Calgary, Alberta (November 18, 2020) TSX: SHLE
Source Energy Services Ltd. (together with its affiliates, “Source” or the “Company”) announced today that it has received strong voting support from holders of its Notes (the “Noteholders”) for its previously announced recapitalization transaction (the “Recapitalization Transaction”) to be implemented pursuant to a corporate plan of arrangement (“Plan of Arrangement”) under the Canada Business Corporations Act (the “CBCA”).
As of the close of business on November 18, 2020, Noteholders holding 98% of the Company’s 10.5% senior secured notes due 2021 (the “Notes”) have cast votes in respect of the Plan of Arrangement, with 100% of the votes having been cast in favour of approval of the Plan of Arrangement.
As further described in the Company’s management information circular dated November 2, 2020 (the “Information Circular”) and its press release issued on October 26, 2020 (the “October 26 Press Release”), each Noteholder that votes in favour of the Plan of Arrangement by 5:00 p.m. (Calgary time) on November 18, 2020 (or such later date as may be determined by the Company in consultation with the Initial Consenting Noteholders, the “Early Consent Date”) will be entitled to receive, in addition to the consideration provided to all Noteholders under the Plan of Arrangement, its pro rata share (determined based on the total principal amount of Notes held by such Noteholder as a percentage of the aggregate principal amount of Notes outstanding) of additional new first lien secured notes due 2025 in a principal amount equal to all accrued interest on the Notes from June 16, 2020 to the closing of the Recapitalization Transaction (the “Early Consent Consideration”).
Notwithstanding the overwhelming support received to date from Noteholders, in the interests of providing all Noteholders with additional time to become entitled to receive Early Consent Consideration, the Company is extending the Early Consent Date to 5:00 pm (Calgary time) on November 23, 2020. Any Noteholder that votes in favour of the Plan of Arrangement by 5:00 p.m. (Calgary time) on November 23, 2020 will be entitled to receive Early Consent Consideration pursuant to the Plan of Arrangement. Noteholders who have already cast their votes in favour of the Plan of Arrangement do not need to take any action. Source and its board of directors encourage all Noteholders and holders of common shares (the “Shareholders”) who have not yet voted to vote in favour of the Plan of Arrangement.
Banks, brokers or other intermediaries (each an “Intermediary”) may have internal deadlines that require certain securityholders to submit their votes to such Intermediary by an earlier date in advance of the Voting Deadline and Early Consent Deadline, and may have internal requirements for the submission of such voting instructions. Securityholders are encouraged to contact their Intermediaries directly to confirm any such internal deadline or voting instruction requirements.
Source will hold meetings of its Noteholders and Shareholders (the “Meetings”) to vote on resolutions approving the Recapitalization Transaction, which Meetings are scheduled to be held on November 25, 2020. Pursuant to the interim order of the Court of Queen’s Bench of Alberta dated October 26, 2020, any Noteholder or non-registered Shareholder wishing to vote must submit its voting instructions prior to November 23, 2020 at 5:00 p.m. (Calgary time) (the “Voting Deadline”).
Further information regarding, among other things, voting and early consent matters, as well as the Meetings scheduled for November 25, 2020 in respect of the Plan of Arrangement, is set out in the Information Circular and the October 26 Press Release. Any questions or requests for further information, including assistance in providing voting instructions, may be directed to Kingsdale Advisors, the Company’s proxy, information and exchange agent, at 1-800-749-9890 or 416-867-2272, or by email at firstname.lastname@example.org.
The securities to be issued pursuant to the Recapitalization Transaction have not been and will not be registered under the U.S. Securities Act of 1933 (the “1933 Act”), or the securities laws of any state of the United States, and may not be offered or sold within the United States except pursuant to an exemption from the registration requirements of the 1933 Act. The securities to be issued to Noteholders pursuant to the Recapitalization Transaction will be issued and distributed in reliance on the exemption from registration set forth in Section 3(a)(10) of the 1933 Act (and similar exemptions under applicable state securities laws).
ABOUT SOURCE ENERGY SERVICES
Source is a logistics company that focuses on the supply and distribution of high quality Northern White frac sand. Source provides its customers with a full end-to-end solution supported by its Wisconsin mines and processing facilities, its Western Canadian terminal network and its “last mile” logistics capabilities. In addition to its industry leading frac sand transload terminal network and in-basin frac sand storage capabilities, Source also provides storage and logistics services for other bulk oil and gas well completion materials that are not produced by Source. Source has also developed Sahara, a proprietary wellsite mobile sand storage and handling system.
Source’s full-service approach allows customers to rely on its logistics capabilities to increase reliability of supply and to ensure the timely delivery of their requirements for frac sand and other bulk completion materials at the wellsite.
