CALGARY, AB, Dec. 18, 2020 /CNW/ - Calfrac Well Services
Ltd. ("Calfrac" or the "Company") (TSX: CFW) is very
pleased to announce the completion of its previously disclosed
amended recapitalization transaction.
The amended recapitalization transaction was implemented
pursuant to a Plan of Arrangement (the "Plan") under the
Canada Business Corporations Act ("CBCA"). This Plan
was approved by an order of the Court of Queen's Bench of
Alberta dated October 30; and an order giving full effect to
the Plan in the United States was
entered effective December 1.
Calfrac's Executive Chairman, Ron
Mathison, commented: "We are delighted to make this
announcement, which represents a new beginning for Calfrac. Calfrac
now enters 2021 with: much lower debt; dramatically reduced
interest expenses; a significant $60
million increase in the Company's liquidity; and a number of
new, well-engaged investors."
Lindsay Link, Calfrac's President
and Chief Operating Officer added: "We are becoming increasingly
optimistic about client activity in all of the geographic areas
that we serve. The combination of today's capital structure
changes, improving business conditions and continuing expense
reductions all bode well for the coming year."
A presentation containing the details of the Plan, as well as
other important information, is available on the Company's website
or by clicking here. A short summary of the specific
elements of the Plan can be found below.
Two new directors have been appointed to the Calfrac Board: the
well-known entrepreneur and investor, Mr. George Armoyan; and a senior investment manager,
Mr. Anuroop Duggal. Mr. Armoyan is
now the most significant investor in Calfrac; and Mr. Duggal is the
nominee of another important new investor.
With the appointment of the two new directors, Messrs.
Kevin R. Baker, QC and James S. Blair have retired from the Board. Mr.
Mathison noted: "Both Kevin and Jamie have been exemplary directors
throughout their long tenure. Their hard work, sound judgement and
untiring dedication have served all of Calfrac's stakeholders
exceedingly well. In Mr. Blair's case, I would specifically like to
recognize his many notable contributions to Calfrac's extensive
Health, Safety, Environment and Quality Management initiatives. For
Mr. Baker, I would like to acknowledge his combination of legal
expertise and extensive business experience which allowed him to
bring particularly valuable perspectives to Calfrac's board."
Mr. Link also stated: "We are most grateful to the clients and
vendors who have been steadfast partners of Calfrac, certainly over
time, but especially throughout the past turbulent year. In
addition, the Calfrac managers and employees in the field, in the
various districts and at head office have never faltered. The long
and complex process of completing the Plan could never have been
accomplished without the efforts of our financial and legal
advisors, our executive team and our board of directors. We offer
sincere thanks to them all."
SUMMARY OF SPECIFIC ELEMENTS OF THE PLAN
As a result of the Plan, Calfrac has been able to:
- Reduce indebtedness by approximately $576 million, converted using the exchange rate
as of September 30, primarily
representing the face value of the Senior Unsecured Notes that were
exchanged for common equity in the Company;
- Reduce annual interest costs by as much as $51 million, converted using the exchange rate as
of September 30;
- Secure an increase in liquidity of $60
million, representing the capital injected by investors in
the 1.5 Lien Convertible Notes. This amount is before the payment
of remaining transaction costs;
- Issue to shareholders of record as of December 17, two share purchase warrants for
every Calfrac share held. Each warrant allows the holder to
purchase a share of common equity from the Company for $0.05 ($2.50 post
consolidation). These warrants have a three-year term following the
effective date, expiring on December 18,
2023 and will be listed for trading on the TSX under the
symbol CFW.WT;
- Complete, using existing liquidity, a prior tender offer for
Calfrac shares, where 6,061,561 shares were tendered for
$909,234 in cash. The holders of
these shares will also receive warrants for shares tendered per the
terms of the tender offer;
- Execute an amendment to the Company's Senior Bank Credit
Facility, including a waiver of the Funded Debt to Bank EBITDA
covenant through Q2/21; and,
- Execute a share and warrant consolidation at a 50:1 ratio,
resulting in approximately 37.4 million shares outstanding at
closing, before giving effect to future warrant exercises, backstop
fees, equity-linked compensation or conversion of the 1.5 Lien
Convertible Notes. No fractional shares or warrants were issued as
a part of the consolidations.
A further news release will be issued by the Company to confirm
the commencement of trading of the post-consolidation shares and
warrants.
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 the
expected positive impacts of the amended recapitalization
transaction; expectations for improved customer activity and
expense reductions in 2021; the expected reduction in annual cash
interest expense; the anticipated listing of the warrants for
trading on the TSX and the commencement of trading thereof; the
anticipated commencement of trading of the common shares on a
post-share consolidation basis; and Calfrac's expectations and
intentions with respect to the foregoing.
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; actions taken by Wilks
Brothers, LLC; decisions by securities regulators and/or the
courts; default under the Company's credit facilities and/or both
tranches of the Company's senior secured notes due to a breach of
covenants therein; the impact of events of default in respect of
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; global economic
conditions; along with those risk and uncertainties identified
under the heading "Risk Factors" and elsewhere in the Management
Information Circular dated August 17,
2020, as supplemented by the Material Change Report dated
September 25, 2020, and the Company's
annual information form dated March 10,
2020, each as 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. This press release is not an offer of
securities for sale in the United
States. Securities may not be offered or sold in
the United States absent an
exemption from registration under the Securities Act of
1933.
SOURCE Calfrac Well Services Ltd.