High Arctic Halts DistributionGlad we didn't sell out to this group. Huge debt and poor cash flow.
GLTA
Cheers,
Oxyurid
News from Reuters
High Arctic halts trust distributions
26/02/07
CALGARY, Alberta (Reuters) - High Arctic Energy Services Trust said on Monday it will suspend monthly distributions to unitholders and consider reverting to a corporation.
The oilfield services firm also said in a statement it believed it may have breached debt covenants on a credit agreement with a group of lenders.
High Arctic has yet to finish year-end financial statements but said it likely exceeded its allowed debt-to-cash flow ratio. However Jed Wood, the trust's chief executive said it has since reached an agreement with lenders on the C$100 million in debt.
"We've been able to take care of that," Wood said. "It has been resolved now...and we've negotiated new facilities."
The Red Deer, Alberta-based company said it had formed a board committee to study reverting to a corporation in the wake of the Canadian government's decision in October to remove the tax advantages enjoyed by trusts by 2011.
It expects the reorganization to include a restructuring of its long-term debt and an issue of equity from treasury. The committee should make a recommendation within four weeks.
Wood said the company, which had been paying 9.75 Canadian cents a unit monthly to investors, will suspend the distributions at least until the trust's annual meeting in early May.
High Arctic will use the money saved by withholding distributions and a C$10 million short-term debt facility it's negotiating with an existing lender for short-term capital requirements and to pay for a new drilling rig it plans to use in Papua New Guinea.
High Arctic units fell C$1.74 to C$3.52 in late morning trading on the Toronto Stock Exchange. The units have fallen 73 percent over the past year.
($1=$1.16 Canadian)