January 13, 2017 - 8:30 AM EST
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Aveda Transportation and Energy Services Provides Operational and Banking Update

CALGARY, AB--(Marketwired - January 13, 2017) -

NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES OR THE DISTRICT OF COLUMBIA), OR ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.

Aveda Transportation and Energy Services Inc. ("Aveda" or the "Company") (TSX VENTURE: AVE), a leading provider of oilfield hauling services and equipment rentals to the energy industry, is pleased to provide this operational and banking update.

Revenue

The Company previously disclosed that it had rebuilt its senior leadership team in 2016, including the hiring of a new President and CEO, Vice-President of US Operations and Vice-President of Canadian operations. Each of these new additions to the Aveda team brought with them 20+ years of operational experience and deep-rooted customer relationships. Through their relationships along with the efforts of our recently high graded operational and sales teams, the Company is pleased to report that its revenue has continued to grow through the fourth quarter of 2016. Preliminary revenue results for each of the last three months are as follows:

October $9.1 million
November $10.7 million
December $11.2 million

The chart below highlights the revenue growth the Company has experienced since the revamping of its management team in March/April of 2016:

Geographic Footprint Expansion

Pecos, Texas

The Company had previously disclosed that it opened a second operating terminal in Pecos, Texas which is located in the Permian Basin. This expansion allows the Company to serve the Permian Basin and more specifically the Delaware Basin that continues to host a large portion of the Permian's activity. The Company is pleased to report that the expansion is proceeding as planned and is expected to generate positive EBITDA in the fourth quarter of 2016.

Williamsport, Pennsylvania

Due to declining rig counts and competitive pricing, Aveda had previously announced that it had temporarily closed its operations in the northeastern United States. The Company is pleased to report that through the informal sponsorship of a major customer, Aveda has re-opened its operations in Williamsport, Pennsylvania and has re-staffed its operations in the fourth quarter of 2016. This operation contributed over $2.0 million to the Company's revenue results in the fourth quarter of 2016. In 2017, the Company expects to open a satellite yard in the northeastern United States to better service its customers who are operating in the Utica and Marcellus Shales basins.

Casper, Wyoming

Through the informal sponsorship of a major drilling contractor in the United States, the Company has opened a new branch in Casper, Wyoming. During December, 2016 Aveda relocated several pieces of equipment to this new terminal. It will be operated as a satellite yard of the Company's North Dakota operations. The Casper, Wyoming terminal will be fully operational in January 2017 and is expected to serve the Uinta, Wamsutter, Pinedale and DJ Basins.

Through these expansion areas, Aveda continues to have the largest and most diversified geographic footprint of any rig mover in North America.

Capital Expenditures

During the fourth quarter of 2016, the Company activated 50 trucks and 72 trailers that were previously acquired from the Hodges acquisition in 2015 and invested approximately $1.7 million for the purchase of two 110-ton crawler cranes and two large loaders for its Pecos, Texas expansion. Aveda also invested approximately $500,000 for maintenance capital in the fourth quarter of 2016.

The Company has the largest fleet of rig moving equipment which is one the most modern and well maintained fleets in North America. Despite having the largest fleet of rig moving equipment, the Company continues to incur significant third party expenses predominately due to a shortage of hoisting equipment. The Company expects to invest approximately $4.0 million in hoisting equipment (predominately cranes) in 2017. Most of this investment is expected to be incurred in the first half of 2017. The Company also expects to invest approximately $1.0 - $2.0 million in maintenance capital expenditures in 2017.

Through continued investment in maintaining its equipment and expanding its hoisting equipment fleet, the Company expects to sustain its position as having one of the largest, most modern and well maintained rig moving fleets in North America.

"I am extremely pleased with the over 630% revenue growth we have experienced since April 2016," said Ronnie Witherspoon, President and Chief Executive Officer of Aveda. "I am extremely grateful and proud of the strong efforts of our entire newly formed team and look forward to continued growth and success in 2017."

