Akita reduces credit facility to C$110 million, gets covenant relief

By Wendy Van Sickle

Columbus, Ohio, July 20 – Akita Drilling Ltd. amended its Dec. 19, 2018 credit agreement to reduce the facility size to C$110 million and to provide five quarters of covenant relief, according to a news release.

Previously, the facility size was C$120 million and $5 million.

The covenant relief period runs through June 30, 2021 and replaces the funded debt to EBITDA ratio with funded debt to tangible net worth ratio.

A minimum trailing 12-month EBITDA test will be required quarterly during the covenant relief period, with EBITDA varying each period in line with agreed upon forecasts.

Additionally, the EBITA to interest ratio was amended.

AKITA has the option to extend the covenant relief period on a quarterly basis subject to the consent of the lenders

The amended facility, along with cost cutting over the first half of the year that resulted in a one-third reduction of the company's full time labor force, are expected to provide the company with the financial flexibility it will require in order to sustain operations over this period of low oil and gas commodity pricing and corresponding weak demand for drilling services, according to the release.

Akita is a Calgary, Alta.-based company engaged in the contract drilling business.

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