GASFRAC Files for CCAA Protection
CALGARY, ALBERTA--(Marketwired - Jan 15, 2015) - GASFRAC Energy Services Inc. ("GASFRAC or the "Corporation") (GFS.TO) announces today that the Corporation has commenced proceedings and obtained court protection under the Companies' Creditors Arrangement Act ("CCAA") pursuant to an initial order granted by the Court of Queen's Bench, in the Province of Alberta, on January 15, 2015 ("Initial Order"). Pursuant to the Initial Order the Corporation and all of its operating subsidiaries have obtained protection from its creditors under CCAA, other than in respect of the Corporation's primary secured lender, PNC Bank Canada Branch ("PNC"), for a period expiring February 9, 2015, as the Corporation attempts to restructure and reorganize its assets, business and financial affairs, subject to possible extension from time to time pursuant to further court order. The application for the Initial Order was not opposed by PNC and the Corporation is currently attempting to negotiate a forbearance agreement with PNC related to its secured indebtedness, although there is no assurance such an agreement will be reached or what the terms thereof will include.
As a result of a combination of continuing negative operating results, limited access at the present time to capital markets for junior issuers such as the Corporation, reduced industry activity resulting from depressed petroleum and natural gas commodity prices and the inability of the Corporation to obtain a suitable offer for the purchase of the Corporation or its assets after a strategic alternative process, which commenced on November 13, 2014, that would satisfy all of the Corporation's existing financial obligations, both secured and unsecured, the Corporation was unable to restructure its affairs in an adequate manner, and after careful consideration of all other available alternatives, the board of directors of the Corporation determined that it was in the best interests of the Corporation and all of its stakeholders to file for an application for creditor protection under the CCAA.
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, after the filing date, will continue to be met on an ongoing basis. Under the Initial Order the Corporation's management will remain responsible for the day-to-day operations of the Corporation and to the best of the knowledge, information and belief of the Corporation there are no intended material changes to the management team or the composition of the board of directors and that the continuity thereof is anticipated to continue throughout the CCAA process.
To enable the Corporation and its operating subsidiaries to maintain normal business operations, the Initial Order provides a stay of certain creditor claims and the exercise of contractual rights arising out of the CCAA process, as well as, provides the necessary protection to continue a strategic alternative process under the oversight of the board of directors and with the advice of the Corporation's professional advisors. In this regard the Corporation anticipates that it will make an application in the near future for a further court order to create a sale and investments solicitation process ("SISP") to be conducted in conjunction with the CCAA proceedings, intended to generate interest in either the business or the assets of the Corporation, with the goal of maximizing return in respect of the Corporation's assets and creating the foundation of a plan of compromise or arrangement for all stakeholders of the Corporation.
Subject to further court approval, it is anticipated that the Corporation will continue to retain CIBC World Markets Inc., as sales agent, investment banker and financial advisor to the Corporation in connection with any proposed financing or sale transaction that may arise under the CCAA proceedings or any future SISP. A further court application related to approval of this engagement is anticipated to proceed in the near future.
Ernst & Young Inc. has been appointed Monitor of the Corporation for the CCAA proceedings. A copy of the CCAA Initial Order will be made available and details relating to this case 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.
Trading in the common shares of the Corporation on the Toronto Stock Exchange ("TSX") have been halted and it is anticipated that the trading thereof will continue to be halted until a review is undertaken by the TSX regarding the suitability of the Corporation for listing on the TSX.
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 reorganization or restructuring of the assets, business and financial affairs of the Corporation, appointment of CIBC as sales agent and financial advisor and further negotiations involving PNC 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 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 liquidity situation and the CCAA proceedings, 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.
