Canadian Manufacturing

Calfrac investors approve company plan over Wilks Brothers takeover

Wilks Brothers had offered to pay 25 cents per share with a maximum cash payout of $21.1 million to buy Calfrac

October 19, 2020  The Canadian Press

CALGARY — Shareholders in debt-laden Calgary-based Calfrac Well Services Ltd. have narrowly approved a recapitalization plan proposed by management, thus setting aside a takeover offer from Texas rival Wilks Brothers, LLC.

In a vote Oct. 16, owners of 68.75% of the shares represented at the meeting voted in favour of a proposal which allows each shareholder to retain their shares or elect to be paid 15 cents per share in cash from a maximum pool of $10 million.

The company is also offering to issue two warrants per share, allowing the holder to buy more shares at an exercise price of five cents each for three years.

In an earlier meeting on Oct. 16, holders of Calfrac’s senior unsecured notes voted 99.7% in favour of the proposal, which allows them to swap debt for shares, leaving existing shareholders with about 8% of the equity.

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The proposal required at least two-thirds approval from both sets of stakeholders to proceed.

Wilks Brothers had offered to pay 25 cents per share with a maximum cash payout of $21.1 million to buy Calfrac. It owns just under 20% of the shares.

Calfrac warned last month that if the court-supervised reorganization under the Canada Business Corporations Act is not completed, it would go back to an earlier plan through a Companies’ Creditors Arrangement Act process that would likely result in a reduced recovery for shareholders.

Wilks responded that it would continue to honour its takeover offer even if the company does enter a CCAA process.


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