Source Energy Secures Major Credit Facilities for Growth Plans

Source Energy Services Boosts Financial Standing with New Credit Deals

Source Energy Services Ltd. has taken a significant step toward strengthening its financial position by securing a comprehensive refinancing of its credit facilities. The company, identified by its stock ticker TSX: SHLE, has entered into a substantial five-year term loan valued at $135 million (USD) in partnership with Silver Point Finance, LLC. Additionally, Source has secured a revolving asset-backed loan facility with the Canadian Imperial Bank of Commerce amounting to $40 million (CND). This strategic move allows Source to further its operational capacity and liquidity.

Components of the Refinancing Package

The refinancing agreement is rich in benefits for Source. The new financial structure will lead to a reduced cost of borrowing, enhancing the company’s overall financial flexibility. Furthermore, Source boasts an undrawn CIBC ABL facility and maintains approximately $10 million in cash on hand. The new credit facilities are expected to improve Source's leverage position and extend loan maturities all the way to 2029.

Leadership Insights on the New Financing

Derren Newell, the Chief Financial Officer, expressed optimism about the new arrangements, stating, “These credit facilities will undoubtedly reinforce our balance sheet and liquidity, allowing us to pursue long-term growth strategies while reducing our debt levels.” The partnership with Silver Point and CIBC marks a pivotal chapter in Source's journey towards sustainable growth.

Understanding the Term Loan and ABL Facility

The term loan with Silver Point will mature on December 20, 2029, and carries an interest rate tied to Term SOFR plus an applicable margin. As is customary with such facilities, the loan agreement is subject to standard covenants and principal amortization schedules.

The Canadian Imperial Bank of Commerce's ABL facility, on the other hand, is currently undrawn and will mature on December 20, 2027. It can be executed in either Canadian or U.S. dollar draws. The interest rates on this facility are determined through various benchmarks, including Prime and CORRA, emphasizing the flexibility offered to Source in managing its financial strategy.

Redemption of Senior Secured Notes

In a pivotal move, Source has issued a notice of redemption for all its outstanding Senior Secured Notes, amounting to $140.5 million. The redemption is set for a date in the future, and noteholders will receive a complete principal amount along with accrued and unpaid interest. This action is part of the company's strategy to streamline its capital structure and enhance cash flow management.

Guidelines for Beneficial Holders

For those holding these Notes, further details regarding the terms and conditions are provided in the Redemption Notice distributed by Computershare Trust Company. Any questions related to this redemption should be directed to the respective brokerage firms or financial institutions involved.

About Source Energy Services

Source Energy is dedicated to the integrated production and distribution of frac sand, as well as other bulk completion materials. Their operations span multiple locations, including Wisconsin and Peace River, boasting an efficient logistics network supported by trucking operations and proprietary sand handling systems. This cohesive structure allows Source to deliver reliable support to customers, fulfilling their demands for frac sand and completion materials when needed.

About Silver Point and CIBC

Silver Point has established itself as a pivotal player in the credit investment arena since 2002. With a seasoned team overseeing a substantial volume of assets, it specializes in providing tailored financing solutions to middle-market companies. Meanwhile, CIBC serves millions of clients, offering a comprehensive range of financial services across North America, solidifying its role as a trusted financial institution.

Frequently Asked Questions

What does the new financing mean for Source Energy Services?

This financing offers Source improved liquidity, lower borrowing costs, and extended maturities, positioning them for future growth.

How does Source Energy's production strategy support its financial health?

Source's integrated approach to frac sand production and logistics enhances operational efficiency and reliability, bolstering its financial standing.

Who are the partners involved in Source Energy's new credit facilities?

The new credit facilities involve partnerships with Silver Point Finance, LLC and the Canadian Imperial Bank of Commerce.

What steps is Source taking regarding its existing debts?

Source is redeeming its outstanding Senior Secured Notes as part of a strategy to streamline its capital structure and improve cash flow.

How can investors obtain more information regarding the Redemption Notice?

Investors can consult their brokerage firms for specific details about the Redemption Notice as distributed by Computershare Trust Company.

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