CALGARY, AB, March 1, 2021 /CNW/ - Calfrac Well Services
Ltd. ("Calfrac" or the "Company") (TSX: CFW) announced today the
modification of its prior disclosure on one matter and its
intention to make an application to the Court of Queen's Bench of
Alberta in relation to this
modified disclosure.
Background
As previously announced, Calfrac successfully completed its
Amended Recapitalization Transaction on December 18, 2020. This transaction was
implemented pursuant to a Plan of Arrangement under the Canada
Business Corporations Act. The Plan was approved by court
orders in both Canada and
the United States.
Calfrac's Shareholders and Unsecured Noteholders had
overwhelmingly approved the Company's Amended Recapitalization
Transaction on October 16, 2020.
Fewer than 4% of the Calfrac securities held by investors, other
than Wilks Brothers, LLC, a direct competitor of Calfrac, voted
against the Plan.
Voting Procedures
Care was taken to maintain a voting process that complied with
all applicable laws and the rules of the Toronto Stock Exchange. A
comprehensive vote required the approval of the Plan by 66 2/3% of
the votes cast by all Calfrac Shareholders who voted. In addition,
a separate vote count was done for certain matters that included
only the votes of disinterested Shareholders, with a 50% approval
threshold in each case. A separate vote was conducted in respect of
authorizing the issuance of Calfrac Common Shares upon the
conversion of the newly issued 1.5 Lien Notes, which included only
the votes of those Shareholders who did not acquire any of such 1.5
Lien Notes.
Modified Disclosure
Calfrac recently became aware that one institutional Shareholder
of Calfrac purchased approximately $1
million of the 1.5 Lien Notes. The purchase was made
pursuant to a pro rata offering, made to qualified holders of
Calfrac's previously issued Unsecured Notes. Up to $15 million of principal amount of 1.5 Lien Notes
was offered to such Unsecured Noteholders as part of the Plan.
Despite efforts to confirm that the institutional Shareholder
and other Shareholders had not purchased any of such Notes, the
purchase of these Notes by such Shareholder was not discovered at
the time of subscription, as the subscriber name was that of an
unknown affiliated entity, rather than the institution's usual name
as it was known to Calfrac's agents. The subscriber's address was
also the address of an unrelated custodial institution, rather than
that of the institutional Shareholder.
The dollar amount of the subscription was not material to any
of: Calfrac, the 1.5 Lien Note financing, the Plan or the
institutional Shareholder.
Calfrac further advises that Calfrac and the institutional
Shareholder intend to rescind the subscription and cancel the
applicable 1.5 Lien Notes following which the institutional
Shareholder will be returned its initial purchase price.
Calfrac has advised applicable regulators and will be making an
application to the Court of Queen's Bench of Alberta with respect to this matter.
Benefits of the Plan and Conclusion
The previously disclosed benefits of the approved Plan remain
the same:
- A reduction of Calfrac's indebtedness by
approximately $576 million;
- A reduction in Calfrac's annual interest costs by as much
as $51 million;
- Additional corporate liquidity, representing the capital
injected by investors in the 1.5 Lien Notes;
- The issuance of two share purchase warrants for each Calfrac
share previously held;
- The completion of a tender offer for Calfrac shares, where
6,061,561 shares were tendered for $909,234 in cash, plus
warrants; and
- An amendment to the Company's Senior Bank Credit Facility,
including a waiver of the Funded Debt to Bank EBITDA covenant
through Q2/21.
Calfrac's common shares and warrants are publicly traded on the
Toronto Stock Exchange under the trading symbols "CFW" and
"CFW.WT", respectively. 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 the
anticipated rescission of a subscription for 1.5 Lien Notes by
an institutional Shareholder, cancellation of the applicable 1.5
Lien Notes and return of the investment proceeds to such
institutional Shareholder, and a related application to the Court
of Queen's Bench of Alberta, and
Calfrac's intentions and expectations 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.
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:
actions taken by Wilks Brothers, LLC; decisions by securities
regulators and/or the courts; default under the Company's credit
facilities and/or the Company's senior secured notes due to a
breach of covenants therein; failure to reach any additional
agreements with the Company's lenders; 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; failure to receive any applicable regulatory,
court, third party and other stakeholder approvals or decisions in
respect of the Recapitalization Transaction and the court orders
granting enforcement thereof; Calfrac's ability to continue to
manage the effect of the COVID-19 pandemic on its operations;
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.