Calfrac investors spurn Wilks takeover
CALGARY • Calfrac Well
Services Ltd. shareholders have spurned a takeover offer from Texas- based Wilks Brothers LLC after hearing two different plans for the heavily indebted fracking company.
At a contentious meeting Friday, shareholders owning more than two- thirds of the company’s stock voted in favour of a recapitalization plan under the Canada Business Corporations Act put forward by the company’s management.
As a result, Cisco, Tex.based Wilks Brothers is expected to withdraw its unsolicited takeover bid for the company.
Earlier Friday, Calfrac’s creditors voted overwhelmingly in favour of the recapitalization deal.
“There has been, in U. S. dollars, $ 380,825,000 of notes, or 99.7 per cent voted in favour and US$879,000, or 0.23 per cent voted against,” Calfrac executive chairman Ronald Mathison said at the debt-holders meeting.
The company said it will now take the outcomes of the votes to the court to approve the recapitalization deal. Wilks Brothers’ stake in the company is expected to be sharply reduced.
The votes concluded a four-month war of words between Calfrac management and Wilks Brothers, a major shareholder and debt holder that made multiple offers to buy Calfrac’s U. S. fracking business and, when it was rebuffed, submitted increasingly attractive recapitalization transaction plans and a hostile bid to buy the company.
In the weeks leading up to the vote, the two opposing sides have published duelling press releases asking shareholders and bondholders to support their vision for the future of Calfrac, which is Canada’s second- largest hydraulic fracturing company. It also has international operations, including sites in the U. S. and Argentina.
On Oct. 5, Calfrac called Wilks Brothers a “wolf in sheep’s clothing” that was “acting in its own narrow self- interest” in an open letter to shareholders.
“Wilks Brothers wishes to acquire, or at least control Calfrac, at a lowball price,” the company said in its release.
For its part, Wilks Brothers on Oct. 7 announced that shareholder advisory firms Institutional Shareholder Services ( ISS) and Glass Lewis & Co. both concluded that shareholders should vote against Calfrac’s recapitalization transaction.
“Not surprisingly, Calfrac has failed to disclose the renewed ISS and Glass Lewis recommendations to its shareholders and Wilks’ amended premium offer continues to represent the only direct path to superior value for shareholders,” Wilks Brothers said in its release.
The fight between Calfrac and Wilks Brothers became public on July 14, when Calfrac announced a recapitalization transaction a month after it had missed an interest payment on a tranche of its debts.
On Aug. 4, the company announced that Wilks Brothers, which owns more than 19 per cent of Calfrac’s shares and a significant chunk of its debts, publicly offered the company what the Texas company called a superior recapitalization deal.
Wilks Brothers said it was a better deal for everyone except a specific group of debt holders that includes Calgary-based Matco Investment Ltd., which is led by Mathison.
Roughly a month later, on Sept. 11, Wilks Brothers affiliate THRC Holdings LP announced a hostile takeover offer to buy all existing shares of Calfrac.