Keeping in mind the highly cyclical nature of the upstream petroleum industry, HSE has always maintained a conservative approach to its total debt obligations. This has resulted in a strong balance sheet and an excellent working capital position. At a time when a significant contraction in its core Oilfield health and safety services has negatively affected the top and bottom line, this financial strength and continued access to debt capital under attractive terms will give our Company the flexibility to maintain core operations and key personnel until the economy recovers. This ensures HSE remains well-positioned for exploit the recovery when it occurs.”
HSE is an integrated, national supplier of industrial Health, Safety and Environmental services. From its head office in Calgary, Alberta, it serves its clients from field service locations in Alberta, British Columbia, Saskatchewan, Ontario, Nova Scotia, New Brunswick, Newfoundland-Labrador and Michigan. HSE also operates in Midland, Texas, through a jointly owned company called Boots & Coots HSE Services LLC. HSE trades on the TSX under the symbol “HSL”.
Forward-Looking Statements
This news release contains forward-looking information and statements (collectively “forward-looking statements”) within the meaning of applicable securities laws concerning, among other things, the Company’s prospects, expected revenues, expenses, profits, financial position, strategic direction, and growth initiatives, all of which are subject to risks, uncertainties and assumptions. These forward-looking statements are identified by their use of terms and phrases such as expect, anticipate, estimate, believe, may, will, would, could, might, intend, plan, continue, ongoing, project, objective and other similar terms and phrases. These forward-looking statements are based on certain assumptions and analyses made by the Company based on its experience and assessment of current conditions, known trends, expected future developments and other factors it believes are appropriate under the circumstances. Such forward-looking statements are subject to inherent risks and uncertainties. There is significant risk that the forward-looking statements will not prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause actual future results and events to differ materially from that expressed in the forward-looking statements. Accordingly this news release is subject to the disclaimer and qualified by the assumptions and risk factors referred to in the Management Discussion and Analysis in the 2008 first, second and third quarter reports, in the 2008 annual report, and in other filings with securities commissions in Canada as reported in the Company’s profile at www.sedar.com. Any forward-looking statements in this news release speak only as of the date of this news release. Except as required by law, the Company disclaims any intention to update or revise any forward-looking statements to reflect new events or circumstances.
Non GAAP Measures
This report makes reference to EBITDA, a measure that is not recognized under generally accepted accounting principles (GAAP). Management believes that, in addition to net earnings, EBITDA is a useful supplementary measure. EBITDA provides investors with an indication of earnings before provisions for interest, taxes, amortization, gains or losses on the disposal of property and equipment, foreign exchange gains or losses, and the non-cash effect of stock-based compensation expense. Investors should be cautioned that EBITDA should not be construed as an alternative to net earnings determined by GAAP as an indication of the Company’s performance. This method of calculating EBITDA may differ from that of other companies and accordingly may not be comparable to measures used by other companies.
HSE Integrated Ltd. trades on the TSX under the symbol “HSL”
For more information, please contact:
David Yager, Chairman & CEO Telephone: (403) 266-1833 E-Mail:
Lori McLeod-Hill, CFO Telephone: (403) 266-1833 E-Mail: lmcleod-hill@hseintegrated.com