Banking Update

The Company's old asset based operating facility ("Old Facility") was for a maximum amount of $125.0 million and had an expiry date of January 1, 2018. Under the Old Facility covenant tests were waived if undrawn availability was in excess of $25.0 million. The Company is pleased to announce that it has extended its asset based operating facility ("New Facility") to May 31, 2019. The maximum amount of the New Facility is $92.5 million which consists of a committed facility of $77.5 million and an acquisition line accordion of $15.0 million. Having a lower facility size will reduce the Company's standby fees on the undrawn portion of the facility. The New Facility will bear interest based on the following grid:

          
LevelAverage Undrawn Availability CAD Prime-based loans USD base-rate loans BA rate loans LIBOR rate loans
IAt least $25,000,000 1.50% 1.50% 3.50% 3.75%
IIAt least $12,500,000 and <$25,000,000 1.75% 1.75% 3.75% 4.00%

III<$12,500,000 2.00% 2.00%

 4.00%

 4.25%

DefaultANY 4.00% 4.00%

 N/A N/A
          

For the first year of the New Facility, the interest rate will be based on Level III regardless of the amount of undrawn availability. The Company has chosen the LIBOR rate option as it is the most cost effective borrowing rate for Aveda.

The total number of appraisals under the New Facility have been reduced from three to two, further the leverage covenant has been removed under the New Facility. Covenant tests are waived under the New Facility as long as undrawn availability is in excess of $20.0 million and this will be subsequently reduced to $14.0 million should the Company raise $10.0 million in new equity in the first quarter of 2017. Should the Company fail to raise $10 million in new equity in the first quarter of 2017, this would constitute an Event of Default under the New Agreement. As such, the Company intends to raise at least $10 million in new equity in the first quarter of 2017. WCC (defined below) has committed to subscribe for up to $5 million of the equity raise on the same terms and conditions as the public. Senior executives of Aveda are also anticipated to participate in the equity raise.

"The new facility significantly reduces our covenant test thresholds and gives us ample room to grow our business," said Bharat Mahajan, Vice-President, Finance and Chief Financial Officer of Aveda. "With the due date of our bank debt pushed out to May 31, 2019 we can focus all our efforts on growing the business."

A copy of the New Facility amending agreement shall be filed on SEDAR and accessible at www.sedar.com.

Werklund Support

The Company is pleased to report that it continues to receive strong support from its Executive Chairman and largest shareholder, David Werklund. Mr. Werklund through Werklund Capital Corporation and Werklund Ventures Ltd. (collectively "WCC") has agreed under the New Facility to provide Aveda's banking syndicate (the "Syndicate") with a $5.0 million standby debt facility (the "Standby Facility") that can be called upon at the sole discretion of the Syndicate in the event of a default under the New Facility. Although it is highly unlikely that the Standby Facility would ever get called upon, this undertaking should be a strong indication to all Aveda shareholders that Mr. Werklund is a strong supporter of the Company. Aveda will pay an upfront arrangement fee of 1%. This fee will be payable in Common Shares (or units) using the same valuation basis as Aveda uses on its next equity raise conducted prior to March 31, 2017 (the "Future Offering Price"). Aveda will also pay to WCC a quarterly standby fee of 0.375% of the undrawn availability as at the end of each fiscal quarter and a quarterly administrative fee of 0.249% on the drawn portion of the Standby Facility as at the end of each fiscal quarter. Subject to shareholder approval as further described below, these fees will be payable in Common Shares at the prevailing market price on the TSX Venture Exchange (the "Exchange") when the fees are paid on a quarterly basis. Should the Standby Facility be drawn upon, the drawn amount will bear interest at 15% per annum payable in cash or payment in kind payable and compounded monthly to become part of the principal balance. Further should Aveda choose to repay draws on this facility, WCC will have the option to receive cash or payment in Common Shares (or units) at the Future Offering Price. The Standby Facility will be subordinated to the New Facility.

