ENTREC Announces Strategic Process and Commencement of CCAA Proceedings

ACHESON, Alberta, May 15, 2020 (GLOBE NEWSWIRE) — ENTREC Corporation (“ENTREC” or the “Company”) has announced the commencement of a strategic process (the “Strategic Process”) to identify and pursue potential strategic options and alternatives with respect to ENTREC and its subsidiaries to maximize value for the benefit of ENTREC’’s stakeholders. The Strategic Process will explore a broad range of strategic options and alternatives that may be available to the Company, including, but not limited to, transactions involving the sale of all or a portion of the business and assets or shares of the Company and its subsidiaries, or a refinancing, recapitalization or other restructuring transaction.  The Company intends to explore market interest with a range of potential parties and remains engaged in ongoing discussions with certain existing key stakeholders in connection with its potential strategic and restructuring alternatives.
ENTREC has determined that in the current circumstances it is in the best interests of the Company and its stakeholders to implement the Strategic Process through a court-supervised restructuring proceeding, and has obtained today an initial order (the “Initial Order”) from the Court of Queen’s Bench of Alberta (the “Court”) commencing proceedings under the Companies’ Creditors Arrangement Act (the “CCAA”).  Pursuant to the Initial Order, among other things, a stay of proceedings has been granted in respect of the Company and its subsidiaries to allow them to continue to operate their business without disruption while ENTREC pursues potential strategic and restructuring alternatives, which may include a sale, investment or other restructuring transaction under Court supervision for the benefit of its stakeholders (the “Restructuring”). The Company will seek an immediate provisional recognition of the Initial Order in the United States under Chapter 15 of the US Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas, USA (the “US Bankruptcy Court”).Prior to obtaining the Initial Order, the Company entered into a restructuring support agreement (the “Restructuring Support Agreement”) with its senior secured lending syndicate (the “Syndicate”) pursuant to which the Syndicate has agreed to support the Company’s Restructuring subject to the terms of the Restructuring Support Agreement, including providing the Company with interim financing secured by a Court-ordered priority charge against all of the Company’s and its subsidiaries’ assets pursuant to the Initial Order, as further described below.As required by the CCAA, pursuant to the Initial Order, Alvarez & Marsal Canada Inc. (the “Monitor”) has been appointed as Monitor of the Company (including its subsidiaries) in its CCAA proceedings. The duties and powers of the Monitor are outlined in the Initial Order and the CCAA.  Materials publicly filed in the CCAA proceedings, including copies of the Initial Order and the Restructuring, will be made available on the Monitor’s website at http://www.alvarezandmarsal.com/entrec.Pursuant to the Restructuring Support Agreement, the Syndicate has agreed to provide certain interim financing to ENTREC pursuant to an interim financing facility (the “Interim Financing Facility”) during the CCAA proceedings, which Interim Financing Facility was approved by the Court pursuant to the Initial Order.  Subject to the terms and conditions of the Restructuring Support Agreement and any orders of the Court or the US Bankruptcy Court, the Syndicate has agreed to make revolving loans and swing loans under the ABL Facility available to ENTREC during the CCAA proceedings, and such availability of revolving loans and swing loans under the ABL Facility shall constitute the Interim Financing Facility. The maximum availability under the Interim Financing Facility shall be determined in accordance with the terms of the ABL Facility, as modified by the Restructuring Support Agreement, and at no time will exceed $125,000,000. Further, no advance under the Interim Financing Facility shall exceed the amount necessary to finance the cash flow requirements of ENTREC and its subsidiaries, as approved by the Monitor and the Syndicate from time to time.ENTREC intends to continue to pay its employees for services rendered during the CCAA proceedings and intends to pay its suppliers for goods and services provided to the Company following the commencement of the CCAA proceedings.A comeback hearing in respect of the relief granted pursuant to the Initial Order, and any further relief required by the Company, has been scheduled for May 25, 2020 (the “Comeback Hearing”).   In light of industry challenges facing the Western Canadian oil and natural gas sector, ENTREC believes that the commencement of the CCAA proceedings at this time will provide the Company with the time and stability required to continue operating its business while it works to implement the Restructuring and achieve an outcome that is in the best interests of ENTREC and its stakeholders. There can be no assurance that the Restructuring will result in a transaction, and given the level of secured debt obligations of the Company, there can be no assurance with respect to quantum of recovery that may be available to satisfy claims made by the Company’s secured or unsecured creditors. Additional information with respect to the Restructuring will be made available by the Company as determined necessary or appropriate by the Company.In accordance with the policies of the Toronto Stock Exchange (the “TSX”), in connection with the CCAA proceedings, the TSX will be reviewing the continued listing of ENTREC’s common shares (the “Common Shares”) and 8.5% unsecured subordinated debentures (the “Debentures”).  