Titan Energy Services (ASX:TTN) is raising up to $6.1 million...

Titan Energy Services (ASX:TTN) is raising up to $6.1 million through a placement and partially underwritten entitlement offer to fund its working capital requirements.

The company is raising $1 million through a placement of 5.5 million shares at $0.18 each to new cornerstone investor Ausdrill (ASX:ASL).

It is also offering shareholders the opportunity to subscribe for three new shares for every five shares held at $0.15 each to raise up to $5.1 million.

This is partially underwritten by Bizzell Capital Partners Pty Ltd and Wilson HTM Corporate Finance Limited to a total of $3.26 million.

In addition, the company’s directors intend to take up their full entitlements under the entitlement offer and have also entered into additional sub-underwriting commitments.

The entitlement offer represents a 34.8% discount to Titan's closing price of $0.23 on 17th December 2014 while the placement to Ausdrill includes 2.1 million free attaching options exercisable at $0.28 with an expiry of 31st December 2016.


Cost Reductions

The company has entered into agreements to restructure its existing camp lease arrangements to de-hire about 60% of existing camps, defer the lease payments of remaining camp leases and extended credit terms on outstanding invoices to 1st September 2015.

This will reduce forward camp lease commitments by about $13.8 million and grant lease cost savings of $2.9 million in the 2015 financial year.


Debt Facilities

Titan has also agreed with its senior lender to amend its 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 million on or before 6 February
2015.

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