Wilks Announces Filing of Notice of Variation for its Improved Premium Offer and Responds to Calfrac's Latest Attempt to Intimidate Shareholders

CISCO, Texas, Oct. 9, 2020 /CNW/ - Wilks Brothers, LLC ("Wilks") today announced that, further to its October 5, 2020 announcement, its affiliate, THRC Holdings, L.P., has formally amended the terms of its take-over bid (the "Premium Offer") for all of the issued and outstanding common shares of Calfrac Well Services Ltd. ("Calfrac") (TSX: CFW).  Wilks' Premium Offer will remain open until 5:00 p.m. (Toronto time) on December 23, 2020, subject to its terms. The Notice of Variation, Amended Letter of Transmittal and Amended Notice of Guaranteed Delivery were filed with securities regulators in Canada yesterday and will be mailed to Calfrac Shareholders.

KEY POINTS FOR CALFRAC SHAREHOLDERS:

• Shareholders can receive up to $0.25 in cash per Calfrac Share and a minimum cash consideration of $0.18 per Calfrac Share, subject to the aggregate purchase price for all Calfrac Shares acquired pursuant to the Premium Offer not exceeding $21,103,250.
• Cash consideration is more than 110% higher than the $10 million aggregate cash consideration under Calfrac's Amended Management Transaction.
• Wilks' Premium Offer contains no new conditions.
• Wilks' Premium Offer is the only transaction that does not require Court approval or the consent of Calfrac or any of its creditors.
• Wilks' Premium Offer is the only transaction that has the full support of ISS, Glass Lewis and other independent advisory firms.
• Wilks' Premium Offer is simple, straightforward and available to Shareholders if they Vote AGAINST the Amended Management Transaction and any Management Transaction is not approved by the Courts.
• Calfrac's threat that the Premium Offer will disappear because a CCAA Court will rubberstamp Calfrac's Management Transaction, is misleading and not rooted in any reality. A CCAA Court is not a rubberstamp.
• Calfrac's recent actions are just another desperate and feeble attempt to divert Shareholders' attention from Wilks' superior Premium Offer.

The economics for Calfrac Shareholders are crystal clear:

Under the Wilks Premium Offer, you can receive cash recovery of up to $0.25 per Share, but no less than $0.18 per Share; OR

Under the Amended Management Transaction, you can receive, at most, cash recovery of between $0.089 to $0.118 per Share.   

STRAIGHT TALK FROM WILKS

Wilks has improved its Premium Offer to further enhance recovery for current Shareholders of Calfrac. As a result, Wilks has determined that no further conditions to the Premium Offer are required.  The Wilks' Premium Offer is straightforward and gimmick free.

As promised, Wilks' Premium Offer will remain open to Shareholders even if Calfrac "pivots" to a CCAA proceeding after Shareholders vote down the Amended Management Transaction.  This is because a CCAA Court is not a rubberstamp for the Management Transaction, as Calfrac suggests.  A CCAA filing by Calfrac provides a forum for debtholder negotiations and for the development of true value enhancing transactions that benefit Calfrac and all stakeholders. 

However, if a CCAA process ultimately results in Calfrac's original Management Transaction (or any amendment, variation or replacement) being approved by the Court of Queen's Bench of Alberta (the "Court"), before Wilks is able to purchase shares via the Premium Offer, the conditions to the Premium Offer will not have been met. The Premium Offer has always been conditioned on the Management Transaction not being approved by the Court, in any process. 

Calfrac Shareholders should know that Wilks' believes Calfrac's original Management Transaction is wholly incapable of being approved in any CCAA proceeding, in any event; it will be irrevocably tainted by having been voted down by Shareholders and/or rejected by the Court in the CBCA proceeding.  Further, any such transaction would require the express approval of the holders of the second lien notes, which will not be provided.  Calfrac cannot hide from the fact that its plan to proceed in this manner under the CCAA is fundamentally flawed.  No one should be fooled by Calfrac's claim that it can have the Court "rubberstamp" a rushed, and clearly unfair, CCAA plan. If Calfrac commences a proceeding under the CCAA, Wilks expects that such a restructuring process will be like all other CCAAs, fair, transparent and value-maximizing.  Moreover, any attempt by Calfrac to try to implement the original Management Transaction via the CCAA would also be an impermissible defensive tactic under Canadian securities laws while the Premium Offer is pending. Bottom line, Calfrac's threats to Shareholders are baseless.

Following Shareholders' voting down the Amended Management Transaction, Wilks will be applying to the Canadian securities regulators to shorten the period for which the Premium Offer must remain outstanding in order to be able to take up shares under the Premium Offer well before the current December 23, 2020 statutory deadline, to get cash into Shareholders hands sooner.

