Whitehorn Merchant Capital Inc. recently assisted Leader Energy Services Ltd. (“Leader”) in replacing its convertible debentures with a $15.0 million subordinated debt facility.  Leader is a publicly traded oilfield service company focused on providing coiled tubing and nitrogen pumping services.   

Leader engaged Whitehorn to find a financing alternative to remove the inherent ceiling on its share price in the public market.  The ceiling was caused by the significant dilution the convertible debentures.  In addition to finding a financing provider, Whitehorn  assisted Leader with negotiating the terms of the prepayment with the holders of the convertible debentures.   

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Whitehorn provided Leader with multiple term sheets after only three weeks of actively marketing the opportunity.  The successful investor provided a very flexible facility including the following: 

  • Three year facility, bearing interest at 12.0% per annum, payable quarterly; 

  • Repayable at any time without penalty;  and

  • An equity component in the form of three year purchase warrants with an exercise price equal to a 15% premium over the then current market price. 

The new facility is significantly less dilutive than the convertible debentures, which could have been converted into over 75% of the common shares of Leader.  The new facility’s equity component will represent less than a 15.0% equity stake, upon exercise of the warrant.  

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