The Standby Facility is subject to final approval by the TSX Venture Exchange (the "Exchange"). In addition, because WCC and the Company are related parties (within the meaning of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101") and pursuant to the policies of the Exchange) and because the Standby Facility is a related party transaction (within the meaning of MI 61-101 and pursuant to the policies of the Exchange), the Company is required to obtain a formal valuation for, and minority approval of, the Standby Facility, in the absence of exemptions therefore. The Company is exempt from the formal valuation requirement pursuant to section 5.5(b) of MI 61-101. With respect to the minority approval requirement, the conversion of the Standby Facility into securities of the Company would negate the ability of the Standby Facility from being exempt from the minority approval requirement pursuant to section 5.7(f) of MI 61-101, therefore minority approval is a condition precedent of the conversion of the loan into securities of the Company. Because holding a shareholders' meeting is costly and time consuming, the Company intends to apply to the Ontario Securities Commission (the "OSC") for an exemption to allow it to obtain the minority shareholder approval described above by way of written approval from the majority of the minority shareholders rather than holding a shareholders' meeting. The Company anticipates receiving exemptive relief from the OSC in due course. The exemptive relief from the OSC and written shareholder consent from at least 50% +1 of the minority shareholders shall be a condition precedent to the conversion of any principal sum, interest or fees payable under the Standby Facility into Common Shares (or units).

The members of the board of directors of the Company that are independent of the Standby Facility (within the meaning of MI 61-101 and pursuant to the policies of the Exchange) have determined that the Standby Facility is in the Company's best interests and have approved the Standby Facility on that basis.

The minority shareholders shall be provided the required information to provide their consent in a disclosure document which shall be provided to each shareholder who provides consent and shall be filed on SEDAR and accessible at www.sedar.com. Should the Company fail to obtain minority shareholder approval for the Standby Facility, instead of having the ability to make payments in Common Shares (or units) as described above, Aveda will have to pay significantly higher fees and interest. Instead of: 1) an arrangement fee of 1% payable in Common Shares (or units), Aveda will pay an upfront arrangement fee of 2% in cash; 2) a quarterly standby fee to WCC of 0.375% in Common Shares, Aveda will pay 0.75% quarterly in cash; and 3) a quarterly administrative fee to WCC of 0.249% in Common Shares, Aveda will pay 0.498% quarterly in cash. Should the Standby Facility be drawn upon and shareholder approval is not received, the drawn amount will bear interest at 22% per annum payable in cash as opposed to 15% payable in Common Shares (or units) at the Future Offering Price if shareholders approve the Standby Facility.

The Company's management and independent board members strongly encourage all shareholders to approve the Standby Facility. Any existing Aveda shareholders who wish to help with providing their written consent should contact Aveda's CFO, Bharat Mahajan at (403) 264-5769 or bharat.mahajan@avedaenergy.com.

"The results that Aveda's new management team has produced in such a short time are pretty incredible," said David Werklund, Chairman of Werklund Capital Corporation and Werklund Ventures Limited. "I continue to be a strong supporter of Aveda and believe that Company is extremely well positioned to take advantage of the growing North American rig count."

A copy of the agreement for the Standby Facility with WCC shall be filed on SEDAR and accessible at www.sedar.com.

Investor Relations Update

The Company has posted an updated corporate presentation to its website. The updated corporate presentation can be found at http://www.avedaenergy.com/investor-hub/presentations/default.aspx.

Aveda will also be a presenter at the Richmond Club in Toronto on January 25, 2017. In addition to the live audience, a video is taken of each presenter and synchronized with the company's PowerPoint slides so that people on the Internet can see exactly what the live audience sees. Internet web statistics show that each video is seen 300-500 times over the first thirty days of the video being posted on the Richmond Club website.

To cover the costs relating to: the investor luncheon presentations, video production and web promotion, the Company has agreed to pay Streetwise Investors Club Inc., owner of the Richmond Club, $1,450 per month for the next twelve months.

As the Company's operations continue to successfully grow, Aveda's CEO and CFO expect to spend a considerable amount of time and effort making presentations to retail and institutional investors throughout 2017.

