Zedcor Energy Inc. (ZDC) (f.k.a Canadian Equipment Rentals Corp.) provides oilfield rental equipment and accommodations to the drilling segment of the oilfield industry in Western Canada. Its services mostly involve surface and accommodation rentals.
ZDC was previously in a forbearance expiring 28 April with its former revolver lender group, led by Canadian Imperial Bank of Commerce (CIBC) and ATB Financial, after failing to comply with its leverage and interest coverage covenants.
Although the company was able to successfully refinance its credit facility with a new ABL loan, it’s still left with a temporary, high interest-bearing capital structure and insufficient liquidity. Also, as a result of the current downturn in the Canadian oil market and the company’s capital structure challenges, management downsized the business significantly in order to delever, only a few years after expansion efforts.