CALGARY, AB, June 15, 2020 /CNW/ - Calfrac Well
Services Ltd. ("Calfrac" or the "Company") (TSX: CFW) is
announcing that the Company has elected to defer the cash interest
payment due on June 15, 2020 in
respect of its outstanding 8.50% senior unsecured notes due 2026
(the "Unsecured Notes"), which were issued pursuant to an
indenture dated May 30, 2018 (the
"Unsecured Notes Indenture"). Under the terms of the
Unsecured Notes Indenture, the Company has a 30 day grace period
from the periodic interest payment date in order to make this cash
interest payment before an event of default will occur.
During this grace period, the Company will continue to work with
its financial advisors, RBC Capital Markets, together with Perella
Weinberg Partners LP and Tudor, Pickering, Holt & Co., to
consider alternatives for addressing its capital
structure.
While the Company is addressing its capital structure, its
operations will continue as usual, with all obligations to
customers, suppliers and employees being met in the ordinary
course. Calfrac remains committed to continuing to provide safe and
high quality services to its customer base.
The amount currently drawn on Calfrac's senior credit facilities
is approximately $170 million,
against a $375 million line of
credit. A failure to pay the cash interest payment due
within the 30 day grace period would also be an event of default
under Calfrac's credit agreement governing its senior credit
facilities; and under the indenture governing the Company's second
lien notes due 2026. An event of default carries the risk of
the principal amount of the indebtedness and all accrued interest
becoming immediately due and payable.
The Company continues to be proactive in addressing the rapid
and unforeseen deterioration in 2020 business conditions that has
resulted from the COVID-19 global pandemic and the oil price war
among OPEC+ members. This year's unprecedented decline in oil
prices globally, with the resultant reductions in the planned
spending of essentially all of Calfrac's clients, have led to
significant reductions in Calfrac's operating and capital costs, of
all kinds.
Calfrac will communicate further as soon as new information is
available with respect to its capital structure plans.
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, Argentina and
Russia.
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
discussions regarding the Company's capital structure, cash
interest payments owing to creditors, events of default under the
Company's various debt instruments and the Company's intentions and
expectations.
These forward-looking statements and information are based on
certain key expectations and assumptions made by Calfrac in light
of its experience and perception of historical trends, current
conditions and expected future developments as well as other
factors it believes are appropriate in the circumstances,
including, but not limited to, the following: the economic and
political environment in which Calfrac operates; Calfrac's
expectations for its customers' capital budgets and geographical
areas of focus; the effect unconventional oil and gas projects have
had on supply and demand fundamentals for oil and natural gas;
Calfrac's existing contracts and the status of current negotiations
with key customers and suppliers; the effectiveness of cost
reduction measures instituted by Calfrac; and the likelihood that
the current tax and regulatory regime will remain substantially
unchanged.
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, risks associated with:
Calfrac's ability to continue to manage the effect of the COVID-19
pandemic on its operations; default under the Company's credit
facilities and/or the Company's senior notes due to a breach of
covenants therein; failure to reach an agreement with lenders
(including holders of each series of the Company's notes) to
restructure the Company's capital structure within the 30 day grace
period; the impact of events of defaults in respect of the credit
facilities and/or senior notes on other material contracts of the
Company, including but not limited to, cross-defaults resulting in
acceleration of amounts payable thereunder or the termination of
such agreements; failure of existing shareholders and noteholders
to agree to a recapitalization plan or debt restructuring; global
economic conditions; along with those risk and uncertainties
identified under the heading "Risk Factors" and elsewhere in the
Company's annual information form dated March 10, 2020 and filed on SEDAR at
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.