Whitehorn Merchant Capital Inc. recently assisted Leader Energy Services Ltd. (“Leader”) in replacing its convertible debentures with a $15.0 million subordinated debt facility. Leader is a publicly traded oilfield service company focused on providing coiled tubing and nitrogen pumping services.
Leader engaged Whitehorn to find a financing alternative to remove the inherent ceiling on its share price in the public market. The ceiling was caused by the significant dilution the convertible debentures. In addition to finding a financing provider, Whitehorn assisted Leader with negotiating the terms of the prepayment with the holders of the convertible debentures.
Whitehorn provided Leader with multiple term sheets after only three weeks of actively marketing the opportunity. The successful investor provided a very flexible facility including the following:
Three year facility, bearing interest at 12.0% per annum, payable quarterly;
Repayable at any time without penalty; and
An equity component in the form of three year purchase warrants with an exercise price equal to a 15% premium over the then current market price.
The new facility is significantly less dilutive than the convertible debentures, which could have been converted into over 75% of the common shares of Leader. The new facility’s equity component will represent less than a 15.0% equity stake, upon exercise of the warrant.
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