ACHESON, ALBERTA–(Marketwired – May 6, 2016) – ENTREC Corporation (“ENTREC” or the “Corporation“) (TSX:ENT), an employee-owned heavy haul transportation and crane solutions provider, announced today that it will seek approval from holders of its 7.00% convertible unsecured subordinated debentures due October 31, 2017 (ENT.DB) (the “Debentures“) to amend the terms of the Debentures at a meeting of the holders of the Debentures (the “Debentureholders“) to be held on June 6, 2016 (the “Meeting“).

The proposed amendments (the “Debenture Amendments“) to the Debentures (as amended by the Debenture Amendments, the “Amended Debentures“) consist of:

1. INCREASING the underlying coupon rate from 7.00% to 8.50% effective October 31, 2016 (being the commencement of the next interest rate accrual period);
2. DECREASING the conversion price from $2.60 to $1.00 per share of the Corporation;
3. EXTENDING the maturity date from October 31, 2017 to June 30, 2021;
4. PERMITTING the Corporation to redeem the Amended Debentures, in whole or in part, at any time up to June 30, 2021, at a price equal to the principal amount thereof plus accrued and unpaid interest to, but excluding the date of the redemption;
5. REMOVING the Corporation’s ability to, upon the conversion of the Amended Debentures by a holder thereof, elect to pay the holder cash in an amount and at such time as determined in accordance with the Indenture; and
6. REMOVING the Corporation’s ability to undertake any rights offering, issuance of securities, subdivision of the common shares of the Corporation, dividend or other distribution on the common shares of the Corporation or any other securities, capital reorganization, reclassification or any similar type of transaction in which (i) the number of securities to be issued, (ii) the price at which securities are to be issued, converted or exchanged, or (iii) any property or cash that is to be distributed or allocated, is in whole or in part based upon, determined in reference to, related to or a function of, directly or indirectly, (x) the exercise or potential exercise of the Common Share Redemption Right (as defined in the trust indenture governing the Debentures) or the Common Share Repayment Right (as defined in the trust indenture governing the Debentures), or (y) the Current Market Price (as defined in the trust indenture governing the Debentures) determined in connection with the exercise or potential exercise of the Common Share Redemption Right or the Common Share Repayment Right.

Contingent on the approval of the Debenture Amendments, the Corporation will, on October 31, 2017, redeem on a pro rata basis $3,500,000 of the principal amount of Amended Debentures outstanding as at the close of business on October 31, 2017 (the “Partial Redemption“). The Partial Redemption will be for a cash payment equal to the principal amount thereof plus accrued and unpaid interest to, but excluding the date of the redemption.

“By extending the maturity of the Debentures, we will be provided with increased financial flexibility to capitalize on attractive growth opportunities in the near and medium term,” stated John M. Stevens, ENTREC’s President and CEO. “In addition, we believe the Debenture Amendments will provide Debentureholders with a longer period of time to receive, what we believe to be, an attractive yield. Based on the current low interest rate environment, we believe the 8.50% coupon provides returns that are superior to other convertible debenture investments in the Canadian market.”

In each instance of a contemplated redemption activity of the Amended Debentures, the Corporation will be required to give not more than 60 days and not less than 30 days’ notice of its intention to redeem, whether in whole or in part. All remaining Amended Debentures will be repaid by the Corporation at the extended maturity date of June 30, 2021.

If the Debenture Amendments are approved by the Debentureholders, the effective date of the increase in the interest rate will be October 31, 2016 (being the commencement of the next interest rate accrual period) while the other Debenture Amendments will be effective earlier on the date that the Corporation enters into the second supplemental trust indenture embodying such amendments.