CALFRAC'S RECORD TO DATE SPEAKS VOLUMES

Calfrac's Board and the self-selected group of unsecured creditors and insiders it has aligned itself with have demonstrated that they will say and do anything to try to push through a deal that independent experts agree is bad for both Calfrac and its stakeholders.  Calfrac's record to date speaks volumes:

• The current Board and management have overseen a catastrophic loss in Shareholder value and have no reasonable plan to address this;
• Instead of exploring value maximizing transactions, Calfrac launched its original Management Transaction; a transaction that would leave Calfrac as a highly leveraged company while effecting an unprecedented transfer of value to a group of insiders and self-selected unsecured noteholders at the expense of Calfrac's Shareholders;
• This transfer of value is to be accomplished principally through the issue of $60 million of 1.5 Lien notes, which are convertible at $0.02665/share, which is an eye-watering discount to the $0.15 value that Calfrac itself has ascribed to its shares in the Amended Management Transaction. This does nothing but confer substantial value to the Calfrac insiders and the self-selected unsecured creditors who would provide this financing;
• Only after Wilks launched the Premium Offer to protect Shareholders did Calfrac grudgingly increase the recoveries to Shareholders via the "Amended Management Transaction" that contains cash caps, gimmicks and other features that are a true "bait and switch". The market was not fooled and immediately recognised that the Amended Management Transaction fell woefully short of the superior value offered under Wilks' Premium Offer; and
• Finally, unwilling to provide additional value to Shareholders, Calfrac then resorted to threats, intimidation and the classic "carrot and stick" approach with its Shareholders, threatening to use a CCAA Court as a rubberstamp to force the Management Transaction through. This campaign is shameful, and nothing more than a blatant effort to try to intimidate shareholders into approving the Management Transaction and preserve the enormous financial windfall for the Chairman and the self-selected group of unsecured noteholders.

Shareholders have endured enough disregard from Calfrac.  Its actions speak louder than its words.

In the coming (final) days before the October 16 Shareholder vote, Wilks expects Calfrac will continue to make a lot of noise.  Shareholders should ignore it.  Calfrac's campaign is spinning out of control and they are trying to drag Shareholders down with them.  Calfrac's noise cannot change the fact that its Amended Management Transaction is a bad deal for Calfrac and its Shareholders.  Independent leading proxy advisory firms, ISS and Glass Lewis, agree.  They have both strongly recommended that Calfrac shareholders vote AGAINST the Amended Management Transaction.  Another independent analyst, Cormark Securities Inc., has stated that it views the Wilks' Premium Offer as "materially superior for non-interested shareholders" when compared to the Amended Management Transaction.

Wilks' Premium Offer is the clear path for Shareholders to achieve a superior recovery on their investment.

To preserve their right to the Premium Offer recovery, Calfrac Shareholders must first vote down the Amended Management Transaction. Vote the BLUE Proxy AGAINST the Amended Management Transaction. 

Click here for voting instructions or learn more at www.afaircalfrac.com.

The deadline to submit your blue proxy is October 13, 2020 at 11:59 p.m. MST.

If you have already voted AGAINST the Amended Management Transaction using the BLUE proxy, you do not need to do anything further and we thank you for your support.

If you have yet to vote or want to change your vote, you are encouraged to vote using only the BLUE proxy. Please disregard any other proxies you receive. If you have already submitted a proxy solicited by Management, you may still change your vote and protect your economic interests by voting your BLUE proxy today. The later dated proxy will supersede any earlier proxy submitted.

Need help voting? Please contact Laurel Hill Advisory Group as noted below.

QUESTIONS/ VOTING/ TENDERING ASSISTANCE

Shareholders who have questions or require voting or tendering assistance, may contact our communications advisor, proxy solicitation agent, information agent and depositary, Laurel Hill Advisory Group, by phone, toll-free at 1-877-452-7184 (North America) or [phone] (outside North America) or by e-mail at [email protected].

NOTICE

THIS ANNOUNCEMENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE OR FORM PART OF THE OFFER OR AN INVITATION TO PURCHASE, OTHERWISE DISPOSE OF OR A SOLICITATION OF AN OFFER TO SELL, ANY SECURITY. WILKS HAS FILED A TAKE-OVER BID CIRCULAR (AS THE SAME MAY BE AMENDED OR SUPPLEMENTED) AND RELATED MATERIALS WITH VARIOUS SECURITIES COMMISSIONS IN CANADA PURSUANT TO WHICH THE OFFER IS MADE. THE TAKE-OVER BID CIRCULAR CONTAINS IMPORTANT INFORMATION ABOUT THE OFFER AND SHOULD BE READ IN ITS ENTIRETY BY CALFRAC SHAREHOLDERS AND OTHERS TO WHOM THE OFFER IS ADDRESSED. CALFRAC SHAREHOLDERS (AND OTHERS) WILL BE ABLE TO OBTAIN, AT NO CHARGE, A COPY OF THE OFFER TO PURCHASE, TAKE-OVER BID CIRCULAR AND VARIOUS ASSOCIATED DOCUMENTS ON THE SYSTEM FOR ELECTRONIC DOCUMENT ANALYSIS AND RETRIEVAL (SEDAR) AT WWW.SEDAR.COM. THE OFFER WILL NOT BE MADE IN, NOR WILL DEPOSITS OF SECURITIES BE ACCEPTED FROM A PERSON IN, ANY JURISDICTION IN WHICH THE MAKING OR ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. HOWEVER, WILKS MAY, IN ITS SOLE DISCRETION, TAKE SUCH ACTION AS IT DEEMS NECESSARY TO EXTEND THE OFFER IN ANY SUCH JURISDICTION.

