(TSX: TWM) CALGARY, AB, Aug. 15, 2024 /CNW/ - Tidewater Midstream and Infrastructure Ltd. ("Tidewater" or the "Corporation") (TSX:TWM) has filed its interim consolidated financial statements and Management Discussion and Analysis ("MD&A") for the three month period ended June 30, 2024. SECOND QUARTER 2024 HIGHLIGHTS Net Income attributable to shareholders increased by $1.7 million to a net loss of $4.7 million in the second quarter 2024, from a net loss of $6.4 million in the same period of 2023. The improvement was largely due to higher operating income, offset in part by unfavorable changes in the fair value of derivative contracts, and the absence of a deferred income tax recovery. Consolidated adjusted EBITDA(1)[1]was $45.3 million for the second quarter of 2024, compared to $29.3 million in the second quarter of 2023, proforma for Pipestone and Dimsdale, which were divested in December 2023. On June 4, 2024, Tidewater Midstream completed the issuance of $100 million convertible unsecured subordinated debentures (the "Convertible Debentures") at a price of $1,000 per debenture. The Convertible Debentures mature on June 30, 2029, and accrue interest at 8% per annum, payable semi-annually, on the last day of June and December, commencing December 31, 2024. Proceeds from the issuance were used to satisfy and discharge Tidewater Midstream's $75 million convertible debentures due September 30, 2024, with the remaining proceeds used for general corporate purposes. In early May 2024, Tidewater Midstream successfully completed the previously announced three-week turnaround at the Brazeau River Complex and Fractionation Facility (the "BRC") safely, on time and approximately $5.0 million below initial cost expectations. The Renewable Diesel & Renewable Hydrogen Complex (the "HDRD Complex") averaged daily throughput of approximately 2,925 bbl/d, representing a 98% utilization rate. Consistent with previous guidance, the HDRD Complex is expected to exceed an average full year utilization rate of 85%, representing an average daily throughput of 2,550 bbl/d. The Special Committees and Boards of Directors of both Tidewater Midstream and Tidewater Renewables Ltd. (the "Parties") have approved entering into a related party purchase agreement, whereby Tidewater Midstream will acquire from Tidewater Renewables Ltd. ("Tidewater Renewables") various operated assets at the Prince George Refinery (the "PGR") and the BRC, that were previously sold to Tidewater Renewables during its initial public offering. Tidewater Midstream will also acquire the canola co-processing and fluid catalytic cracking ("FCC") co-processing units. Consideration for this related party transaction will consist of an upfront cash payment by Tidewater Midstream of $129.7 million and a commitment to purchase a minimum of $80.7 million BC LCFS credits, as they are produced by Tidewater Renewables, over the next nine months, assuming the HDRD complex continues to operate at over 90% utilization (the "Proposed Transaction"). Tidewater Midstream expects to finance the transaction through operating cash flow, a $25.0 million increase in its revolving credit facility and a $150.0 million term loan. Tidewater Renewables will use the proceeds to repay amounts outstanding on its Senior Credit Facility. This transaction is expected to close during the third quarter of 2024, subject to completion of documentation, financing and regulatory approval. Given the uncertainty surrounding the BC LCFS credit market, the Corporation is revising its previously issued 2024 consolidated adjusted EBITDA(1)[2]guidance to $130 million to $150 million (previously $150 million to $170 million), assuming completion of the Proposed Transaction during the third quarter of 2024 and crack spreads averaging in the $80 to $90/bbl range. Full-year 2024 consolidated maintenance capital is expected to be in the range of $35 million to $40 million, consistent with previous guidance. ____________________________ 1Non-GAAP financial measure. See the "Non-GAAP Measures" section of this Press Release CEO Message: "During the second quarter, we achieved several milestones. I am very proud of all the hard work that went into the successful turnaround at the BRC. Along with being completed on time and below initial cost expectations, the turnaround was completed safely with no lost time injuries. Safety is a top priority at Tidewater and completing the turnaround with no lost time injuries is a great accomplishment by the midstream team. On the downstream side of the business, the PGR and the HDRD complex continued to run near capacity. As we exited the second quarter, it became apparent that depressed low carbon fuel credit prices in the US were going to have an impact on Canadian low carbon fuel credit prices. The high price BC credit market is proving to be an attractive outlet for US producers of renewable fuel, who are able to take advantage of US subsidies and earn Canadian compliance credits. The importation of substantial volumes of subsidized US renewable diesel into BC has significantly reduced the demand by BC LCFS obligated parties for compliance credits. The result has been that Tidewater Renewables was unable to contract BC LCFS credit sales for the third quarter of 2024. The revenue generated from future BC LCFS credit sales makes up a significant portion of Tidewater Renewables' overall corporate revenue and cash flow, and the inability to generate any BC LCFS credit-based revenue would have had pronounced negative implications for Tidewater Renewables underlying business. To remedy this, Tidewater Renewables' Board of Directors formed an independent special committee, which received independent financial and legal advice, to evaluate various liquidity alternatives and based on an extensive review felt the proposed solution provided the best option.  