/THIS PRESS RELEASE IS NOT FOR DISTRIBUTION IN THE UNITED STATES OR TO U.S. NEWS AGENCIES/
CALGARY, AB, Aug. 16, 2022 /CNW/ - Tidewater Midstream and Infrastructure Ltd. ("Tidewater" or the "Company") (TSX: TWM) is pleased to announce the successful closing of its previously announced refinancing plan, consisting of a $130 million increase in the size of its Senior Credit Facility to $550 million and an approximately $92.5 million equity offering, fully funding the redemption of its $125 million senior unsecured notes due December 19, 2022 and repayment of its $20 million second lien term loan due October 31, 2022.? The completion of the refinancing plan simplifies the balance sheet, lowers Tidewater's leverage and cost of capital, extends the Company's debt maturity profile and provides significant additional liquidity from the increase in the size of the Senior Credit Facility. Proceeds from the offering coupled with underwriter's over-allotment option exercise have enabled Tidewater to cancel its initially proposed second lien facility, helping to reduce the Company's cost of capital and simplify its capital structure.
The refinancing plan consisted of a bought deal equity offering of 48,392,000 units of the Company (the "Units" as defined below) at a price of $1.20 per Unit (the "Offering Price") for aggregate gross proceeds of approximately $58 million (the "Public Offering"), a concurrent offering of 28,750,000 Units to Birch Hill Private Equity Partners Management Inc., LP and certain affiliated entities controlled by ?Birch Hill, (collectively, "Birch Hill")?, funds managed and advised by Kicking Horse Capital Inc. ("Kicking Horse Funds" and "Kicking Horse" respectively) and officers of the Company at the Offering Price for aggregate gross proceeds of $34.5 million on a non-brokered private placement basis (the "Private Placement") (the Private Placement, together with the Public Offering, the "Offering"). The Company increased the size of its credit facility by ?approximately 30% to ??$550 million, with the facility's maturity date remaining unchanged at ?August 18, 2024 through an expanded syndicate of lenders that include two of Canada's largest banks. The previously announced upsizing of the Public Offering coupled with Underwriters' (as defined below) over-allotment option exercise have enabled Tidewater to cancel its initially proposed second lien facility from Birch Hill.
Each Unit is comprised of one common share of the Company (each a "Common Share") and one-?half of one common share purchase warrant (each full warrant, a "Warrant"). Each Warrant entitles ?the holder to acquire one Common Share from the Company at a price of $1.44 per Common Share ?until August 16, 2024.? The Warrants issued in connection with the Public Offering are expected to begin trading on or about August ??16, 2022?.
The Public Offering was sold on a bought deal basis to a syndicate of underwriters led by CIBC Capital Markets, National Bank Financial Inc., RBC Dominion Securities Inc., and ATB Capital Markets Inc. and including Canaccord Genuity Corp., Acumen Capital Finance Partners ?Limited, iA Private Wealth Inc., Raymond James Ltd., INFOR Financial Inc. and PI Financial Corp. (collectively, ? the "Underwriters"). ?
The Offering was completed pursuant to a short form prospectus dated August 9, 2022 (the ???"Prospectus") filed in each of the provinces of Canada, and in the United States on a private placement basis to ??qualified institutional buyers pursuant to an exemption from registration requirements in Rule 144A of ??the United States Securities Act of 1933, as amended (the "U.S. Securities Act"). The Offering is subject ??to the final acceptance of the TSX, which has conditionally accepted the Offering. ?
In connection with the financing plan and the investment by Kicking Horse in the Private ?Placement, Thomas P. Dea has joined the Board of Directors of the Company. Mr. Dea is the President and Chief Executive Officer of Kicking ?Horse, a Toronto-based investment manager focused on concentrated investment strategies in public equities, distressed debt, and special situations.
The Company and Kicking ?Horse have entered into a board nomination agreement whereby the Company will agree to nominate Mr. Dea, or ?another Kicking Horse nominee, so long as the Kicking Horse Funds hold at least 2% of the issued and outstanding ?Common Shares.?
