Enservco Signs Non-Binding Letter of Intent with Lender to Amend its Senior Revolving Credit Facility for Substantial Debt Reduction, New Working Capital Revolver and Equity

• Total bank debt would be reduced from approximately $33 million to approximately $17 million

• Bank would receive eight million shares of Enservco restricted common stock and warrants for 15 million shares of common stock in exchange for debt reduction
   
• Debt reduction would result in a $17.5 million increase in stockholders’ equity when included with Chairman’s investment fund conversion of $1.5 million of subordinated debt and accrued interest into Enservco restricted common stock

DENVER, Sept. 17, 2020 (GLOBE NEWSWIRE) -- Enservco Corporation (NYSE American: ENSV), a diversified national provider of specialized well-site services to the domestic onshore conventional and unconventional oil and gas industries, today announced it has signed a non-binding letter of intent (“LOI”) with East West Bank (“EWB”) to amend its existing senior revolving credit facility to reduce bank debt by $16 million, amend the current facility into a term loan and provide a new working capital revolving line of credit in exchange for equity in Enservco.

Under the LOI, the parties will seek to enter into a definitive agreement providing that:

EWB would reduce the current loan balance by $16 million in exchange for eight million shares of Enservco restricted common stock and 15 million common stock purchase warrants. The current credit facility would be amended to reflect a term loan with a balance of approximately $17 million and a new working capital revolving line of credit with no initial balance and a limit of $1 million, both bearing interest at an annual rate of 8.25%, of which 3% will accumulate and be paid at maturity on October 15, 2021. The term loan would be interest only with potential for principal payments in the event Enservco reaches certain profit metrics and would mature in October 2021. The revolving line of credit would be based on Enservco’s eligible receivables.

The restricted common stock issued to EWB will be registered for resale by Enservco with the SEC to be tradeable within six months. The warrants will be exercisable beginning October 15, 2021, at a price of $0.25 per common share, an approximate 92% premium to Enservco’s closing stock price on September 16, 2020.

Enservco and EWB seek to close the debt restructuring in October 2020.

The financial impact on Enservco of this proposed amendment and the recent Cross River conversion of half of its subordinated debt and accrued interest into equity is expected to be substantial. Upon completion, based on its balance sheet as of June 30, 2020, Enservco will have reduced its total debt by nearly 52% – from $35.5 million to $18.5 million. In addition, the Company’s stockholders’ equity would experience a positive swing of approximately $17.5 million.