Tidewater Renewables has also approached the Government of British Columbia to discuss needed changes within the low carbon fuel programs to better support a domestic renewable fuel industry. As the market corrects, and potential regulatory changes are implemented, we believe the proposed transaction will provide significant benefits to both entities. Tidewater Midstream will benefit from a simplified corporate structure and re-acquire a significant amount of deconsolidated EBITDA(1) that was previously dropped down to Tidewater Renewables as part of its initial public offering. Going forward, Tidewater Renewables will be able focus all of its efforts on its renewable fuels business, which consists of the HDRD complex and the proposed sustainable aviation fuel ("SAF") project, where the front-end engineering and design continues to progress." - stated Jeremy Baines, CEO. _______________________________ 1Non-GAAP financial measure. See the "Non-GAAP Measures" section of this news release. CONSOLIDATED AND DECONSOLIDATED FINANCIAL HIGHLIGHTS Three months ended June 30 Tidewater Deconsolidated (2) Tidewater Consolidated (in millions of Canadian dollars except per share information) 2024 2023 2024 2023 Net loss attributable to shareholders $ (9.9) $ (11.0) $ (4.7) $ (6.4) Net loss attributable to shareholders per     share – basic $ (0.02) $ (0.03) $ (0.01) $ (0.02) Adjusted EBITDA (1) $ 15.8 $ 35.9 $ 45.3 $ 44.0 Distributable cash flow attributable to shareholders (1) $ (9.9) $ (26.4) $ 4.0 $ (31.8) Distributable cash flow per share – basic (1) $ (0.02) $ (0.06) $ 0.01 $ (0.07) Net debt (3) $ 189.4 $ 595.4 $ 505.9 $ 885.5 Total capital expenditures $ 13.2 $ 40.1 $ 21.7 $ 96.0 (1)  Non-GAAP financial measures. See the "Non-GAAP Measures" section of this News Release. (2)  Deconsolidated results exclude the results of Tidewater Renewables. See the "Non-GAAP Measures" section of this News Release for information on deconsolidated measures. (3)  Capital management measure. See the "Non-GAAP Measures" section of this News Release.   Six months ended June 30 Tidewater Deconsolidated (2) Tidewater Consolidated (in millions of Canadian dollars except per share information) 2024 2023 2024 2023 Net loss attributable to shareholders $ (29.9) $ (23.1) $ (16.0) $ (31.2) Net loss attributable to shareholders per     share - basic $ (0.07) $ (0.05) $ (0.04) $ (0.07) Adjusted EBITDA (1) $ 30.3 $ 72.2 $ 85.1 $ 92.9 Distributable cash flow attributable to shareholders (1) $ (12.9) $ (28.5) $ 9.8 $ (30.3) Distributable cash flow per share – basic (1) $ (0.03) $ (0.07) $ 0.02 $ (0.07) Net debt (3) $ 189.4 $ 595.4 $ 505.9 $ 888.5 Total capital expenditures $ 15.5 $ 62.0 $ 29.8 $ 202.1 (1)  Non-GAAP financial measures. See the "Non-GAAP Measures" section of this News Release. (2)  Deconsolidated results exclude the results of Tidewater Renewables. See the "Non-GAAP Measures" section of this News Release for information on deconsolidated measures. (3)  Capital management measure. See the "Non-GAAP Measures" section of this News Release. STRATEGIC UPDATE Tidewater's strategy is supported by three key operational initiatives: maintaining safe and reliable operations, generating return on assets through maximizing facility throughput and optimizing our existing asset base, and achieving synergies through corporate integration. The following progress was made on these initiatives in 2024 year to date: Maintain safe and reliable operations •  No lost time incidents during the second quarter of 2024. •  Safe and successful execution of BRC turnaround. •  The PGR and HDRD complex operating at or slightly above design capacity Return on assets and optimizing existing asset base •  Continued the engineering and progressed site evaluation for the SAF project. •  Progressing the marketing plan for the PGR and the HDRD post Cenovus offtake. Corporate integration and synergies •  Continuing to initiate additional profitability enhancement initiatives. •  The Special Committees and Boards of Directors of both Tidewater Midstream and Tidewater Renewables have approved entering into a related party agreement whereby Tidewater Midstream will acquire from Tidewater Renewables various operated assets at the PGR and the BRC, that were previously sold to Tidewater Renewables during its initial public offering. Tidewater Midstream will also acquire the canola co-processing and FCC co-processing units. This proposed transaction is expected to close during the third quarter of 2024, subject to completion of documentation, financing and regulatory approval. PROPOSED TRANSACTION BETWEEN TIDEWATER MIDSTREAM AND TIDEWATER RENEWABLES During the first and second quarters of 2024, Tidewater Renewables forward sold BC LCFS emission credits at an average price of approximately $450 per credit to various counterparties. Towards the end of the second quarter of 2024, when Tidewater Renewables approached numerous