Select Water Solutions Strengthens Financial Position
Select Water Solutions, Inc. (NYSE: WTTR), a leading provider of sustainable water and technology solutions for the energy industry, has proudly announced the closing of a new five-year sustainability-linked credit facility valued at $550 million. This credit line consists of a $300 million revolving credit commitment and a $250 million term loan aimed at boosting the company’s financial stability.
Details of the Credit Facility
The newly established credit facility allows Select Water Solutions to secure important liquidity to support its strategic growth initiatives. With both the revolving credit and term loan components set for a five-year tenor, this credit arrangement enhances the company’s long-term financial outlook significantly. Additionally, the facility includes the potential for expansion, which envisions the inclusion of another $200 million through further commitments from lenders over the next four years.
Financial Impact of the Credit Facility
As the closing date for the credit facility was reached, Select had no outstanding borrowings under the revolving credit and around $20 million in letters of credit. The term loan was fully funded, allowing for an excellent starting point as Select Water Solutions transitions into the new financial environment. This also marks the complete repayment of obligations under its previous credit agreement.
Sustainability Commitment
A remarkable feature of the credit facility is its sustainability linkage. Select’s commitment to environmental stewardship is reinforced through sustainability-linked targets that reward the company with lower borrowing costs for achieving predetermined goals in water recycling and safety standards. These targets not only support growth but also enforce accountability in environmental matters.
Leadership Insights
John Schmitz, the Chairman and CEO of Select, expressed enthusiasm for the facility, noting its potential to bolster the company's balance sheet while expanding liquidity. He emphasized that the facility aligns with the company's goals of enhancing large-scale water infrastructure and advancing innovative water recycling technologies.
He further highlighted ongoing projects that amount to over $150 million, showcasing a robust backlog of contracted revenues poised to deliver consistent cash flows and returns for shareholders in the upcoming years. This credit facility is pivotal for enabling Select to maintain its competitive edge while ensuring safe and sustainable solutions for its clientele.
Future Growth Prospects
Chris George, Executive Vice President and CFO, reiterated the facility's strategic alignment with the company’s intent to pursue investments backed by long-term contracts, maintaining a sound financial profile. The newfound liquidity extends through 2030, setting the stage for Select to scale its growing Water Infrastructure segment, which has substantially increased its profitability over the last couple of years.
Building a Robust Infrastructure
With a significant liquidity position of almost $400 million, Select is well-prepared to seize both organic and acquisition growth opportunities. The sustainability-linked structure of the facility also underscores the company’s commitment to environmental excellence and safety, core values that set Select apart in the industry.
Support from Financial Institutions
The credit facility's arrangement saw leadership from Bank of America as the Lead Arranger, with other esteemed institutions joining as Joint Lead Arrangers. This collaborative effort demonstrates strong institutional support for Select Water Solutions. The legal counsel for this impactful arrangement was provided by Vinson & Elkins LLP for Select, while Winston & Strawn LLP represented Bank of America and the lending participants.
About Select Water Solutions
Select Water Solutions is recognized for offering innovative, sustainable water solutions to the energy sector, firmly rooted in the management of critical water resources. The company prides itself on advancing responsible and environmentally sound practices, ensuring that water management enhances both operational success and environmental protection.
Frequently Asked Questions
What is the purpose of the $550 million credit facility?
The credit facility aims to bolster Select Water Solutions' financial position and support its strategic growth initiatives in sustainable water management.
Who arranged the credit facility for Select Water Solutions?
Bank of America acted as the Lead Arranger and Agent for the credit facility, with participation from other financial institutions.
What are the key features of the sustainability-linked credit facility?
The facility incorporates sustainability-linked targets that reward the company for achieving milestones in water recycling and safety, thus promoting environmental responsibility.
How does this credit facility affect Select's future?
This new facility enhances Select’s liquidity and financial stability, enabling continued growth and expansion in its operations through environmental innovation.
What is Select Water Solutions known for?
The company is renowned for providing sustainable water and technology solutions tailored for the energy industry, emphasizing environmental stewardship and safety.
