Essential Energy Services Announces Extension and Amendment of Its Credit Facility - Seite 2

After the Covenant Relief Period, the borrowing base will be eliminated if the following conditions are met:

• the fixed asset lending value is greater than $50 million; and
• the funded debt to bank EBITDA ratio is less than or equal to 2.75x.

Financial Covenants after the Covenant Relief Period
The financial covenants after the Covenant Relief Period include:

• the funded debt to capitalization ratio cannot exceed 50%;
• the funded debt to bank EBITDA ratio cannot exceed 3.5x; and
• the fixed charge coverage ratio must not be less than 1.25x.

Debt Outstanding
On July 9, 2020, Essential had a cash balance of $6.6 million, net of long-term debt.

With cash exceeding long-term debt, Essential is in a strong financial position. Debt, excluding IFRS 16 lease obligations, was low in the second quarter. As activity was slow, due to seasonality and COVID-19 economic disruption, receivables were collected and expenses were low. Debt is anticipated to increase when activity increases as accounts receivable accumulate. The outlook for activity for the remainder of 2020 remains uncertain. Essential announced cost cutting steps early in the second quarter and a modest capital spending forecast for 2020. Amending the credit facility is expected to proactively provide Essential with sufficient liquidity and additional financial flexibility through to the end of 2021 to navigate these uncertain times.

FORWARD LOOKING STATEMENT

This news release contains “forward-looking statements” and “forward-looking information” (collectively referred to herein as “forward-looking statements”) within the meaning of applicable securities legislation. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words “expects”, “plans”, “anticipates”, “believes”, “intends”, “estimates”, “continues”, “projects”, “potential”, “budget” and similar expressions, or are events or conditions that “will”, “would”, “may”, “could” or “should” occur or be achieved. This news release contains forward-looking statements pertaining to debt levels, the outlook for activity and the Amended Credit Facility providing Essential with sufficient liquidity and financial flexibility.