Calfrac Announces Amendments to Credit Facilities and Provides Capital Budget Update

CALGARY, Dec. 14, 2015 /CNW/ - Calfrac Well Services Ltd. ("Calfrac") (TSX–CFW) is pleased to announce that it has entered into an agreement with its syndicate of lenders (the "Lenders") to make certain amendments to its credit facilities (the "Credit Facilities") in order to provide Calfrac with increased financial flexibility.

The principal amendments to the Credit Facilities include, among others, the following terms:

  • a voluntary reduction in the Credit Facilities commitment from $400 million to $300 million, which is still anticipated to provide Calfrac with more than sufficient liquidity;
  • a change to the maximum funded debt-to-EBITDA ratio ("Leverage Ratio") covenant, to apply over the next two years;
  • the removal of the prior maximum total debt-to-capitalization ratio covenant (previously 70%);
  • a new covenant of 30% governing Calfrac's funded debt-to-capitalization ratio (removing Calfrac's unsecured senior notes due 2020 from the calculation of debt in the debt-to-capitalization ratio covenant);
  • a conditional increase in the accordion feature of the syndicated credit facility (from $100 million to $200 million); and
  • a new equity cure provision which allows Calfrac to apply the proceeds of equity offerings in the calculation of EBITDA towards the Leverage Ratio, subject to the conditions discussed below.

Fernando Aguilar, President & Chief Executive Officer of Calfrac, commented, "We are very pleased to announce these amendments to the terms of our Credit Facilities and we would like to thank our lenders for their commitment towards our business. We believe that we have been able to agree upon a covenant relief package that will provide for significant financial flexibility to manage our business during this industry downturn. This is a positive development for our company which will enable us to withstand even further erosion in industry conditions, and position us for long-term success."

Additional details relating to these amendments are set out below.  It should be noted that certain conditions apply to such amendments, which will require ongoing compliance by Calfrac:

  • the Leverage Ratio covenant, which does not include Calfrac's unsecured senior notes due 2020, is increased to the following:

For the quarters ended


Covenant

December 31, 2015


4.5x

March 31, 2016 and June 30, 2016


Waived

September 30, 2016 and December 31, 2016


5.0x

March 31, 2017 and June 30, 2017


4.5x

September 30, 2017 and December 31, 2017


4.0x

Thereafter


3.0x

  • from the quarter ending December 31, 2015 through the quarter ending December 31, 2017: 
    • advances under the Credit Facilities will be limited by a borrowing base based on North American accounts receivable, cash on hand and fixed asset values; and 
    • distributions will be restricted and no increase in dividends will be permitted;
  • the proceeds from equity offerings may be applied in the calculation of EBITDA towards the Leverage Ratio covenant for any of the quarters ending prior to and including December 31, 2017, subject to the following conditions:
    • an equity cure may be utilized in no more than two quarters during such period;
    • equity cures may not be utilized in consecutive quarters; and
    • the equity cure utilized in any quarter is not to exceed the greater of 50% of total EBITDA over the prior twelve month period or $25 million;
  • second lien financing of up to $400 million will be permitted, subject to certain conditions, including the execution of a satisfactory intercreditor agreement; and
  • two pricing levels, which are based on the applicable Leverage Ratio calculation, were added which will result in Calfrac paying higher fees for advances and for standby fees under the Credit Facilities until December 31, 2017 and during any period in which Calfrac's Leverage Ratio calculation is 3.5x or greater, with such increases representing a potential increase in fees of an additional 125 basis points at the highest pricing level.

Calfrac is also announcing a 2016 capital budget of approximately $25 million which is comprised entirely of sustaining capital expenditures, plus an additional $30 million which will be carried over from Calfrac's 2015 capital program. Calfrac's 2015 capital spending is expected to total approximately $160 million.

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 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 Calfrac's liquidity and future capital expenditures. 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, prevailing economic conditions; commodity prices; sourcing, pricing and availability of raw materials, component parts, equipment, suppliers, facilities and skilled personnel; dependence on major customers; uncertainties in weather and temperature affecting the duration of the service periods and the activities that can be completed; health, safety and environmental risks; exchange rate fluctuations; marketing and transportation; loss of markets; environmental risks; governmental regulations; competition; incorrect assessment of the value of acquisitions; failure to realize the anticipated benefits of acquisitions; ability to access sufficient capital from internal and external sources; failure to obtain required regulatory and other approvals; and changes in legislation, including but not limited to tax laws, royalties and environmental regulations.

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.

For further information: Fernando Aguilar, President and Chief Executive Officer, Telephone: (403) 266-6000, Fax: (403) 266-7381; Michael J. McNulty, Chief Financial Officer, Telephone: (403) 266-6000, Fax: (403) 266-7381; Ashley Connolly, Manager, Capital Markets, Telephone: (403) 266-6000, Fax: (403) 266-7381

RELATED LINKS
http://www.calfrac.com

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