By October 19, 2015 Read More →

Aly Energy Services closes equity deal, renegotiates debt until 2017

Aly Energy says it anticipates upturn in oilfield business before new debt matures in 2017

Texas-based drilling services company Aly Energy Services, Inc. says it has raised over $3 million in capital and renegotiated its debt, as the industry continues to struggle with low oil prices and E&P cutbacks.

Aly EnergyThe company (OTCQB: ALYE) announced Monday that effective Sept. 30 it closed an private equity offering resulting in net proceeds of $3.35 million from selling 1,562,500 shares of its common stock at a price of $3.20 per share to accredited investors on June 24.

The proceeds have been used to reduce indebtedness under the company’s existing credit facility.

“The successful equity raise is a testament to the confidence our investors have in Aly Energy’s long-term vision and market opportunity,” said Micki Hidayatallah, chairman and CEO of Aly Energy Services.

Aly Energy

Micki Hidayatallah, chairman and CEO of Aly Energy Services.

“This capital infusion strengthens our balance sheet and made it possible for us to negotiate constructively with our lender.”

As of June 30, Aly Energy was in default under the credit facility due to its noncompliance with certain financial covenants. The second amendment of Sept. 30 waives the company’s default as of June 30 and modifies the maturity date to April 30, 2017.

“Prevailing commodity prices have adversely affected the entire oilfield services sector and Aly Energy is not immune,” said Hidayatallah. “However, despite the current commodity price environment, we are working diligently to serve our customers with differentiated and cost-effective solutions.”

In connection with the execution of the Amendment, the Company used proceeds of $3.35 million from its recently closed private offering to make a prepayment on the loan. Subsequent to this payment, the Amendment waives all further principal payments on the remaining $20.1 million of outstanding term borrowings until March 31, 2017 and reduces the size of the revolving credit facility through the maturity date of April 30, 2015 to $1 million.

As of Sept. 30, 2015, Aly Energy had a borrowing capacity of $1 million under the revolving credit facility in addition to a cash balance in excess of $1 million.

“Clearly, this Amendment is a positive development for Aly Energy and an important step forward in ensuring our long-term success,” said Hidayatallah.

“The amended agreement provides the Company with the flexibility needed to continue advancing our growth plan, which is focused on both organic growth and selective acquisitions that strengthen our competitive position. Our existing cash balance, expected cash flow from operations and borrowing capacity on the credit line provide liquidity to fund our business plan for the foreseeable future.”

Aly Energy Services provides equipment and services essential to the drilling and development of oil and gas resources, including mud delivery, solids control, fluid management, and directional drilling and measurement-while-drilling services. The company serves the Permian Basin (in Texas and New Mexico), Eagle Ford Shale, Utica Shale, Marcellus Shale, Woodford Shale, Granite Wash, Mississippian Lime, and Tuscaloosa Marine Shale.

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