Titan Energy Services (Titan) today announces the following: ...

Titan Energy Services (Titan) today announces the following:
 an equity capital raise comprising a placement and an entitlement offer to strengthen the
Company’s balance sheet in light of the recent trading conditions;
 a restructure of RCH accommodation camp lease arrangements – involving de-hiring ~60% of
existing leased camps, equivalent to ~500 rooms, payment deferrals including new security
arrangements and extended credit terms;
 amended covenants for existing Senior Debt facilities; and
 an earnings guidance update.
Capital Raising
Titan is undertaking an equity capital raise of up to $6.1m comprising a placement to a new
cornerstone investor, Ausdrill International Pty Ltd (a wholly owned subsidiary of Ausdrill Ltd –
ASX:ASL) of $1.0m and a partially underwritten 3 for 5 accelerated non-renounceable entitlement
offer of $5.1m (if fully subscribed).
Under the placement, Titan will issue 5.5 million new ordinary shares at $0.18 per share to raise
approximately $1.0m together with issuing 2.1 million free attaching options to acquire ordinary
shares, exercisable at $0.28 with an expiry of 31 December 2016. The terms and conditions of the
options are set out in the annexure to this announcement. In addition, a representative of Ausdrill
will be nominated for appointment to the Board of Directors.
Titan Chairman Shaun Scott said “We are very pleased to have a company with the industry and
operational expertise of Ausdrill become a major shareholder and provide this vote of confidence in
Titan’s business. We see many potential opportunities for cooperation between our companies for
the mutual benefit of all shareholders.”
Under the entitlement offer, Titan will issue up to 34.0 million new ordinary shares at $0.15 per
share to raise up to $5.1m (if fully subscribed). The entitlement offer issue price of $0.15 per share
represents a 34.8% discount to Titan’s closing price of $0.23 on 6 January 2015, a 23.8% discount to the theoretical ex-rights price1 and a 16.7% discount to the placement price.
The Directors intend to take up their full entitlements under the entitlement offer and have also
entered into additional sub-underwriting commitments. The Entitlement Offer is being partially
underwritten by Bizzell Capital Partners Pty Ltd and Wilson HTM Corporate Finance Limited
(Underwriters) up to an amount of $3.3m.
The entitlement offer is being made under a prospectus which has been lodged with the ASIC and
released separately to ASX

Restructure of RCH Accommodation Room Lease Arrangements
Titan has entered into agreements to restructure its existing camp lease arrangements to de-hire
~60% of existing camps, defer the lease payments of remaining camp leases (subject to 10% p.a.
interest charge) and extended credit terms on outstanding invoices to 1 September 2015. Titan
retains ~560 rooms including 187 owned rooms.
The restructure is being effected under separate commercial agreements with individual suppliers.
One of the agreements has already taken effect and another is subject to the successful completion
of the capital raising and the parties entering into definitive legal agreements consistent with the
binding heads of agreement.
The result of these changes once fully implemented will be the reduction of the forward camp lease
commitments balance by ~$13.8m, the balance as at 30 November 2014 was $20.7m; and lease cost
savings in FY15 of ~$2.9m.
Titan will secure its obligations under one of the agreements by providing a second ranking security
subordinated to its Senior Lender. Any amounts owing to that supplier after 31 August 2015, may be
settled with the issue of ordinary shares (at the suppliers election) at the 5 day volume weighted
average share price.
Further details are contained in the investor presentation released to ASX with this announcement.
Debt Facilities
Titan has agreed with its Senior Lender to amend their debt facility agreements as follows:
 revise the cash flow related covenant calculation;
 suspend the camp and rig utilisation covenants for the six months to 30 June 2015;
 for the Loan to Value Ratio not to exceed 85% as at 30 June 2015;
 to satisfactorily document the arrangements in relation to the camp lease restructure by 23
January 2015; and
 to conduct an equity capital raising to raise a minimum of $4.0m on or before 6 February
2015.
Further details are contained in the investor presentation released to ASX with this announcement.
Earnings Guidance Update
Since the last market update, market conditions have remained soft. As a result Titan’s EBIT loss for
the 6 months to 31 December 2014 is expected to be approximately $4.0m, excluding the Hofco
retention payment of $1.9m and any asset impairment charges.
Updated FY15 guidance is not provided at this point given the uncertainty of project
commencements and conversion of tenders, but it is clear that Titan will not meet the most recent
FY15 EBIT guidance issued of $10m – 12m (excluding the Hofco retention payment of $1.9m). Further
market updates will be provided when our full year earnings position is more certain.