In addition, Kicking Horse shall be entitled to participate in future share issuances in order to maintain a share ownership position of approximately 4%. The Company has entered into a similar agreement with Birch Hill which allows Birch Hill to participate in future share issuances in order to maintain its current share ownership position of approximately 23%.? Each of the subscribers under the Private Placement has until September 16, 2022 to acquire up to an additional 15% of the Units they acquired under the Concurrent Private Placement (the "Placement Over-Allotment Option")?. As such, up to an additional aggregate of 4,312,500 Units may be issued by the Company prior to September 16, 2022 under the Placement Over-Allotment Option?.
The involvement of management and Birch Hill in the Offering are "related party transactions" ?within the meaning of MI 61-101 and the Company is relying on the exemptions in sections 5.5(a) and 5.7(a) [Fair ?Market Value Not More Than 25% of Market Capitalization] of MI 61-101 in connection with such transactions, as the ?aggregate fair market value of such transactions does not exceed 25% of the Company's current market capitalization, as determined in accordance with MI 61-101?.? Readers are directed to the Material Change Report filed on SEDAR on August 8, 2022 for further information relating to the "related party transactions" involving Birch Hill and management. Readers are also directed to the Early Warning Report filed on SEDAR by Birch Hill on August 2, 2022 for more information regarding the Birch Hill holdings.
Stifel FirstEnergy acted as financial advisor to the special committee of the board of directors in relation to the Company's refinancing plan.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in the United States or in any other jurisdiction in which such offer, solicitation or sale would be unlawful. The securities have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements thereunder.
Tidewater is traded on the TSX under the symbol "TWM". Tidewater's business objective is to build a diversified midstream and infrastructure company in the North American natural gas, natural gas liquids, crude oil, refined product, and renewable energy value chain. Its strategy is to profitably grow and create shareholder value through the acquisition and development of conventional and renewable energy infrastructure. To achieve its business objective, Tidewater is focused on providing customers with a full service, vertically integrated value chain through the acquisition and development of energy infrastructure, including downstream facilities, natural gas processing facilities, natural gas liquids infrastructure, pipelines, railcars, export terminals, storage, and various renewable initiatives. To complement its infrastructure asset base, the Company also markets crude, refined product, natural gas, NGLs and renewable products and services to customers across North America.
Tidewater is a majority shareholder in Tidewater Renewables, a multi-faceted, energy transition company focusing on the production of low carbon fuels. Tidewater Renewables' common shares are publicly traded on the TSX under the symbol "LCFS".
Throughout this press release and in other materials disclosed by the Company, Tidewater uses a number of financial measures when assessing its results and measuring overall performance. The intent of non-GAAP measures and ratios is to provide additional useful information to investors and analysts. Certain of these financial measures do not have a standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other entities. As such, these measures should not be considered in isolation or used as a substitute for measures of performance prepared in accordance with GAAP. For more information with respect to financial measures which have not been defined by GAAP, including reconciliations to the closest comparable GAAP measure, see the "Non-GAAP Measures" section of Tidewater's most recent MD&A which is available on SEDAR.
Non-GAAP Financial Measures
Consolidated Adjusted EBITDA is calculated as income (or loss) before finance costs, taxes, depreciation, share-based compensation, unrealized gains/losses on derivative contracts, non-cash items, transaction costs, lease payments under IFRS 16 Leases and other items considered non-recurring in nature plus the Company's proportionate share of EBITDA in their equity investments. Consolidated Adjusted EBITDA is used by management to set objectives, make operating and capital investment decisions, monitor debt covenants and assess performance. In addition to its use by management, Tidewater also believes consolidated Adjusted EBITDA is a measure widely used by securities analysts, investors, lending institutions, and others to evaluate the financial performance of the Company and other companies in the midstream industry. The Company issues guidance on this key measure. As a result, consolidated Adjusted EBITDA is presented as a relevant measure in the MD&A to assist analysts and readers in assessing the performance of the Company as seen from management's perspective.
