Oil and gas service provider Enservco (NYSE:ENSV) Corp (NYSE American: ENSV) has entered into a $3.5 million credit agreement with Pathward National Association, according to a recent 8-K filing with the Securities and Exchange Commission. The agreement, dated October 23, 2024, allows subsidiary Buckshot Trucking LLC to borrow against 90% of eligible receivables at an interest rate tied to the Wall Street Journal Prime Rate plus 2.5%, with a floor of 8.0% per annum.
The revolving loan facility, secured by all of Buckshot's assets, carries initial and annual fees of $35,000 and a steep early termination fee. The loan is backed by a guarantee from Enservco and a security agreement covering all of the company's assets.
This financial move comes as Enservco faces a demand for accelerated payment of $625,000 from note holders Angel Capital Partners LP and Equigen II LLC, following a missed interest payment. The company is also grappling with delisting proceedings from the NYSE American after failing to meet the minimum stockholders' equity requirement. Trading of Enservco's common stock has been suspended, with plans to transfer to the OTCQB market.
The credit facility will fund working capital needs and expenses related to recent transactions, as Enservco navigates these financial and operational hurdles. The information in this article is based on statements from the press release.
In other recent news, Enservco Corporation has taken strategic steps to strengthen its financial position and operational efficiency. The company has sold certain assets of its subsidiary, Heat Waves Hot Oil Service, to HP (NYSE:HPQ) Oilfield Services for $1.695 million, a move aimed at reducing dependency on seasonal businesses and paying down debt. The proceeds will go towards retiring the company's borrowings under the Utica Facility.
Simultaneously, Enservco is in the final stages of acquiring Buckshot Trucking, a move expected to diversify its operations into the logistics sector, providing year-round cash flows and margin generation. This acquisition is subject to shareholder approval and financing arrangements.
In addition, the company has reported a significant 125% increase in adjusted EBITDA and a 10% rise in gross profit margin for the first quarter of 2024, largely attributed to colder winter conditions and improved operational efficiencies.
Despite these positive developments, Enservco is facing potential delisting from the NYSE American exchange due to failure to meet the minimum stockholders' equity requirement. The company is appealing the decision and has plans to secure a $10 million equity line of credit and convert $2.2 million worth of convertible notes into equity to address the equity shortfall. These are the recent developments in the company's strategic initiatives.
InvestingPro Insights
As Enservco Corp (NYSE American: ENSV) secures a new credit agreement to address its financial challenges, InvestingPro data provides additional context to the company's current situation. Over the last twelve months as of Q2 2024, Enservco reported revenue of $22.97 million, with a modest revenue growth of 3.24%. However, the company's financial health appears precarious, as evidenced by its adjusted operating income of -$3.21 million and an operating income margin of -13.99% for the same period.
InvestingPro Tips highlight some of the company's ongoing struggles. Notably, Enservco suffers from weak gross profit margins, which is reflected in the reported gross profit margin of 17.7% for the last twelve months. Additionally, the company is not profitable over the last twelve months, aligning with the negative operating income figures.
The stock's performance has been particularly concerning, with InvestingPro data showing a one-year price total return of -62.82% as of the latest available date. This significant decline underscores the challenges Enservco faces, including the delisting proceedings mentioned in the article.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for Enservco, providing deeper insights into the company's financial position and market performance.
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