GASFRAC ENERGY SERVICES, INC.
Calgary, Alberta January 28, 2015 - GASFRAC Energy Services Inc. ("GASFRAC or the "Corporation") announces today that it has obtained court approval under the previously announced Companies' Creditors Arrangement Act ("CCAA") proceedings in respect of a forbearance agreement, entered into between GASFRAC and its subsidiaries and the Corporation's primary secured lender, PNC Bank Canada Branch ("PNC"), pursuant to which PNC has agreed, subject to certain conditions and restrictions, to forbear from exercising remedies under its existing secured loan documents that they are entitled to exercise with respect to specific defaults by GASFRAC under such secured loan documents, until March 2, 2015, or a date on which an event of default under the forbearance agreement occurs. In addition thereto, PNC has also agreed to increase the line of credit available to the Corporation to a maximum amount of $39,500,000 to enable the Corporation to fund ongoing operations.
The Corporation also received court approval to extend the existing stay of certain creditor claims and the exercise of contractual rights until March 18, 2015, which will enable the Corporation and its operating subsidiaries to maintain normal business operations, as well as to provide the necessary protection for the Corporation to continue a restructuring process under the oversight of the Monitor and with the advice of the Corporation's professional advisors.
The Corporation further received court approval for the implementation of a sale and investment solicitation process ("SISP Procedure") to be conducted within the CCAA proceedings under the supervision of the Monitor and a Special Committee of independent directors of the Corporation consisting of Julien Balkany (Chairman), Dale Tremblay and Robert McBean. The goal of SISP Procedure is to generate the highest possible bids for the acquisition of the business or the assets of the Corporation or a refinancing or recapitalization of the Corporation, and depending on the outcome of the SISP, may formulate a plan of compromise or arrangement for all stakeholders of the Corporation. The court has approved the appointment of CIBC World Markets Inc. to act as agent, investment banker and financial advisor to the Corporation in connection with any proposed financing or sale transactions that may arise under the SISP Procedure and the CCAA proceedings.
The SISP Procedure describes the manner in which prospective bidders may gain access to or continue to have access to due diligence materials concerning the Corporation and its assets, the manner in which bidders and bids become Qualified Bidders or Qualified Bids (as each term is defined under the SISP Procedure), respectively, the receipt and negotiations of Qualified Bids received, the ultimate selection of the successful bidder and the approval thereof by the Corporation, PNC and the court.
The Monitor will supervise the SISP Procedure. Qualified Bidders, if they wish to submit a bid, will be required to deliver written copies of a bid proposal to CIBC, with a copy to the Monitor, at the addresses specified in the SISP Procedure, no later than 12:00 p.m. (Mountain Standard Time) on February 24, 2015, or such other date or time as may be agreed by CIBC, in consultation with the Monitor, the Corporation and PNC. Late bids will not be considered. The bid proposal must be in the form of an agreement for the acquisition of GASFRAC or its assets, business or undertaking, or any combination thereof, or some other form of transaction (including without limitation, a refinancing or recapitalization). The bid-proposal agreement must be in a form such that if it is accepted by GASFRAC, it will result in a final and binding agreement.
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Under the CCAA proceedings, it is expected that the Corporation's operations will continue uninterrupted in the ordinary course of business and obligations to employees, key suppliers of goods and services and obligations to the Corporation's customers, during the CCAA proceedings and SISP Procedure, will continue to be met on an ongoing basis and that the Corporation's management will remain responsible for the day-to-day operations of the Corporation.
Ernst & Young Inc. has been appointed Monitor of the Corporation for the CCAA proceedings and SISP Procedure. A copy of all court orders or amendments thereto, the SISP Procedure and other details related thereto may be accessed on the Monitor's website at www.ey.com/ca/gasfracenergy. The Monitor has also established the following information hotline related to enquiries regarding the CCAA process, at
403-206-5060.
The Corporation has been advised that trading in the common shares of the Corporation on the Toronto Stock Exchange ("TSX") will be delisted on February 20, 2014 for failure to meet the continued listing requirements of the TSX. In view of the foregoing, the Corporation intends to immediately seek a listing on the TSX Venture Exchange Inc. ("TSXV") pursuant to the streamlined listing procedure under the policies of the TSXV.
The Corporation also announces that Mark Williamson has resigned as Chairman, Interim Chief Executive Officer and a director of the Corporation and Larry Lindholm has resigned as a director of the Corporation, both to pursue other business opportunities and to avoid any concerns regarding potential conflicts of interest involving the Corporation or the SISP Procedure. The Corporation thanks each of them for their dedication, hard work and contributions to the Corporation and wishes them well in their future endeavours.
Mr. Williamson's position will not be filled in the short term given the court supervised CCAA proceedings.
Lori-McLeod Hill will continue in her role as Chief Financial Officer of the Corporation to assist in the court supervised SISP and restructuring activities with supervision of the Special Committee of the Corporation, who remain actively involved in the overall process.
Further news releases will be provided on an ongoing basis throughout the CCAA process as may be determined necessary.
This news release contains certain statements that constitute forward-looking statements under applicable securities legislation. All statements other than statements of historical fact are forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue", or the negative of these terms or other comparable terminology. These statements are only as of the date of this document and the Corporation does not undertake to publicly update these forward-looking statements except in accordance with applicable securities laws. Forward-looking statements, including but without limitation, statements concerning the implementation of CCAA proceedings and the SISP Procedure and the reorganization or restructuring of the assets, business and financial affairs of the Corporation, the delisting of the common shares of the Corporation on the TSX and an application for listing of the common shares on the TSXV are based on current expectations, estimates, projections and assumptions, which the Corporation believes are reasonable but which may prove to be incorrect and therefore such forward-looking statements should not be unduly relied upon. These forward-looking statements involve known and unknown risks, uncertainties which may cause actual results or performance to be materially different from any future results or performance expressed or implied herein. These risks, uncertainties and other factors relating to the Corporation include, but are not limited to, the level of indebtedness of the Corporation, the implementation and impact of obtaining any reorganization or restructuring of the assets, business and financial affairs of the Corporation, future co-operation of the creditors of the Corporation including PNC, the Corporation's ability to generate sufficient cash-flow from operations or to obtain adequate financing to fund capital expenditures and working capital needs and to meet the Corporation's ongoing obligations during the CCAA process and the SISP Procedure and thereafter, the ability of the Corporation's common shares to remain listed and trading on the TSX, the ability to maintain relationships with suppliers, customers, employees, stockholders and other third parties in light of the Corporation's current
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liquidity situation and the CCAA proceedings and the SISP Procedure, as well as other general assumptions regarding, among other things: industry activity; the general stability of the economic and political environment; effect of market conditions on demand for the Corporation's products and services; the ability to obtain qualified staff, equipment and services in a timely and cost efficient manner; the ability to operate its business in a safe, efficient and effective manner; the performance and characteristics of various business segments; the effect of current plans; the timing and costs of capital expenditures; future oil and natural gas prices; currency, exchange and interest rates; the regulatory framework regarding environmental matters in the jurisdictions in which the Corporation operates; and the ability of the Corporation to successfully market its products and services.
In addition, actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth under the section entitled "Business Risks" in the Corporation's MD&A filed on SEDAR.
Requests for shareholder information should be directed to: E-mail: investors@gasfrac.com
Phone: 403-817-2739
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