/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/
CALGARY, Nov. 23, 2016 /CNW/ - Calfrac Well Services Ltd. ("Calfrac") (TSX–CFW) is pleased to announce that it has entered into an agreement with Peters & Co. Limited, as lead underwriter on behalf of a syndicate of underwriters to be formed (collectively, the "Underwriters"), pursuant to which the Underwriters have agreed to purchase, on a private placement basis, 14,040,000 common shares of Calfrac ("Shares") at a price of $2.85 per Share for total gross proceeds of approximately $40 million (the "Offering").
Of the net proceeds of the Offering, $25 million is expected to be held in a segregated account which will enable such amount to be utilized in the calculation of EBITDA towards Calfrac's covenant to maintain a specified funded debt to EBITDA ratio. The application of new equity issue proceeds in this manner, referred to as an "Equity Cure", may take place in any of the quarters ending prior to and including December 31, 2017, subject to certain conditions, including the condition that Calfrac cannot use Equity Cures in consecutive quarters. The Equity Cure funds, together with the remainder of the net proceeds of the Offering, are expected to be used for general working capital and corporate purposes.
Calfrac previously funded its first available Equity Cure in December 2015 and the relevant funds remain in a segregated account. The use of Calfrac's Equity Cures will depend on a number of factors, including the pace of the recovery of the North American pressure pumping services market and the associated need for working capital, the collection of accounts receivable and the timing of capital expenditures.
Calfrac's largest single shareholder, Matco Investments Ltd., will be participating in the Offering to at least its effective pro rata ownership percentage (20.64%). The Offering is scheduled to close on or about December 6, 2016 and is subject to customary conditions, including receipt of all necessary regulatory approvals and the approval of the Toronto Stock Exchange.
Fernando Aguilar, President and Chief Executive Officer, commented, "This Offering will fully fund our second available Equity Cure and provide assurance that we will be positioned to utilize all of the flexibility afforded under our credit facilities."
This news release does not constitute an offer to sell or a solicitation of any offer to buy the securities in the United States. The securities offered have not been and will not be registered under the U.S. Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements of such Act.
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, Russia, Argentina and Mexico.
This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of words such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar expressions are intended to identify forward-looking statements or information. More particularly and without limitation, this press release contains forward-looking statements and information relating to the anticipated closing date of the Offering, the use of proceeds therefrom, the participation of Matco Investments Ltd. in the Offering and the utilization of Calfrac's Equity Cure. 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: the ability of Calfrac to obtain the required regulatory approvals to complete the Offering; global economic conditions; the level of exploration, development and production for oil and natural gas in Canada, the United States, Russia, Argentina and Mexico; 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; excess oilfield equipment levels; regional competition; the availability of capital on satisfactory terms; restrictions resulting from compliance with debt covenants and risk of acceleration of indebtedness; direct and indirect exposure to volatile credit markets, including credit rating risk; currency exchange rate risk; risks associated with foreign operations; operating restrictions and compliance costs associated with legislative and regulatory initiatives relating to hydraulic fracturing and the protection of workers and the environment; changes in legislation and the regulatory environment; dependence on, and concentration of, major customers; liabilities and risks, including environmental liabilities and risks, inherent in oil and natural gas operations; uncertainties in weather and temperature affecting the duration of the service periods and the activities that can be completed; liabilities and risks associated with prior operations; failure to maintain Calfrac's safety standards and record; failure to realize anticipated benefits of acquisitions and dispositions; the ability to integrate technological advances and match advances from competitors; intellectual property risks; sourcing, pricing and availability of raw materials, component parts, equipment, suppliers, facilities and skilled personnel; and the effect of accounting pronouncements issued periodically.
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.
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For further information: Fernando Aguilar, President and Chief Executive Officer, Telephone: (403) 266-6000, Fax: (403) 266-7381; Michael Olinek, Vice President, Finance and Interim Chief Financial Officer, Telephone: (403) 266-6000, Fax: (403) 266-7381; Ashley Connolly, Manager, Capital Markets, Telephone: (403) 266-6000, Fax: (403) 266-7381