Calfrac Well Services Ltd. says a Texas company's proposed restructuring plan doesn't have sufficient support from unsecured noteholders and so it will continue with a debt-for-stock swap announced in July.
Under the original plan, Calfrac's unsecured notes would be exchanged for shares and current shareholders would see their stake reduced to eight per cent of Calfrac's equity.
Wilks Brothers, LLC of Cisco, Texas, countered that proposal on Aug. 4 with one that it said would leave Calfrac with less debt in return for a smaller equity stake.
It charged the plan advanced by Calfrac would “unfairly enrich certain key insiders’” in the company.
Calfrac said Monday that a special committee of its directors has reviewed the Wilks offer, consulted unsecured noteholders, and concluded the Texas bid lacks enough support to be successful.
It added that the original recapitalization proposal currently has the support of 78 per cent of the senior unsecured notes, subject to certain conditions.
Calfrac has scheduled meetings of shareholders and unsecured noteholders for Sept. 17 in Calgary, with a decline for submitting proxies or voting instructions set for Sept. 15.
In an earlier news release, Calfrac said Wilks Brothers, which owns U.S. competitor ProFrac Services Ltd., made two offers to buy Calfrac’s U.S. business in June. Both were refused.
Wilks Brothers owns just under 20 per cent of Calfrac's common shares.
Both Calfrac and ProFrac offer oilfield services including hydraulic fracturing, where chemicals and liquids are injected at high pressure into underground formations to break up tight rock and allow trapped oil and gas to flow into the well.
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