Consent Fee

On or about the effective date of the Debenture Amendments, the Corporation will pay a consent fee, in cash, equal to $20.00 per $1,000 principal amount of Debentures (the “Consent Fee“) to Debentureholders that delivered and did not withdraw valid proxies voting on the Debenture Amendments on or prior to 10:00 a.m. (Mountain Time) on June 2, 2016. All other Debentureholders will not be eligible to receive the Consent Fee, but will be bound by the Debenture Amendments if they become effective. Payment of the Consent Fee will be conditional upon, among other things, the Debenture Amendments being validly approved by Debentureholders and satisfaction of the other conditions precedent described in a management information circular (the “Circular“) expected to be made available under the Corporation’s profile on SEDAR at www.sedar.com and mailed to the Debentureholders on May 13, 2016. Assuming all Debentureholders vote on the Debenture Amendments, the aggregate amount of the Consent Fee payable by the Corporation will be $506,000.

Board Recommendation

The Board of Directors of the Corporation (the “Board“) believes that the Debenture Amendments provide a number of benefits to the Corporation and its securityholders, including to the Debentureholders.

The Board UNANIMOUSLY RECOMMENDS that the Debentureholders vote FOR the Debenture Amendments.

Details About the Debenture Amendments

The record date for determining the Debentureholders entitled to receive notice of and vote at the Meeting is May 6, 2016. Further information with respect to the Debenture Amendments will be outlined in the Circular. For the Debenture Amendments to be approved, at least 66 2/3% of the principal amount of the Debentures voted (either in person at the Meeting or by proxy) must be FOR votes.

Detailed voting instructions will be found in the Circular and accompanying proxy form or voting instruction form. The Meeting is scheduled to be held on June 6, 2016 at 10:00 a.m. (Mountain Time) at the offices of National Bank Financial Inc. located at 311 – 6th Avenue SW, 18th Floor, Calgary, Alberta T2P 3H2.

About ENTREC

ENTREC is an employee-owned heavy haul transportation and crane solutions provider to the oil and natural gas, construction, petrochemical, mining and power generation industries. ENTREC is listed on the Toronto Stock Exchange under the symbol ENT.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements included herein constitute “forward-looking statements”. All statements included in this press release that address future events, conditions or results of operations, including in respect of the Debenture Amendments, are forward-looking statements. These forward-looking statements can be identified by the use of forward-looking words such as “may”, “should”, “will”, “could”, “expect”, “intend”, “plan”, “estimate”, “anticipate”, “believe”, “future” or “continue” or the negative forms thereof or similar variations. Forward looking statements in this press release include, but are not limited to, the expected impact of the Partial Redemption; the expected terms of the Debenture Amendments; the expected effective date of the Debenture Amendments; and the expected benefits of the Debenture Amendments to the Corporation and to the Debentureholders. These forward-looking statements are based on certain assumptions and analyses made by management in light of their experiences and their perception of historical trends, current conditions and expected future developments, as well as other factors they believe are appropriate in the circumstances. Debentureholders are cautioned not to put undue reliance on such forward-looking statements, which are not a guarantee of performance and are subject to a number of risks and uncertainties, including, but not limited to that the Debenture Amendments will not be successfully completed for any reason and the risk that, if completed, the Corporation will not be able to pay the interest and/or repay the principal amount outstanding under the Debentures when due, and that the Corporation or Debentureholders may not realize the anticipated benefits of the Debenture Amendments, and increases in interest rates. Many of such risks and uncertainties are outside the control of the Corporation and could cause actual results to differ materially from those expressed or implied by such forward-looking statements. In making such forward-looking statements, management has relied upon a number of material factors and assumptions, including with respect to general economic and financial conditions, interest rates, exchange rates, equity and debt markets, business competition, changes in government regulations or in tax laws, acts and omissions of third parties, and the ability of the Corporation to obtain approval for the Debenture Amendments (including approval from the TSX). Such forward-looking statements should, therefore, be construed in light of such factors and assumptions. All forward-looking statements are expressly qualified in their entirety by the cautionary statements set forth above. The Corporation is under no obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.

ENTREC Corporation
Jason Vandenberg
CFO
(780) 960-5630
www.entrec.com