By Susanna Moon
Chicago, June 10 – Calfrac Well Services Ltd. said it closed a debt-with-warrants financing that included a C$200 million 9%/12% second-lien senior secured term loan due Sept. 30, 2020 with Alberta Investment Management Corp., or Aimco.
Calfrac may elect to pay interest in kind or defer interest for up to eight quarterly periods over the term of the loan, with this in-kind or deferred interest then carrying an interest rate of 12%, according to a company announcement.
Amortization payments of 1% of the original principal amount are payable annually, in equal quarterly installments, with the balance due at maturity.
The company said it also issued to Aimo warrants to purchase up to 6,934,776 common shares at a price of $4.14 per share at any time before June 10, 2019.
Proceeds will be used for working capital and general corporate purposes, including the repayment of all of Calfrac's bank debt under its syndicated revolving credit facilities and the repayment of the borrowings of Calfrac Well Services (Argentina) SA.
“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,” the release noted.
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 with Calfrac's lending syndicate, any repurchase of unsecured notes is limited to C$200 million and subject to a minimum liquidity requirement of C$100 million. Any repurchase of notes must result in a reduction of annual net interest costs on a dollar-for-dollar basis.
"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,” Fernando Aguilar, president and chief executive officer of Calfrac, said in the press release.
“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."
Peters & Co. Ltd. and RBC Capital Markets, LLC were the financial advisers.
Proceeds 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.
Calfrac is a Calgary, Alta.-based company that provides specialized oilfield services to exploration and production companies.
| Issuer: | Calfrac Well Services Ltd.
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| Issue: | Second-lien senior secured term loan
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| Amount: | C$200 million
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| Maturity: | Sept. 30, 2020
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| Coupon: | 9% in cash or 12% in kind
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| Warrants: | For up to 6,934,776 common shares
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| Warrant expiration: | June 10, 2019
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| Warrant strike price: | $4.14
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| Investor: | Alberta Investment Management Corp.
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| Pricing date: | June 10
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| Stock symbol: | Toronto: CFW
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| Stock price: | C$2.95 at close June 8
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| Market capitalization: | C$374.93 million
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