Calfrac announces CDN$200 million debt-with-warrants financing

CALGARY, June 10, 2016 /CNW/ - Calfrac Well Services Ltd. ("Calfrac" or the "Company") (TSX–CFW) announced today that it has closed a debt-with-warrants financing with Alberta Investment Management Corporation ("AIMCo"). 

AIMCo, on behalf of certain of its clients, has provided Calfrac a CDN$200 million second lien senior secured term loan facility (the "Term Loan"). The Term Loan will mature on September 30, 2020, and will bear interest at the rate of 9% per annum, paid quarterly. Amortization payments equal to 1% of the original principal amount are payable annually, in equal quarterly installments, with the balance due on the final maturity date. Calfrac may elect to pay interest "in kind" or defer payment of interest for up to eight quarterly periods over the term of the loan, with such "in kind" or deferred interest then carrying a 12% per annum interest rate. The proceeds from the Term Loan were made available in a single draw, and amounts borrowed under the Term Loan that are repaid or prepaid will not be available for reborrowing.

In conjunction with the funding of the Term Loan, an aggregate of 6,934,776 warrants to purchase common shares of Calfrac have been issued to AIMCo, entitling it to acquire up to 6,934,776 common shares at a price of $4.14 per common share at any time prior to June 10, 2019.

The proceeds of the Term Loan will be used by Calfrac for working capital and general corporate purposes, including the repayment of all of Calfrac's current bank indebtedness under its syndicated revolving credit facilities, and the repayment of the borrowings of Calfrac Well Services (Argentina) S.A. The financing also positions Calfrac to assess opportunities to repurchase some of its unsecured senior notes due 2020 if they become available at a price that Calfrac finds advantageous.

No amendments were made to the available commitment, term, covenants or interest rates payable under Calfrac's existing credit facilities as part of the required approvals for the Term Loan.  As part of the arrangements agreed to with Calfrac's lending syndicate, any repurchase of unsecured notes is currently limited to CDN$200 million and subject to a minimum liquidity requirement of CDN$100 million, calculated with reference to undrawn capacity under the credit facilities together with cash on hand.  As well, any repurchase of notes must result in a reduction of annual net interest costs on a dollar for dollar basis. 

"We are very pleased to announce this agreement with AIMCo, a high performance investment manager with global experience", stated Fernando Aguilar, President and Chief Executive Officer of Calfrac.  "AIMCo is an ideal long-term investor for Calfrac, and the funds secured through this financing, together with our fully funded equity cure announced last December, will ensure that we are well-positioned to navigate this period of market weakness and capitalize on the opportunities expected to arise as market conditions recover.  We would also like to recognize and thank our lending syndicate for its ongoing commitment to our business, as evidenced by its support of this transaction through the intercreditor agreement that was concluded as part of this financing."

"Calfrac Well Services is a true representation of the innovation and entrepreneurial spirit for which Alberta's energy sector has gained global recognition," said Kevin Uebelein, AIMCo Chief Executive Officer. "AIMCo's investment teams have proven adept at identifying value-adding investment opportunities for its clients. Despite the current challenges faced by the industry, AIMCo is confident that Calfrac is well-positioned to build upon its leadership position in the market, earning sustainable, long-term returns for its investors." 

Peters & Co. Limited and RBC Capital Markets, LLC acted as financial advisors to Calfrac in this transaction.

About Calfrac

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, Mexico and Russia.

About Alberta Investment Management Corporation (AIMCo)

AIMCo is one of Canada's largest and most diversified institutional investment managers with more than CDN$90 billion of assets under management.  AIMCo was established on January 1, 2008 with a mandate to provide superior long-term investment results for its clients.  AIMCo operates at arms-length from the Government of Alberta and invests globally on behalf of 31 pension, endowment and government funds in the Province of Alberta.  For more information on AIMCo please visit www.aimco.alberta.ca.

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 use of proceeds of the Term Loan, the opportunity to repurchase unsecured senior notes on an accretive basis, the severity of the present oil and gas industry downturn and Calfrac's ability to navigate it, and Calfrac's positioning to build upon its leadership position in its market and earn sustainable, long-term returns for its investors.  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, risks associated with  general economic conditions in Canada, the United States, Russia, Mexico and Argentina; the demand for fracturing and other stimulation services during drilling and completion of oil and natural gas wells; volatility in market prices for oil and natural gas and the effect of this volatility on the demand for oilfield services generally; currency exchange rate risk; compliance with covenants and/or repayment obligations under the Company's credit facilities, Term Loan and senior notes indenture; regional competition; liabilities and risks, including environmental liabilities and risks, inherent in oil and natural gas operations; changes in legislation, including but not limited to tax laws, royalties and environmental regulations; sourcing, pricing and availability of raw materials, components, parts, equipment, suppliers, facilities and skilled personnel; the ability to integrate technological advances and match advances by competitors; the availability of capital on satisfactory terms; intellectual property risks; uncertainties in weather and temperature affecting the duration of the service periods and the activities that can be completed; dependence on, and concentration of, major customers; the creditworthiness and performance by the Company's counterparties and customers; liabilities and risks associated with prior operations; the effect of accounting pronouncements issued periodically; and failure to realize anticipated benefits of acquisitions and dispositions.

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.

Fernando Aguilar, President and Chief Executive Officer, Telephone: [phone], Fax: [phone]; Michael Olinek, Vice President, Finance and Interim Chief Financial Officer, Telephone: [phone], Fax: [phone]; Ashley Connolly, Manager, Capital Markets, Telephone: [phone], Fax: [phone]