Petrowest lenders offer flexibility as company prepares for Site C work project

CALGARY – Petrowest Corp. (TSX:PRW) says it’s working towards providing a 2016 budget to lenders by mid-January to get relief from some of the company’s financial commitments.

The lenders have granted waivers on its non-compliant debt covenants until Feb. 29, if the budget is delivered by Jan 18.

A company spokesman says the budget has been delayed by work related to a major BC Hydro contract announced Dec. 21.

Petrowest is a member of Peace River Hydro Partners, a consortium that has been chosen by BC Hydro to do the main civil works for the Site C Clean Energy Project, which includes construction of a dam and a concrete foundation for a generating station.

The work is set to begin in early January.

The non-compliant items under the lending agreements relate to Petrowest’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), a measure of earnings that has fallen dramatically in 2015.

One of Petrowest’s covenants is to maintain a minimum of $20.7 million adjusted EBITDA for four consecutive quarters.

As of Sept. 30, the Calgary-based company had generated $10.62 million of adjusted EBITDA for the first nine months of 2015, down from $27.6 million in the comparable period for 2014.

Petrowest has been transforming itself into a diversified business, resulting in a decline in revenue from the energy sector and more from work at the Site C project. It operates primarily in northern Alberta and northeastern B.C.