RADNOR, PENNSYLVANIA - August 6, 2015 - Niska Gas
Storage Partners LLC (NYSE:NKA) ("Niska" or "the Company") reported
today its financial results for the three months ended June 30,
2015 and provided an update on its recently announced merger
transaction with Brookfield Infrastructure.
Financial Results
Niska's Adjusted EBITDA (as defined below) for the
quarter ended June 30, 2015 was $1.0 million, compared to $35.8
million for the quarter ended June 30, 2014. Cash Available
for Distribution was negative $11.3 million for the quarter
compared to positive $24.0 million in the quarter ended June 30,
2014. Niska's net loss for the quarter ended June 30, 2015
was $37.4 million ($0.97 per common unit), compared to a net loss
of $19.0 million ($0.52 per common unit) for the quarter ended June
30, 2014.
Adjusted EBITDA and Cash Available for
Distribution for the fiscal quarters ended June 30, 2015 and June
30, 2014 include benefits from previous inventory write-downs of
$22.7 million and $4.3 million, respectively. Results for the prior
year fiscal quarter ended June 30, 2014 include the previously
disclosed one-time recognition of $26.0 million in revenues related
to the termination and renegotiation of a long-term contract with
TransCanada Gas Storage Partnership, Niska's largest volumetric
customer.
The Company's Fixed Charge Coverage Ratio
("FCCR"), which is included in its debt agreements and measures
Adjusted EBITDA compared to fixed charges (substantially all of
which is interest expense), was 0.6 to 1.0 for the quarter ended
June 30, 2015. When the fixed charge coverage ratio is below 1.1 to
1.0, the Company is unable to borrow the last 15% of availability
under the revolving credit facility.
Merger Transaction
On June 14, 2015, the Company announced that it
and its managing member, Niska Gas Storage Management LLC, had
entered into a definitive agreement to be acquired by Brookfield
Infrastructure and its institutional partners ("Brookfield").
Brookfield will acquire all of Niska's outstanding common units for
$4.225 per common unit in cash and will acquire the managing member
and the incentive distribution rights in Niska. The closing of the
transaction is expected to occur in the second half of calendar
2016 and is subject to customary closing conditions and regulatory
approvals. A period provided for in the agreement for unsolicited
consideration of alternative acquisition proposals expired on July
29, 2015.
On July 28, 2015, the Company entered into a
definitive agreement whereby Brookfield committed to lend up to
$50.0 million to Niska under a short term credit facility to be
used for working capital purposes. The credit facility is
guaranteed by a subsidiary of the Carlyle/Riverstone Funds and is
subordinated to the Company's existing Senior Notes and $400.0
million credit agreement. The Company filed on 8-K on July 31, 2015
outlining the definitive terms of the agreement.
The Company has also initiated various regulatory
approval processes, including:
-
Customary filings required under the Canadian
Competition Act;
-
Hart Scott Rodino Act filings; and
-
An application to the California Public
Utilities Commission in support of the regulatory approval needed
to transfer ownership of the Wild Goose facility.
Distribution
The Company has agreed not to make earnings
distributions until the earlier of the date of closing or
termination of the merger transaction. Accordingly, no distribution
will be paid with respect to the fiscal quarter ended June 30,
2015.
Form 10-Q
A copy of the Company's current Form 10-Q can be
found on Niska's website, www.niskapartners.com under "Investor
Center-SEC Filings." Niska unitholders may receive hard
copies of these documents free of charge upon request by emailing
ir@niskapartners.com or by calling 403-513-8650.
About Niska
Niska is a growth-oriented midstream natural gas
services provider with operations focused on owning, operating,
developing and acquiring midstream energy assets in the United
States and Canada. The Company is currently the largest
independent owner and operator of natural gas storage in North
America, with strategically located assets in key natural gas
producing and consuming regions. Niska owns and operates
three natural gas storage facilities, including the AECO
HubTM in Alberta,
Canada; Wild Goose in California; and Salt Plains in Oklahoma. The
Company also contracts for natural gas storage capacity in the U.S.
Mid-continent.
