Province- backed Aqua- Pure launches search for saviour
A cash- poor oilfield water purifying company chaired by former Calgary alderman and MLA Richard Magnus and backed by a $ 3- million Alberta government loan has hired financial advisers for a process that could include the sale of the company.
Aqua- Pure Ventures Inc. announced in a news release late Tuesday it had hired Canaccord Genuity Corp. to assist with its strategic process. The moneylosing company has been warning for months that there is “material uncertainty” as to its ability to continue as a going concern and said last week that it will not be able to complete its 2014 audited annual financial statement.
“Aqua- Pure currently is not in a position to meet its near- term debt and other liability obligations if demanded to do so,” it stated in the April 10 release. A demand by creditors could potentially put the company into receivership.
Executives did not immediately return requests for comment left on Aqua- Pure’s unmanned voice mail system Wednesday. Its TSX Venture Exchange shares rose from half a cent to four cents on Wednesday. They’ve traded as high as 25 cents in the past year.
Aqua- Pure, through its primary Texas- based operating unit, Fountain Quail Water Management, operates mobile water- treatment units mainly in Texas shale oil and gas plays. In recent reports, it said its main competitor for contracts to purify the millions of litres of water used in hydraulic fracturing was the industry practice of using disposal wells instead.
In its last financial report in November, Aqua- Pure said its current and long- term non- convertible debt totalled $ 8.8 million, an increase of $ 2.4 million from yearend 2013 due to drawdowns from a $ 3- million, five- year secured loan provided by Agriculture Financial Services Corp., an Alberta Crown corporation. The AFSC loan was made to buy new equipment, it said.
Its overall debt was $ 20.3 million, it said, including $ 13.4 million owed to two directors of Aqua-Pure.
Nikki Booth, a spokeswoman for AFSC, confirmed the $ 3- million loan was approved.
“That loan is fully secured by land, various security agreements and guarantees and Aqua- Pure Ventures is currently and always has been making its payments,” she said.
Magnus has been chairman of Aqua- Pure since 2002, a year after he finished third in the 2001 Calgary mayoral race. He served two terms as a Calgary alderman and four terms as an MLA for Calgary-North Hill before retiring from politics in 2008.
According to a regulatory filing, he owned 630,000 shares as of Dec. 31, 2013.
On March 26, the company reported the unexpected death of chief executive officer and director Jake Halldorson, described by Magnus in a news release as “the respected and well- loved leader of Aqua- Pure for nearly 16 years.”
In its financial report issued in November, it reported revenue of $ 7.6 million through nine months ended Sept. 30, more than double its revenue in the same period of 2013, thanks to its deployment of two additional Nomad evaporator units in the oil- rich Permian Basin of West Texas and southeastern New Mexico.
It also reported a nine- month loss of $ 451,000, compared to a loss of $ 2.5 million in the same period in 2013, while earnings adjusted to remove interest, taxes, depreciation and amortization improved from a loss of $ 1.3 million to a positive $ 900,000.
Aqua- Pure reported cash on hand of $ 712,000, accounts receivable of $ 544,000 and inventory of $ 630,000 as of Sept. 30.
In a presentation placed on its website in December, it said the market value of its equipment was more than $ 25 million. It said it has more than 50 patents and that its gear had been used to clean about 20 million barrels of contaminated wastewater.