ADDITIONAL DISCLOSURE

Wilks is relying on the exemption under section 9.2(4) of National Instrument 51-102 - Continuous Disclosure Obligations and exemptive relief provided by the Alberta Securities Commission in an Order dated August 4, 2020 (the "Order") to make this public broadcast solicitation. The following information is provided in accordance with corporate and securities laws applicable to public broadcast solicitations. This solicitation is being made by Wilks, and not by or on behalf of the management of Calfrac. Wilks has engaged Laurel Hill Advisory Group to act as our communications advisor and proxy solicitation agent.

Based upon publicly available information, Calfrac's registered office is at 4500, 855-2^nd Street S.W. Calgary, Alberta, Canada, T2P 4K7, and its head office is at 411-8^th Avenue S.W. Calgary, Alberta, Canada, T2P 1E3. Wilks is soliciting proxies in reliance upon the public broadcast exemption to the solicitation requirements under applicable Canadian corporate and securities laws (including the Order), conveyed by way of public broadcast, including press release, speech or publication, and by any other manner permitted under applicable Canadian laws. In addition, this solicitation may be made by mail, telephone, facsimile, email or other electronic means as well as by newspaper or other media advertising and in person. All costs incurred for the solicitation will be borne by Wilks.

Wilks and Dan and Staci Wilks together hold 28,720,172 Common Shares, representing approximately 19.78% of the issued and outstanding Common Shares of Calfrac on the basis of Calfrac's disclosure in its management information circular dated August 17, 2020. that there are 145,616,827 Common Shares outstanding.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain information in this Press Release may constitute "forward-looking information", as such term is defined in applicable Canadian securities legislation, about the objectives of Wilks as they relate to Calfrac. All statements other than statements of historical fact may be forward-looking information. Forward-looking information is often, but not always, identified by words such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar expressions.

Material factors or assumptions that were applied in providing forward-looking information include, but are not limited to: the intention of Wilks to make a formal take-over bid for the shares of Calfrac and the results of such bid; that required regulatory approvals will be obtained on terms satisfactory to Wilks; the reaction of Calfrac's Board and management to the Bid; the response to and outcome of any applications to Courts or regulators relating to the transactions described herein or otherwise that may be made by or against Calfrac or Wilks; the intention of Wilks to apply to securities regulators for discretionary relief from certain statutory requirements applicable to the bid and the results of such application.

Forward-looking information contained in this Press Release reflects current reasonable assumptions, beliefs, opinions and expectations of Wilks regarding future events and operating performance of Calfrac and speaks only as of the date of this  Press Release. Such forward-looking information is based on currently publicly available competitive, financial and economic data and operating plans and is subject to known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Calfrac, or general industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information. Many other factors could also cause Calfrac's actual results, performance or achievements to vary from those expressed or inferred herein, including, without limitation, the success of the proposed Wilks Premium Offer, the reaction of the market and Calfrac's shareholders, creditors and customers to the Wilks' Premium Offer, the impact of legislative, regulatory, competitive and technological changes; the state of the economy; credit and equity markets; the financial markets in general; price volatility; interest rate and exchange rate fluctuations; general economic conditions and other risks involved in the hydraulic fracking industry. The impact of any one factor on a particular piece of forward-looking information is not determinable with certainty as such factors are interdependent upon other factors, and Wilks' course of action would depend upon its assessment of the future considering all information then available.

Should any factor affect Calfrac in an unexpected manner, or should any assumptions underlying the forward-looking information prove incorrect, the actual results or events may differ materially from the events predicted. All of the forward-looking information reflected in this Press Release is qualified by these cautionary statements. There can be no assurance that the results or developments anticipated by Wilks will be realized or, even if substantially realized, that they will have the expected consequences for Calfrac, Calfrac's shareholders or Wilks. Forward-looking information is provided, and forward-looking statements are made as of the date of this Press Release and except as may be required by applicable law, Wilks disclaims any intention and assumes no obligation to publicly update or revise such forward-looking information or forward-looking statements whether as a result of new information, future events or otherwise. Nothing herein shall be deemed to be an acknowledgement or acceptance by Wilks that the terms of the amended Management Transaction are legally permissible, appropriate or capable of implementation.

SOURCE Wilks Brothers, LLC.