Forward Looking
Statements
This press release includes "forward-looking
statements" - that is, statements related to future, not past,
events. Forward-looking statements are based on current
expectations and include any statement that does not directly
relate to a current or historical fact. In this context,
forward-looking statements often address our expected future
business and financial performance, and often contain words such as
"anticipate," "believe," "intend," "expect," "plan," "will" or
other similar words. These forward-looking statements involve
certain risks and uncertainties that ultimately may not prove to be
accurate. Among these risks and uncertainties are (1) changes
in general economic conditions; (2) our level of exposure to the
market value of natural gas storage services which could adversely
affect our revenues and cash available to make distributions; (3)
competitive conditions in our industry; (4) actions taken by
third-party operators, processors and transporters; (5) changes in
the availability and cost of capital; (6) operating hazards,
natural disasters, weather-related delays, casualty losses and
other matters beyond our control; (7) the effects of existing and
future laws and governmental regulations; (8) the effects of future
litigation; and (9) other factors and uncertainties that are
unknown or unpredictable could also have a materially adverse
effect on future results. For further discussion of risks and
uncertainties, you should refer to Niska's filings with the United
States Securities and Exchange Commission. Actual results and
future events could differ materially from those anticipated in
such statements. Niska undertakes no obligation, and does not
intend to update these forward-looking statements to reflect events
or circumstances occurring after this press release. You are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this press
release. All forward-looking statements are qualified in
their entirety by this cautionary statement.
*****
Non-GAAP Financial
Measures
Niska uses and discloses the financial measures
"Adjusted EBITDA" and "Cash Available for Distribution" in this
press release. Niska defines Adjusted EBITDA as net earnings
before interest, income taxes, depreciation and amortization,
unrealized risk management gains and losses, loss on extinguishment
of debt, foreign exchange gains and losses, inventory impairment
write-downs, gains and losses on disposal of assets, asset
impairment (including goodwill), non-cash compensation expense and
other income. Niska defines Cash Available for Distribution
as Adjusted EBITDA reduced by interest expense (excluding
amortization of deferred financing costs), income taxes paid (or
recovered), maintenance capital expenditures and other income.
Niska's Adjusted EBITDA and Cash Available for Distribution
are not presentations made in accordance with Generally Accepted
Accounting Principles in the United States ("GAAP"). Niska's
management utilizes Adjusted EBITDA and Cash Available for
Distribution as key performance measures in order to assess:
-
the financial performance of Niska's assets,
operations and return on capital without regard to financing
methods, capital structure or historical cost basis;
-
the ability of Niska's assets to generate cash
sufficient to pay interest on its indebtedness and make
distributions to its equity holders;
-
repeatable operating performance that is not
distorted by non-recurring items or market volatility;
and
-
the viability of capital expenditure
projects.
The GAAP measure most directly comparable to
Adjusted EBITDA and Cash Available for Distribution is net
earnings. For a reconciliation of Adjusted EBITDA to net
earnings, please see the schedule provided in the attached
pages.
Niska believes that investors benefit from having
access to the same financial measures used by Niska's management.
Further, Niska believes that these measures are useful to
investors because they are one of the bases for comparing Niska's
operating performance with that of other companies with similar
operations, although Niska's measures may not be directly
comparable to similar measures used by other companies.
