THE WOODLANDS, Texas,
June 15, 2016 /PRNewswire/ -- TETRA
Technologies, Inc. (NYSE:TTI) (the "Company" or "TETRA") today
provided an update regarding the actions it previously disclosed as
being undertaken to enhance its balance sheet and amend its debt
covenants. The Company has previously indicated that
the following actions have been taken:
- Covenants under CSI Compressco's credit facility were amended
on May 25, 2016 which increased the
leverage ratio covenant to 5.75X from December 31, 2016 to September 30, 2017, with subsequent step
downs.
- TETRA tendered for and retired at par $100 million of its unsecured senior notes. The
purchases of these notes were funded by loans under the Company's
existing credit facility. After completion of this tender offer,
the next maturity of TETRA's long term debt is in April, 2019.
Additionally, TETRA previously disclosed that it was in
discussions with its lenders to amend its existing credit agreement
to, among other things, (a) replace the interest coverage ratio
covenant with a fixed charge coverage ratio covenant, (b) increase
the revolver leverage ratio from 3.0X to 4.0X from June 30, 2016 through March 31, 2018, with subsequent step downs, and
(c) pledge collateral to secure the obligations to the lender
group. TETRA believes it will be able to achieve this without
a reduction in the $225 million
commitment level under the revolving credit facility. TETRA
was recently notified by the administrative agent under its credit
agreement that a majority of the bank lenders have approved the
anticipated amendments subject to acceptable documentation and an
agreement with funds managed or advised by GSO Capital Partners on
comparable amendments. Additionally, TETRA recently
received a non-binding term sheet from funds managed or
advised by GSO Capital Partners to amend the terms of its
$125 million unsecured notes
without an increase in the interest payable on the notes to
(a) increase the leverage ratio from 3.5X to 4.5X through
March 31, 2018, with subsequent step
downs, (b) to replace the interest coverage ratio covenant with a
fixed charge coverage ratio covenant, and (c) to require a pledge
of collateral to secure the obligations under the notes, all
subject to acceptable documentation. Although TETRA believes that
it will be able to finalize the documentation and complete the
amendments with its lenders, there is no assurance that it will be
successful in amending its credit agreement or note purchase
agreement on terms reasonably acceptable to it or at all.
While TETRA previously disclosed that as of March 31, 2016, its leverage ratio under its
credit agreement was 2.08x as compared to 3.0x as required under
the credit agreement, TETRA also previously indicated that it was
reasonably possible that one of its financial covenants under its
credit agreement would not be achieved as of September 30, 2016. Conditions have changed
since this was previously reported and TETRA now believes that
there is a significant level of uncertainty as to whether it will
be in compliance with the interest coverage ratio covenant under
its credit agreement as of September 30,
2016. This uncertainty raises a substantial doubt about
TETRA's ability to continue as a going concern if TETRA is unable
to complete the anticipated amendments with its lenders. The
interest coverage ratio covenant includes a computation for
maintenance capital expenditures that is significantly above what
the company is actually expending or is expected to expend which
results in the expected covenant breach. This interest
coverage ratio covenant is the covenant that TETRA is in
discussions with its lenders, as noted above, to replace with a
more conventional fixed charge coverage ratio covenant.
Stuart M. Brightman, TETRA's
President and Chief Executive Officer, stated, "We are pleased with
the progress to-date in strengthening our balance sheet with the
retirement of the private notes, the amendment of the CSI
Compressco revolver, and the engagement with GSO Capital Partners
and our bank revolver group to amend our covenants to conform to
our actual operations. If we are successful in completing
these anticipated amendments, we believe that these changes will
provide us the financial wherewithal to maneuver through this
downturn and be prepared to respond rapidly when activity levels
rebound by funding working capital and growth capital."
Company Overview and Forward Looking Statements
TETRA is a geographically diversified oil and gas services
company, focused on completion fluids and associated products and
services, water management, frac flowback, production well testing,
offshore rig cooling, compression services and equipment, and
selected offshore services including well plugging and abandonment,
decommissioning, and diving. TETRA owns an equity interest,
including all of the general partner interest, in CSI Compressco LP
(NASDAQ:CCLP), a master limited partnership.
This press release includes certain statements that are deemed
to be forward-looking statements. Generally, the use of words such
as "may," "expect," "intend," "estimate," "projects," "anticipate,"
"believe," "assume," "could," "should," "plans," "targets" or
similar expressions that convey the uncertainty of future events,
activities, expectations or outcomes identify forward-looking
statements that the Company intends to be included within the safe
harbor protections provided by the federal securities laws. These
forward-looking statements include statements concerning the terms
of anticipated amendments to the Company's debt agreements and
expectations regarding the ability to complete such amendments, as
well as the Company's beliefs, expectations, plans, goals, future
events and performance, and other statements that are not purely
historical. These forward-looking statements are based on certain
assumptions and analyses made by the Company in light of its
experience and its perception of historical trends, current
conditions, expected future developments and other factors it
believes are appropriate in the circumstances. Such statements are
subject to a number of risks and uncertainties, many of which are
beyond the control of the Company, including adverse changes in the
credit market. Investors are cautioned that any such statements are
not guarantees of future performances or results and that actual
results or developments may differ materially from those projected
in the forward-looking statements. Some of the factors that could
affect actual results are described in the section titled "Risk
Factors" contained in the Company's Annual Report on Form 10-K for
the year ended December 31, 2015, as
well as other risks identified from time to time in its reports on
Form 10-Q and Form 8-K filed with the Securities and Exchange
Commission.
![TETRA Technologies, Inc. logo. TETRA Technologies, Inc. logo.](http://photos.prnewswire.com/prnvar/20100917/TTLOGO)
Logo - http://photos.prnewswire.com/prnh/20100917/TTLOGO
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/tetra-technologies-inc-provides-update-on-amending-debt-covenants-300285509.html
SOURCE TETRA Technologies, Inc.