About Aveda Transportation and Energy Services

Aveda provides specialized transportation services and equipment required for the exploration, development and production of petroleum resources in the Western Canadian Sedimentary Basin and in the United States of America principally in and around the states of Texas, Oklahoma, Pennsylvania, Wyoming and North Dakota. Transportation services include both the equipment necessary to move the load as well as a trained, professional driver capable of securing, moving and manipulating the load at its origin and destination. Aveda's rental operations include the rental of well-sites, tanks, mats, pickers, light towers and other equipment necessary for oilfield operations.

Aveda was incorporated in 1994 as a private company to serve the oil and gas industry. In the spring of 2006 the Company went public on the TSX Venture Exchange. Aveda has major operations in Calgary, AB, Leduc, AB, Edson, AB, Pleasanton, TX, Midland, TX, Pecos, TX, Marshall, TX, Williamsport, PA, Casper, WY, Williston, ND, and Oklahoma City, OK. Aveda is publicly traded on the TSX Venture Exchange under the symbol AVE. For more information on Aveda please visit www.avedaenergy.com.

This News Release contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "achieve", "could", "believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate", "outlook", "expect", "may", "will", "project", "should", "unlikely" or similar words, including negatives thereof, suggesting future outcomes. In particular, this News Release contains forward-looking statements relating to: demand for the Company's services and general industry activity level; the Company's growth opportunities; and expectations regarding the Company's revenue, EBITDA and equipment utilization. Aveda believes the expectations reflected in such forward-looking statements are reasonable as of the date hereof but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon.

Various material factors and assumptions are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking statements. Those material factors and assumptions are based on information currently available to Aveda, including information obtained from third party industry analysts and other third party sources. In some instances, material assumptions and material factors are presented elsewhere in this News Release in connection with the forward-looking statements. Readers are cautioned that the following list of material factors and assumptions is not exhaustive. Specific material factors and assumptions include, but are not limited to:

• the performance of Aveda's businesses, including current business and economic trends;

• oil and natural gas commodity prices and production levels;

• capital expenditure programs and other expenditures by Aveda and its customers:

• the ability of Aveda to retain and hire qualified personnel;

• the ability of Aveda to obtain parts, consumables, equipment, technology, and supplies in a timely manner to carry out its activities;

• the ability of Aveda to maintain good working relationships with key suppliers;

• the ability of Aveda to market its services successfully to existing and new customers;

• the ability of Aveda to obtain timely financing on acceptable terms;

• currency exchange and interest rates;

• risks associated with foreign operations;

• changes under governmental regulatory regimes and tax, environmental and other laws in Canada and the United States; and

• a stable competitive environment.

The forward-looking statements regarding Aveda's potential revenue and EBITDA are included herein to provide readers with an understanding of Aveda's anticipated cash flow and Aveda's ability to fund its expenditures based on the assumptions described herein. Readers are cautioned that this information may not be appropriate for other purposes.

Forward-looking statements are not a guarantee of future performance and involve a number of risks and uncertainties, some of which are described herein. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause Aveda's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the risks identified in Aveda's annual information form and management discussion and analysis for the year ended December 31, 2015 (the "MD&A"), which are available for viewing on SEDAR at www.sedar.com. Any forward-looking statements are made as of the date hereof and, except as required by law, Aveda assumes no obligation to publicly update or revise such statements to reflect new information, subsequent or otherwise.

This News Release contains the term "EBITDA" which is defined in the MD&A. The above term as presented does not have any standardized meanings prescribed by international financial reporting standards ("IFRS") and therefore may not be comparable with the calculation of similar measures for other entities. Management uses EBITDA to analyze the operating performance of the business. The non-IFRS measure presented is not intended to represent cash provided by operating activities, net earnings or other measures of financial performance calculated in accordance with IFRS.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Image Available: http://www.marketwire.com/library/MwGo/2017/1/13/11G127305/Images/Aveda_Chart-7e64df803f9db28283d2e0ef2be4745b.jpg

For more information, please contact:
Bharat Mahajan, CA
Vice President, Finance and Chief Financial Officer
(403) 264-5769
bharat.mahajan@avedaenergy.com


Source: Marketwired (Canada) (January 13, 2017 - 8:30 AM EST)

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