Calfrac Well Services completes recapitalization transaction

By Sarah Lizee

Olympia, Wash., Dec. 18 – Calfrac Well Services Ltd. announced Friday afternoon the completion of its amended recapitalization transaction.

The amended recapitalization transaction was implemented under a plan of arrangement under the Canada Business Corporations Act.

The plan was approved by the Court of Queen's Bench of Alberta on Oct. 30, and an order giving full effect to the plan in the United States was entered on Dec. 1.

“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,” Calfrac's executive chairman, Ron Mathison, said in the press release.

As a result of the plan, Calfrac has been able to:

• Reduce debt by around $576 million, converted using the exchange rate as of Sept. 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 Sept. 30;

• Secure an increase in liquidity of $60 million, representing the capital injected by investors in the 1.5-lien convertible notes;

• Issue to shareholders of record as of Dec. 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). The warrants expire on Dec. 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 about 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.

Calfrac's common shares are publicly traded on the Toronto Stock Exchange under the “CFW” trading symbol.

Calfrac is a Calgary, Alta.-based company that provides specialized oilfield services to exploration and production companies. The company filed bankruptcy on July 13 under Chapter 15 case number 20-33529.

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