For further information, please contact:
|Media Inquiries:||Investor Relations Inquiries:|
|Meghan Somers||Brad Thomson|
|Communications Advisor||Chief Executive Officer|
|(403) 262-1312 (ext. 295)||(403) 262-1312 (ext. 225)|
Certain statements contained in this press release constitute forward-looking statements relating to, without limitation, expectations, intentions, plans and beliefs, including information as to the future events, the Recapitalization Transaction, the Plan of Arrangement, the voting results at the Meetings, results of operations and Source’s future performance (both operational and financial) and business prospects. In certain cases, forward-looking statements can be identified by the use of words such as “expects”, “estimates”, “forecasts”, “intends”, “anticipates”, “believes”, “plans”, “seeks”, “projects” or variations of such words and phrases, or state that certain actions, events or results “may” or “will” be taken, occur or be achieved. Such forward-looking statements reflect Source’s beliefs, estimates and opinions regarding the Recapitalization Transaction and related transactions, the CBCA proceedings and the Meetings, Source’s future growth, results of operations, future performance (both operational and financial), and business prospects and opportunities at the time such statements are made, and Source undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or circumstances should change. Forward-looking statements are necessarily based upon a number of estimates and assumptions made by Source that are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Forward-looking statements are not guarantees of future performance. In particular, this press release may contain forward-looking statements pertaining, but not limited, to: expectations regarding the Recapitalization Transaction, including the terms, timing and implementation of the Recapitalization Transaction, expectations regarding demand for and sales volumes of sand in light of the COVID-19 pandemic; expectations regarding the price of proppants and sensitivity to changes in such prices; outlook for operations and sales volumes; expectations respecting future competitive conditions; industry activity levels; expectations regarding market share; industry conditions pertaining to the frac sand industry; expectations regarding customer relationships and counterparty risk; drilling and well completion activity in 2020; expectations regarding the impact of direct-source contracts; sand sales volumes and sand spot pricing in 2020; expectations regarding future working capital and capital expenditures; the ability to secure future funding; expectations regarding fluctuations in foreign currency; expectations regarding the severity and outcome of legal claims and proceedings; expectations regarding insurance coverage and proceeds; expectations regarding the impact of climate change; risks associated with information systems and cyber security and operational risks. Statements relating to mineral resources are deemed to be forward looking-statements, as they involve the implied assessment, based on certain estimates and assumptions, that the mineral resources described exist in the quantities predicted or estimated and that the mineral resources described might be able to be profitably produced in the future.
By their nature, forward-looking statements involve numerous current assumptions, known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Source to differ materially from those anticipated by Source and described in the forward-looking statements.
With respect to the forward-looking statements contained in this press release, assumptions have been made regarding, among other things: the Recapitalization Transaction and the CBCA proceedings; proppant market prices; future oil, natural gas and natural gas liquids prices; future global economic and financial conditions; future commodity prices, demand for oil and gas and the product mix of such demand; levels of activity in the oil and gas industry in the areas in which Source operates; the continued availability of timely and safe transportation for Source’s products, including without limitation, Source’s rail car fleet and the accessibility of additional transportation by rail and truck; the maintenance of Source’s key customers and the financial strength of its key customers; the maintenance of Source’s significant contracts or their replacement with new contracts on substantially similar terms and that contractual counterparties will comply with current contractual terms; operating costs; that the regulatory environment in which Source operates will be maintained in the manner currently anticipated by Source; future exchange and interest rates; geological and engineering estimates in respect of Source’s resources; the recoverability of Source’s resources; the accuracy and veracity of information and projections sourced from third parties respecting, among other things, future industry conditions and product demand; demand for horizontal drilling and hydraulic fracturing and the maintenance of current techniques and procedures, particularly with respect to the use of proppants; Source’s ability to obtain qualified staff and equipment in a timely and cost-efficient manner; the regulatory framework governing royalties, taxes and environmental matters in the jurisdictions in which Source conducts its business and any other jurisdictions in which Source may conduct its business in the future; future capital expenditures to be made by Source; future sources of funding for Source’s capital program; Source’s future debt levels; the impact of competition on Source; and Source’s ability to obtain financing on acceptable terms.
A number of factors, risks and uncertainties could cause results to differ materially from those anticipated and described herein including, among others: Source’s ability to complete the Recapitalization Transaction and obtain requisite stakeholder and Court approvals; the final terms, timing and implementation of the Recapitalization Transaction and related transactions; effects of competition and pricing pressures; risks inherent in key customer dependence; effects of fluctuations in the price of proppants; risks related to indebtedness and liquidity, including Source’s leverage, restrictive covenants in Source’s debt instruments and Source’s capital requirements; risks related to interest rate fluctuations and foreign exchange rate fluctuations; changes in general economic, financial, market and business conditions in the markets in which Source operates; changes in the technologies used to drill for and produce oil and natural gas; Source’s ability to obtain, maintain and renew required permits, licenses and approvals from regulatory authorities; the stringent requirements of and potential changes to applicable legislation, regulations and standards; the ability of Source to comply with unexpected costs of government regulations; liabilities resulting from Source’s operations; the results of litigation or regulatory proceedings that may be brought against Source; the ability of Source to successfully bid on new contracts and the loss of significant contracts; uninsured and underinsured losses; risks related to the transportation of Source’s products, including potential rail line interruptions or a reduction in rail car availability; the geographic and customer concentration of Source; the impact of climate change risk; the ability of Source to retain and attract qualified management and staff in the markets in which Source operates; labour disputes and work stoppages and risks related to employee health and safety; general risks associated with the oil and natural gas industry, loss of markets, consumer and business spending and borrowing trends; limited, unfavourable, or a lack of access to capital markets; uncertainties inherent in estimating quantities of mineral resources; sand processing problems; implementation of recently issued accounting standards; the use and suitability of Source’s accounting estimates and judgments; and the impact of information systems and cyber security breaches.
Although Source has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in the forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will materialize or prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement. Readers should not place undue reliance on forward-looking statements. These statements speak only as of the date of this press release. Except as may be required by law, Source expressly disclaims any intention or obligation to revise or update any forward-looking statements or information whether as a result of new information, future events or otherwise.