Tervita seeks new credit after debt restructuring complete

Tervita Corp. plans to seek new credit after completing restructuring talks with lenders to slash its $2.5 billion worth of obligations.

The Calgary-based provider of energy and waste management services, which is using a 30-day grace period after skipping an interest payment Monday, expects to be able to secure new lending after the restructuring, thanks to its “good quality assets,” vice-president Ryan Wong said.

The deal would involve converting some debt to equity, he said.

“We have good operating assets but our capital structure was not optimal,” Wong said.

“At the moment we have more debt than the asset can service.

“The card we have in our hand is that the company is worth more as a going concern and kept whole than if it were broken down into pieces and sold off.”

Closely held Tervita has struggled with its finances as energy producers have slashed drilling budgets amid the two-year oil rout. The company has been working with advisers to manage its debt, including reducing costs and selling assets, Wong said. Tervita skipped the $18.2-million Aug. 15 interest payment on its 10.875 per cent unsecured notes maturing in 2018.

“The industry has gone down in terms of activity level, and our cash flow has gone down,” Wong said.