Niska Gas Storage Investor
Contact:
Sarah Steel -Director, Investor Relations -
403-513-8650
ir@niskapartners.com
NISKA GAS STORAGE
PARTNERS LLC
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) AND
COMPREHENSIVE INCOME (LOSS)
(in thousands of U.S. dollars, except for per unit
amounts)
(unaudited)
|
|
Three Months Ended |
|
|
|
June 30, |
|
|
|
2015 |
|
2014 |
|
|
|
|
|
|
|
REVENUES |
|
|
|
|
|
Fee-based
revenue |
|
$ |
14,262 |
|
$ |
42,754 |
|
Optimization, net |
|
(5,017 |
) |
12,623 |
|
|
|
9,245 |
|
55,377 |
|
|
|
|
|
|
|
EXPENSES (INCOME) |
|
|
|
|
|
Operating |
|
7,957 |
|
10,953 |
|
General
and administrative |
|
11,230 |
|
10,075 |
|
Depreciation and amortization |
|
10,734 |
|
49,966 |
|
Interest |
|
12,741 |
|
12,313 |
|
Foreign exchange losses (gains) |
|
56 |
|
(50 |
) |
Other
income |
|
(5 |
) |
(16 |
) |
|
|
42,713 |
|
83,241 |
|
|
|
|
|
|
|
EARNINGS (LOSS) BEFORE INCOME
TAXES |
|
(33,468 |
) |
(27,864 |
) |
|
|
|
|
|
|
Income tax expense (benefit) |
|
3,939 |
|
(8,892 |
) |
|
|
|
|
|
|
NET EARNINGS (LOSS) AND COMPREHENSIVE
INCOME (LOSS) |
|
$ |
(37,407 |
) |
$ |
(18,972 |
) |
|
|
|
|
|
|
Net earnings (loss) allocated to: |
|
|
|
|
|
|
|
|
|
|
|
Managing member |
|
$ |
(674 |
) |
$ |
(358 |
) |
Common
unitholders |
|
$ |
(36,733 |
) |
$ |
(18,614 |
) |
|
|
|
|
|
|
Earnings
(loss) per unit allocated to common unitholders - basic and
diluted |
|
$ |
(0.97 |
) |
$ |
(0.52 |
) |
NISKA GAS STORAGE
PARTNERS LLC
SELECTED FINANCIAL DATA AND NON-GAAP
RECONCILIATIONS
(in thousands of U.S. dollars, except capacity
amounts)
(unaudited)
|
|
Three Months Ended |
|
|
|
June 30, |
|
|
|
2015 |
|
2014 |
|
|
|
|
|
|
|
Reconciliation of Net Earnings (Loss)
to Adjusted EBITDA and Cash Available for Distribution: |
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
$ |
(37,407 |
) |
$ |
(18,972 |
) |
Add /
(deduct): |
|
|
|
|
|
Interest expense |
|
12,741 |
|
12,313 |
|
Income
tax expense (benefit) |
|
3,939 |
|
(8,892 |
) |
Depreciation and amortization |
|
10,734 |
|
49,966 |
|
Non-cash
compensation expense |
|
583 |
|
250 |
|
Unrealized risk management losses |
|
10,331 |
|
1,151 |
|
Foreign
exchange losses (gains) |
|
56 |
|
(50 |
) |
Other income |
|
(5 |
) |
(16 |
) |
Adjusted EBITDA |
|
972 |
|
35,750 |
|
Less: |
|
|
|
|
|
Cash
interest expense, net |
|
11,827 |
|
11,401 |
|
Income taxes paid (recovered) |
|
251 |
|
(16 |
) |
Maintenance capital expenditures |
|
155 |
|
399 |
|
Other income |
|
(5 |
) |
(16 |
) |
Cash available for distribution |
|
$ |
(11,256 |
) |
$ |
23,982 |
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
Fee-based revenue: |
|
|
|
|
|
Long-term
contract revenue |
|
$ |
9,645 |
|
$ |
40,482 |
|
Short-term contract revenue |
|
4,617 |
|
2,272 |
|
Total |
|
$ |
14,262 |
|
$ |
42,754 |
|
|
|
|
|
|
|
Proprietary optimization: |
|
|
|
|
|
Realized optimization |
|
$ |
5,314 |
|
$ |
13,774 |
|
Unrealized risk management losses |
|
(10,331 |
) |
(1,151 |
) |
Total |
|
$ |
(5,017 |
) |
$ |
12,623 |
|
|
|
|
|
|
|
Capital expenditures: |
|
|
|
|
|
Maintenance |
|
$ |
155 |
|
$ |
399 |
|
Expansion |
|
57 |
|
578 |
|
Total |
|
$ |
212 |
|
$ |
977 |
|
|
|
|
|
|
|
Operating data: |
|
|
|
|
|
Effective working gas capacity (Bcf) |
|
244.9 |
|
250.5 |
|
|
|
June 30, |
|
March 31, |
|
|
|
2015 |
|
2015 |
|
|
|
(unaudited) |
|
|
|
|
|
|
|
Selected Balance Sheet data |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
5,263 |
|
$ |
11,699 |
|
Borrowings under revolving credit facility |
|
$ |
160,600 |
|
$ |
193,500 |
|
Total debt excluding revolving credit facility |
|
$ |
585,596 |
|
$ |
585,926 |
|
Members'
equity |
|
$ |
148,847 |
|
$ |
185,671 |
|
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Niska Gas Storage Partners LLC via
Globenewswire
HUG#1943937
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