Source Energy Services Ltd. Announces Upsize and Pricing of an Offering of Senior Secured Notes

TSX: SHLE

CALGARY, May 24, 2018 /CNW/ - Source Energy Services Ltd. (the "Company" or "Source") is pleased to announce that its wholly-owned subsidiaries Source Energy Services Canada LP and Source Energy Services Canada Holdings Ltd. have, pursuant to an underwriting agreement entered into today, agreed to issue and sell an additional $50 million aggregate principal amount of 10.5% senior secured first lien notes due December 15, 2021 (the "Notes") by way of private placement (the "Private Placement") under the indenture pursuant to which the same issuers previously issued Notes on December 8, 2016. This represents an upsize in the aggregate principal amount of the additional Notes sold under the Private Placement from the $40 million that the Company previously announced. The additional Notes will be issued at $1,057.50 per $1,000 principal amount which represents an effective yield of 7.953% to 2020. Interest on the additional Notes will be payable semi-annually in arrears in equal instalments on June 15 and December 15 of each year with the first interest payment commencing on June 15, 2018. The additional Notes will form a single series with the previously issued Notes. The single series Notes will carry a S&P rating of B+ and a DBRS rating of B(high). The Private Placement is expected to close on or about May 31, 2018, subject to customary closing conditions.

In addition, on May 18, 2018, Source's existing credit facility was amended to, among other things, increase availability for borrowings thereunder (subject to certain conditions) from $70 million to $88 million, reflecting an increase in the amount permitted to be borrowed under such credit facility in compliance with the indenture governing the Notes.

The net proceeds from the issuance of the additional Notes will be used to initially repay drawn amounts under the Company's existing credit facilities, which in turn may be redrawn for general corporate purposes and to fund working capital and capital expenditures.

Brad Thomson, Chief Executive Officer of Source, stated, "I'm pleased with the amendments that we've made to our credit facility and the issuance of additional senior secured first lien notes. These modifications to our capital structure provide Source with the financial flexibility to continue to execute on growth opportunities that the Company sees on the horizon."

BMO Capital Markets and Scotiabank are acting as joint book-running managers for the Private Placement which also includes AltaCorp Capital Inc., Cormark Securities Inc., Canaccord Genuity Corp. and CIBC World Markets Inc. as co-managers.

This press release is neither an offer to sell nor a solicitation of an offer to buy the Notes, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or jurisdiction.

The Notes have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or the securities laws of any other jurisdiction, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The Offering is being made exclusively to qualified institutional buyers in the United States pursuant to Rule 144A under the Securities Act, to non-U.S. persons in transactions outside the United States pursuant to Regulation S under the Securities Act and pursuant to certain prospectus exemptions in Canada.

ABOUT SOURCE ENERGY SERVICES

Source is a fully integrated producer, supplier and distributer of high quality Northern White frac sand primarily to the Western Canadian Sedimentary Basin. Source provides its customers with a full end-to-end solution through its Wisconsin mine assets, processing facilities, unit train capable rail assets, strategically located terminal network and "last mile" logistics capabilities. Source's full service approach allows customers to rely on its logistics capabilities to increase reliability of supply and to ensure the timely delivery of their growing frac sand requirements. In addition to its transload terminal network and in-basin storage capabilities, Source has also developed Sahara, a proprietary wellsite mobile sand storage and handling system.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this press release constitute "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of applicable Canadian securities laws regarding, without limitation, the Company's expectations, intentions, plans and beliefs, including information as to the future financial or operating performance of Source. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "contemplates", "expects" or "does not expect", "is expected", "budget", "goal", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes" or variations of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Such forward-looking statements reflect management's beliefs, estimates and opinions regarding Source's future growth, results of operations, performance, and business prospects and opportunities at the time such statements are made, and Source takes no obligation to update forward-looking statements if these beliefs, estimates and opinions or circumstances should change. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Source, are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Forward-looking statements are not guarantees of future performance. In particular, this press release contains forward-looking statements pertaining to, but not limited to, the closing date for the Private Placement and the use of proceeds of the Private Placement.

By their nature, forward-looking statements involve numerous assumptions, known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Source to differ materially from those anticipated by Source and described in forward-looking statements.

With respect to forward-looking statements contained in this press release, various assumptions have been made. A number of factors, risks and uncertainties could cause results to differ materially from those anticipated and described herein.

Although Source has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement. Accordingly, readers should not place undue reliance on forward-looking statements. These statements speak only as of the date of this press release. Except as required by law, neither the Company nor any of the underwriters undertakes any obligation to publicly update or revise any forward-looking statements.