Capital Management Measures
Consolidated net debt is used by the Company to monitor its capital structure and financing requirements. It is also used as a measure of the Company's overall financial strength. Consolidated net debt is defined as bank debt, notes payable and convertible debentures, less cash. In addition to reviewing consolidated net debt, management reviews deconsolidated net debt to highlight the Company's financial flexibility, balance sheet strength and leverage. Deconsolidated net debt is calculated as consolidated net debt less the portion attributable to Tidewater Renewables. Consolidated and deconsolidated net debt exclude working capital, lease liabilities and derivative contracts as the Company monitors its capital structure based on deconsolidated net debt to deconsolidated Adjusted EBITDA, consistent with its credit facility covenants.
FORWARD LOOKING STATEMENTS
Certain statements contained in this press release constitute forward-looking statements and forward-looking information (collectively referred to herein as, "forward-looking statements") within the meaning of applicable Canadian securities laws. Such forward-looking statements relate to future events, conditions or future financial performance of Tidewater based on future economic conditions and courses of action. All statements other than statements of historical fact may be forward-looking statements. Such forward-looking statements are often, but not always, identified by the use of any words such as "seek", "anticipate", "budget", "plan", "continue", "forecast", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe", "will likely result", "are expected to", "will continue", "is anticipated", "believes", "estimated", "intends", "plans", "projection", "outlook" and similar expressions. These statements involve known and unknown risks, assumptions, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Company believes the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this press release should not be unduly relied upon.
In particular, this press release contains forward-looking statements pertaining to but not limited to the following:
Although the forward-looking statements contained in this press release are based upon assumptions which management of the Company believes to be reasonable, the Company cannot assure investors that actual results will be consistent with these forward-looking statements. Any forward-looking information contained in this press release represents expectations as of the date of this press release and are subject to change after such date. However, the Company is under no obligation (and the Company expressly disclaims any such obligation) to update or alter any statements containing forward-looking information, the factors or assumptions underlying them, whether as a result of new information, future events or otherwise, except as required by law. All the forward-looking information in this press release is qualified by the cautionary statements herein.
Forward-looking information is provided herein for the purpose of giving information about the Offering referred to above. Readers are cautioned that such information may not be appropriate for other purposes. The trading of the Warrants and completion of the proposed Placement Over-Allotment Option are subject to customary closing conditions, termination rights and other risks and uncertainties. Accordingly, there can be no assurance that the proposed trading of the Warrants and completion of the proposed Placement Over-Allotment will occur, or that they will occur on the terms and conditions contemplated in this press release. Further information about factors affecting forward-looking statements and management's assumptions and analysis thereof is available in filings made by the Company with Canadian provincial securities commissions available on the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com.
PRELIMINARY FINANCIAL INFORMATION
The Company's expectations for its net income estimates, its Consolidated Adjusted EBITDA, Tidewater Renewables' net income and Adjusted EBITDA (see "Non-GAAP Measures") are based on, among other things, the Company's and Tidewater Renewables' anticipated financial results for the three and six month period ended June 30, 2022. The Company's and Tidewater Renewables' anticipated financial results are unaudited and preliminary estimates that: (i) represent the most current information available to management as of the date of hereof; (ii) are subject to completion of interim review procedures that could result in significant changes to the estimated amounts; and (iii) do not present all information necessary for an understanding of the Company's or Tidewater Renewables' financial condition as of, and the Company's or Tidewater Renewables' results of operations for, such periods. The anticipated financial results are subject to the same limitations and risks as discussed under "Forward Looking Statements" above. Accordingly, the Company's and Tidewater Renewables' anticipated financial results for such periods may change upon the completion and approval of the financial statements for such periods and the changes could be material.
SOURCE Tidewater Midstream and Infrastructure Ltd.
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