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High Arctic reaches agreement with its largest creditors

High Arctic Energy Services Inc. (TSX: HWO) has agreed with its two largest creditors to convert debt and other obligations into equity.

High Arctic Energy Services Inc. (TSX: HWO) has agreed with its two largest creditors to convert debt and other obligations into equity.

The Red Deer-based company plans to issue nearly 33 million common shares to founder and former director Jed Wood and J.M. Wood Investments Ltd. at a price of 25 cents each to settle outstanding debt and claims. That reflects a settlement value of $8.2 million.

It is also proposing to convert outstanding unsecured convertible debentures worth $27.9 million into 111.6 million common shares at a price of 25 cents each, and to issue 12.1 million common shares at the same price in settlement of interest owing, and 12.6 million common shares to senior lenders in exchange for a one-year term loan.

The restructuring plan was announced on March 25, with additional details released on Friday. It is subject to several conditions, including approval by shareholders and the Toronto Stock Exchange.

High Arctic has been in default of its senior credit facilities since last June.

If it proceeds, the deal would leave the Wood Group with approximately 23.6 per cent of High Arctic’s outstanding common shares, the Cyrus Group with 47.5 per cent and other holders of convertible debentures with 10 per cent.

High Arctic provides specialized oilfield equipment and services. It has domestic operations throughout Western Canada and international operations primarily in Papua New Guinea.