The Common Shares and the Debentures of the Company have been suspended from trading at this time and it is expected that they will be delisted from the TSX in due course.About ENTRECENTREC is a heavy haul transportation and crane solutions provider to the oil and natural gas, construction, petrochemical, mining and power generation industries. ENTREC is listed on the Toronto Stock Exchange under the symbol: ENT.Forward-Looking StatementsCertain information contained in this press release may contain forward looking statements within the meaning of applicable securities laws. The use of any of the words “continue”, “plan”, “intend”, “explore”, “propose”, “would”, “will”, “believe”, “expect”, “position”, “anticipate”, “improve”, “enhance” and similar expressions are intended to identify forward-looking statements. More particularly and without limitation, this press release contains forward-looking statements concerning: the commencement of the Strategic Process and its potential impact and outcomes; the process for implementing the Restructuring; the ability to identify and implement any sale or other restructuring in connection with the Restructuring and the CCAA proceedings; the Company’s intended actions during the CCAA proceedings; the Company’s intention to seek immediate provisional recognition of the Initial Order in the US Bankruptcy Court; the agreement of the Syndicate to support the Company’s Restructuring subject to the terms of the Restructuring Support Agreement; and the effect of the CCAA proceedings.Forward-looking statements are necessarily based on estimates and assumptions that are inherently subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. The above-mentioned forward-looking statements necessarily involve risks, including, without limitation, risks associated with: the ability of the Company to implement the Restructuring; the ability of the Company to find suitable buyers or investors or to obtain all necessary approvals in order to complete any sale or other restructuring transaction identified in connection with the Restructuring and the CCAA proceedings; the ability of the Company to operate in the ordinary course during the CCAA proceedings, including with respect to satisfying obligations to service providers, suppliers, contractors and employees; the ability of the Company to continue as a going concern; the Company’s future liquidity position, and access to capital, to fund ongoing operations and obligations; the ability of the Company to stabilize its business and financial condition; the ability of the Company to implement and successfully achieve its business priorities; the ability of the Company to continue meet the conditions contained in the Restructuring Support Agreement for the support of the Syndicate for the Company’s Restructuring; the ability of the Company to comply with its contractual obligations, including, without limitation, its obligations under debt arrangements; the general regulatory environment in which the Company operates; the general economic, financial, market and political conditions impacting the industry and markets in which the Company operates; the ability of the Company to fund its operations with existing capital and/or raise additional capital to fund its operations; the ability of the Company to generate sufficient cash flow from operations; the impact of competition; the ability of the Company to obtain and retain qualified staff, equipment and services in a timely and efficient manner (including in light of the Company’s restructuring efforts); and the ability of the Company to retain members of the senior management team, including but not limited to, the officers of the Company.Events or circumstances may cause actual results to differ materially from those anticipated, as a result of the risk factors set out and other known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company. In addition, forward looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect and which have been used to develop such statements and information in order to provide stakeholders with a more complete perspective on the Company’s future operations. Such information may prove to be incorrect and readers are cautioned that the information may not be appropriate for other purposes. Although the Company believes that the expectations reflected in such forward looking statements or information are reasonable, undue reliance should not be placed on forward looking statements because the Company can give no assurance that such expectations will prove to be correct.  In addition to other factors and assumptions which may be identified herein, assumptions have been made regarding, among other things: the impact of competition; the general stability of the economic environment in which the Company operates; and the timely receipt of any required regulatory approvals;Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. Additional information on these and other factors that could affect the Company’s operations and financial results are included in reports, including under the heading “Business Risks” in the Company’s management’s discussion and analysis for the year ended December 31, 2019 that is on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com) under the Company’s profile. Furthermore, the forward looking statements contained herein are made as at the date hereof and the Company does not undertake any obligation to update publicly or to revise any of the included forward looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.For further information, please contact the Monitor, Alvarez & Marsal Canada Inc.Telephone: 1-888-368-7311
Email: entrec@alvarezandmarsal.com.

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