CALGARY, ALBERTA - Dec. 16, 2010 /CNW/ - Newalta Corporation ("Newalta") (TSX:NAL) today announced its planned capital budget of $100 million for 2011. Growth capital expenditures of approximately $73 million are comprised of $26 million for the Facilities Division and $35 million for the Onsite Division. The remaining $12 million in growth capital expenditures are for technical development and corporate investments. Maintenance capital expenditures are budgeted to be approximately $27 million. Capital expenditures will be funded from funds from operations, with approximately 40% expected to be spent in the first half of 2011.
"Our capital budget includes a broad range of high-return with low-risk organic growth opportunities across our operations that will contribute to sustained growth in 2012," said Al Cadotte, President and Chief Executive Officer of Newalta. "Within our Facilities Division, we have opportunities to grow the business through efficiency improvements, facility additions, service expansion and innovative new processes. In Onsite, centrifuges and related equipment will be added to meet increased demand and further our strategy of transitioning short-term projects into longer-term contracts that provide stable cash flow."
Newalta also announced today that it will be amending its credit facility effective December 17, 2010 to a three year maturity ending December 17, 2013, with annual extensions available at management's option. As a result of Newalta's recent successful private placement of $125 million in senior unsecured debentures and current forecast needs, management elected to reduce the amount available under the credit facility from $350 million to $200 million. Due to the revised capacity of the amended facility, the lending syndicate was reduced from seven to five institutions.
The financial covenants under the amended credit facility and Newalta's performance relative to those covenants are as follows:
Covenant Actual at September 30, 2010 (1)
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Total Debt(2) to EBITDA less than or equal
to 3.50:1.00 1.94:1
Senior Debt(3) to EBITDA less than or equal
to 2.75:1.00 0.83:1
Interest Coverage Ratio greater than or
equal to 2.25:1.00 4.63:1
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(1) Adjusted to give effect to the reduction in outstanding indebtedness
under the credit facility from the proceeds of the issuance of the
senior unsecured debentures.
(2) Total Debt comprises outstanding indebtedness under the credit facility
and the senior unsecured debentures but excludes the existing $115
million convertible debentures.
(3) Senior Debt comprises only outstanding indebtedness under the credit
facility.
After adjusting for the net proceeds of the senior unsecured debentures and the amended credit facility, Newalta would have had approximately $105 million available under its credit facility as at September 30, 2010.
Based on Newalta's strong financial performance, reduced senior debt levels and improved conditions in the credit market, a significant reduction in pricing of credit spreads was obtained.
"We achieved more favourable terms with the amendment by reducing financing costs, extending the maturity and maximizing our overall flexibility. This reflects the continued improvements in our performance over the past year, as well as the stability and growth prospects of our business," said Mike Borys, Newalta's Senior Vice President and Chief Financial Officer. "We now have a much improved and stronger capital structure in place to capitalize on growth opportunities, increase profitability and enhance long-term value for our shareholders."
Newalta provides cost-effective solutions to industrial customers to improve their environmental performance with a focus on recycling and recovery of products from industrial residues. These services are provided both through our network of 80 facilities across Canada and at our customers' facilities where we mobilize our equipment and people to process material directly onsite. Our customers operate in a broad range of industries including the oil and gas, petrochemical, refining, lead, manufacturing and mining industries. The company has delivered strong, profitable growth for over 15 years and has established a leadership position in the industry with talented people, efficient and safe operations, innovative approaches and high ethical standards. Newalta trades on the TSX as NAL. For more information, visit www.newalta.com.
This press release contains forward-looking information. More particularly, this press release contains forward-looking information concerning the amount of the capital budget for 2011, plans for capital expenditures, growth strategy and implementation of growth opportunities, demand for our services and the results of such expenditures and strategy, including expected profitability. Although Newalta believes that the expectations reflected in this forward-looking information are reasonable, undue reliance should not be placed on it because Newalta can give no assurance that it will prove to be correct. Forward-looking information is based on current expectations, estimates and assumptions that involve a number of risks, which could cause actual results to vary and in some instances to differ materially from those anticipated by Newalta and described in the forward-looking information contained in this press release. Among the various factors that could cause results to vary materially from those indicated in the forward-looking information include: failure to realize growth anticipated by the proposed capital spending, a reduction in funds from operations, limitations on bank borrowing, fluctuations in commodity prices, currency value and interest rates, increased costs for equipment purchases and facility construction and delays in obtaining equipment and in the construction of facilities. In addition, Newalta regularly assesses the allocation of capital expenditures and, as such, the aggregate dollar amount to be expended and the amounts allocated to each growth area and operating division may be reallocated between the divisions and specific projects. Readers should also be aware that the forward-looking information is also affected by the risk factors described in Newalta's other annual information form and those set forth from time to time in Newalta's continuous disclosure filings with Canadian securities regulatory authorities, which are available under Newalta's SEDAR profile at www.sedar.com.
The forward-looking information contained in this press release is made as of the date hereof and Newalta undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
EBITDA and funds from operations are financial measures that do not have any standardized meaning prescribed by Canadian GAAP and may not be comparable to similar measures calculated by other corporations or entities. EBITDA provides an indication of the results generated by the business prior to how activities are financed, assets are amortized, or how the results are taxed in various jurisdictions. Funds from operations is used to assist management in analyzing cash flow and leverage. The manner by which EBITDA and funds from operations are calculated herein is consistent with the manner by which these financial measures are calculated in other public disclosures made by Newalta.