counterparties to contract BC LCFS credit sales for the third quarter of 2024, it was unable to secure any bids. BC LCFS credit sales prices for July 2024 transactions, reported by the Government of British Columbia in August 2024, confirmed that only two BC LCFS emission credit sales transacted at an average price of $207 per credit. This sharp decline in BC LCFS emission credit prices is believed to be a function of large volumes of subsidized US renewable diesel physically moving out of the oversupplied US renewable fuel market and into the higher value British Columbia market. Aggravating the situation, in management's view, are overlapping US and Canadian low carbon fuel policies which allow US renewable diesel producers to take advantage of US subsidies and compliance markets and then import their volumes to Canada and generate BC LCFS emission credits at the point of sale. In the long-term, Tidewater Renewables expects that the combination of supply and demand fundamentals forcing the shut-in of high-cost US renewable fuel production, tightening California LCFS compliance obligations, and tightening BC LCFS compliance obligations will ease the pressure on BC LCFS credit prices. In addition, cold weather diesel specifications are expected to limit physical imports of renewable diesel in the fourth quarter of 2024 and first quarter of 2025. However, the unexpected market situation has created a liquidity issue for Tidewater Renewables. Tidewater Renewables relies heavily on revenue generated from environmental attributes such as the BC LCFS emission credits and CFR emission credits. Tidewater Renewables has approached the Government of British Columbia to discuss potential changes the government could make to the BC LCFS credit market in an attempt to improve liquidity and pricing stability for BC LCFS capital and operating emission credits. As Tidewater Renewables had no forward sales contracted for BC LCFS credits expected to be granted and/or generated from renewable diesel sales for the third quarter of 2024, management of Tidewater Renewables evaluated alternative liquidity sources, including a transaction whereby Tidewater Midstream would acquire certain assets from Tidewater Renewables in exchange for cash proceeds and near-term BC LCFS credit purchases (the "Proposed Transaction"), while the sector awaits a longer term solution. In connection with the Proposed Transaction, Tidewater Renewables' Board of Directors established an independent special committee (the "Renewables Special Committee") to evaluate the Proposed Transaction and to negotiate the terms thereof with the independent special committee established by the Board of Directors of Tidewater Midstream (the "Midstream Special Committee") and to assess alternative liquidity sources. The Renewables Special Committee has retained a financial advisor and legal counsel in connection with the Proposed Transaction. Following discussions and negotiations between the Renewables Special Committee and Midstream Special Committee, which also received independent legal advice, Tidewater Renewables and Tidewater Midstream have announced their commitment to enter into a related party agreement, approved by both special committees and both Boards of Directors, whereby Tidewater Midstream will acquire various assets at the PGR and BRC that were previously sold to Tidewater Renewables pursuant to its initial public offering and commit to future BC LCFS credit purchases from Tidewater Renewables. Tidewater Midstream will also acquire the canola co-processing and FCC co-processing units. These assets generate annual adjusted EBITDA(1)[3]of $40.0 million to $50.0 million. The estimated consideration for the Proposed Transaction consists of an upfront cash payment of $129.7 million and a commitment by Tidewater Midstream to purchase a minimum of $80.7 million for BC LCFS emission credits, as they are produced by Tidewater Renewables over the next nine months, assuming HDRD continues to operate above 90% utilization. Tidewater Midstream expects to finance the Proposed Transaction through operating cash flow, a $25 million increase in its revolving credit facility and $150 million term loan. The estimated proceeds will be used to repay amounts outstanding on Tidewater Renewables Senior Credit facility, which will provide an immediate improvement to Tidewater Renewables' liquidity issues and leverage profile and a reduction to go forward cash interest costs. The completion of the Proposed Transaction is contingent upon Tidewater Renewables securing all requisite consents and approvals from the TSX, both Tidewater Renewables and Tidewater Midstream obtaining financing approval, and the completion of final documentation. Tidewater Renewables is exempt from the valuation and majority of the minority approval requirements stipulated in Section 5.4 and 5.6 of Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions ("MI 61-101"), due to the "financial hardship" exemption provided in Section 5.5(g) and 5.7(1)(e) of MI 61-101. The Corporation expects to execute definitive agreements and close the Proposed Transaction during the third quarter of 2024. _______________________________ 1Non-GAAP financial measure. See the "Non-GAAP Measures" section of this news release. Three months endedJune 30, Six months ended  June 30, (in millions of Canadian dollars) 2024 2023 2024