Spark Power Provides Update on Q3 Financial Statement Restatement, BMO Debt Facility Maturity Extension and Convertible Debenture Offering
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OAKVILLE, ON / ACCESSWIRE / March 10, 2021 / Spark Power Group Inc. ("Spark Power" or the "Company") (TSX:SPG) today provided an update to its press release of March 5, 2021, in which Spark Power announced that it would refile its unaudited condensed interim financial statements for the three and nine month periods ended September 30, 2020 (the "Previously Filed Interim Financial Statements") together with the corresponding management discussion and analysis (the "Previously Filed Interim MD&A").
Amended and Restated Interim Financial Statements
As an update to the March 5, 2021 press release, the Company provides the following additional detail:
- In connection with the filing of the prospectus in respect of the Offering, Spark Power engaged its auditors to perform a review of the Previously Filed Interim Financial Statements and the Previously Filed Interim MD&A. During the auditor's review, the Company identified a Balance Sheet classification error.
- The classification error relates to the treatment of the Company's non-revolving term loan and revolving acquisition line, totaling approximately $38.3 million and $24.4 million, respectively, which were categorized as long-term liabilities; being debts that are due more than one year from the date of the statements. The maturity of these debts was stated in the Previously Filed Interim Financial Statements as September 30, 2027. However, both loans are actually due and payable on September 30, 2021, with amortization ending in September 2027. Since the debts are actually due to mature exactly one year from the date of the Previously Filed Interim Financial Statements, they are required to be shown as current liabilities on the balance sheet.
- As a result, the full amounts drawn under these facilities are required to be presented as current liabilities as at September 30, 2020 and the Previously Filed Interim Financial Statements will be amended and restated to reflect this change in categorization (the "Amended and Restated Interim Financial Statements"), the notes thereto updated, and an amended and restated management discussion and analysis (the "Amended MD&A") thereon will also be refiled.
- This Balance Sheet reclassification does not change the results of operations for the period, or the total assets or liabilities as of the period-end, as reported by the Company.
- As a result of this change in categorization, the Amended and Restated Interim Financial Statements are required to include a note that there is a level of uncertainty that may cast doubt on the Company's ability to continue as a going concern. The Company believes that it has the appropriate plans to mitigate the above noted event, however these plans have not yet been completed.
Commentary on Debt Maturities and Loan Syndication
As a further update to the Company's debt syndication process with its senior lender, the Company provides the following details:
- The Company's senior lender is Bank of Montreal ("BMO").
- The Company commenced discussions with BMO on a syndication of its debt facility in early 2020. With the outbreak of the pandemic this process was put on hold through the balance of 2020.
- During this time the Company worked with BMO in successfully securing amendments to its existing credit facility to support the Company through challenging times brought on by the pandemic, and the Company has continuously managed within those amended terms.
- The objective of the syndication process is to re-finance the above noted non-revolving term loan, revolving acquisition line and all credit facilities into longer-term credit facilities and expand the Company's borrowing facilities to support the future growth of the business.
- As an interim step to the syndication, BMO is presently seeking to extend the maturity date of the non-revolving term loan and revolving acquisition line from September 30, 2021 to June 30, 2022. While there is no assurance the maturity date will be extended, Spark Power expects the extension will be successfully formalized this week.
- Should BMO approve the extension of these maturities, all amounts outstanding on these loans will again be presented as long-term liabilities in the financial statements of the Company in relation to periods ended after the date of this extension, to the extent repayments are not then due within 12 months.
Bought Deal Status
On February 18, 2021, the Company announced that it had entered into an agreement to complete a $20.0 million bought deal public offering (the "Offering") of 7.50% convertible unsecured subordinated debentures due 2026 with a syndicate of underwriters (the "Underwriters") led by Raymond James Ltd. As a further update to the Offering, the Company provides the following details:
- The Company is in ongoing discussions with the underwriters respecting the completion of the Offering.
- The Offering will not close on March 11, 2021 as originally contemplated.
- The Offering has not been terminated, however there is no assurance that the Offering will be completed, on the currently announced terms, or at all.
The Company will provide further information with respect to the filing of Amended and Restated Interim Financial Statements, its Amended MD&A, and details of the Offering as more information is available.
About Spark Power
Spark Power, a wholly owned subsidiary of Spark Power Group Inc. (TSX:SPG), is a leading independent provider of end-to-end electrical contracting, operations and maintenance services, and energy sustainability solutions to the industrial, commercial, utility, and renewable asset markets in North America. We work to earn the right to be our customers' Trusted Partner in Power". Our highly skilled and dedicated people, located in the communities we serve, combined with our knowledge of the power industry, technology expertise, and commitment to safety, ensures we deliver the right solutions that keep our customers' operations up and running today and better equipped for tomorrow. Learn more at www.sparkpowercorp.com.
Investor and Regulatory Inquiries
Dan Ardila, Executive Vice President & Chief Financial Officer
+1 (905) 829-3336 x127
Kim Samlall, Director, Marketing Communications
+1 (905) 829-3336 x185
SOURCE: Spark Power Group Inc.
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