CALGARY, Dec. 14, 2015 /CNW/ - Calfrac Well Services
Ltd. ("Calfrac") (TSX–CFW) is pleased to announce that it has
entered into an agreement with its syndicate of lenders (the
"Lenders") to make certain amendments to its credit
facilities (the "Credit Facilities") in order to provide
Calfrac with increased financial flexibility.
The principal amendments to the Credit Facilities include, among
others, the following terms:
- a voluntary reduction in the Credit Facilities commitment from
$400 million to $300 million, which
is still anticipated to provide Calfrac with more than sufficient
liquidity;
- a change to the maximum funded debt-to-EBITDA ratio
("Leverage Ratio") covenant, to apply over the next two
years;
- the removal of the prior maximum total debt-to-capitalization
ratio covenant (previously 70%);
- a new covenant of 30% governing Calfrac's funded
debt-to-capitalization ratio (removing Calfrac's unsecured senior
notes due 2020 from the calculation of debt in the
debt-to-capitalization ratio covenant);
- a conditional increase in the accordion feature of the
syndicated credit facility (from $100
million to $200 million);
and
- a new equity cure provision which allows Calfrac to apply the
proceeds of equity offerings in the calculation of EBITDA towards
the Leverage Ratio, subject to the conditions discussed below.
Fernando Aguilar, President &
Chief Executive Officer of Calfrac, commented, "We are very pleased
to announce these amendments to the terms of our Credit Facilities
and we would like to thank our lenders for their commitment towards
our business. We believe that we have been able to agree upon a
covenant relief package that will provide for significant financial
flexibility to manage our business during this industry downturn.
This is a positive development for our company which will enable us
to withstand even further erosion in industry conditions, and
position us for long-term success."
Additional details relating to these amendments are set out
below. It should be noted that certain conditions apply to
such amendments, which will require ongoing compliance by
Calfrac:
- the Leverage Ratio covenant, which does not include Calfrac's
unsecured senior notes due 2020, is increased to the
following:
For the quarters
ended
|
|
Covenant
|
December 31,
2015
|
|
4.5x
|
March 31, 2016 and
June 30, 2016
|
|
Waived
|
September 30, 2016
and December 31, 2016
|
|
5.0x
|
March 31, 2017 and
June 30, 2017
|
|
4.5x
|
September 30, 2017
and December 31, 2017
|
|
4.0x
|
Thereafter
|
|
3.0x
|
- from the quarter ending December 31,
2015 through the quarter ending December 31, 2017:
- advances under the Credit Facilities will be limited by a
borrowing base based on North American accounts receivable, cash on
hand and fixed asset values; and
- distributions will be restricted and no increase in dividends
will be permitted;
- the proceeds from equity offerings may be applied in the
calculation of EBITDA towards the Leverage Ratio covenant for any
of the quarters ending prior to and including December 31, 2017, subject to the following
conditions:
- an equity cure may be utilized in no more than two quarters
during such period;
- equity cures may not be utilized in consecutive quarters;
and
- the equity cure utilized in any quarter is not to exceed the
greater of 50% of total EBITDA over the prior twelve month period
or $25 million;
- second lien financing of up to $400
million will be permitted, subject to certain conditions,
including the execution of a satisfactory intercreditor agreement;
and
- two pricing levels, which are based on the applicable Leverage
Ratio calculation, were added which will result in Calfrac paying
higher fees for advances and for standby fees under the Credit
Facilities until December 31, 2017 and during any period in
which Calfrac's Leverage Ratio calculation is 3.5x or greater, with
such increases representing a potential increase in fees of an
additional 125 basis points at the highest pricing level.
Calfrac is also announcing a 2016 capital budget of
approximately $25 million which is comprised entirely of
sustaining capital expenditures, plus an additional $30 million which will be carried over from
Calfrac's 2015 capital program. Calfrac's 2015 capital
spending is expected to total approximately $160 million.
Calfrac's common shares are publicly traded on the Toronto Stock
Exchange under the trading symbol "CFW". Calfrac provides
specialized oilfield services to exploration and production
companies designed to increase the production of hydrocarbons from
wells drilled throughout western Canada, the United
States, Russia,
Argentina and Mexico.
This press release contains forward-looking statements and
forward-looking information within the meaning of applicable
securities laws. The use of any of the words "expect",
"anticipate", "continue", "estimate", "may", "will", "project",
"should", "believe", "plans", "intends" and similar expressions are
intended to identify forward-looking information or statements.
More particularly and without limitation, this press release
contains forward-looking statements and information relating to
Calfrac's liquidity and future capital expenditures. These
forward-looking statements and information are based on certain key
expectations and assumptions made by Calfrac. Although Calfrac
believes that the expectations and assumptions on which such
forward looking statements and information are based are
reasonable, undue reliance should not be placed on the
forward-looking statements and information as Calfrac cannot give
any assurance that they will prove to be correct. Since
forward-looking statements and information address future events
and conditions, by their very nature they involve inherent risks
and uncertainties. Actual results could differ materially from
those currently anticipated due to a number of factors and risks.
These include, but are not limited to, prevailing economic
conditions; commodity prices; sourcing, pricing and availability of
raw materials, component parts, equipment, suppliers, facilities
and skilled personnel; dependence on major customers; uncertainties
in weather and temperature affecting the duration of the service
periods and the activities that can be completed; health, safety
and environmental risks; exchange rate fluctuations; marketing and
transportation; loss of markets; environmental risks; governmental
regulations; competition; incorrect assessment of the value of
acquisitions; failure to realize the anticipated benefits of
acquisitions; ability to access sufficient capital from internal
and external sources; failure to obtain required regulatory and
other approvals; and changes in legislation, including but not
limited to tax laws, royalties and environmental regulations.
Readers are cautioned that the foregoing list of risks and
uncertainties is not exhaustive. Additional information on these
and other risk factors that could affect Calfrac's operations or
financial results are included in Calfrac's annual information form
and may be accessed through the SEDAR website (www.sedar.com). The
forward-looking statements and information contained in this press
release are made as of the date hereof and Calfrac does not
undertake any obligation to update publicly or revise any
forward-looking statements or information, whether as a result of
new information, future events or otherwise, unless so required by
applicable securities laws.
SOURCE Calfrac Well Services Ltd.