Calgary, Alberta (November 25, 2020) TSX: SHLE
Source Energy Services Ltd. (together with its affiliates, “Source” or the “Company”) announced today that at the meetings of holders (the “Noteholders”) of the Company’s 10.5% senior secured first lien notes due 2021 (the “Notes”) and holders (the “Shareholders”) of Source’s common shares held earlier today, the Noteholders and Shareholders overwhelmingly approved the Company’s recapitalization transaction (the “Recapitalization Transaction”) to be implemented pursuant to a plan of arrangement dated November 25, 2020 (the “Plan of Arrangement”) under the Canada Business Corporations Act (the “CBCA”). At the meetings, 100% of the votes cast by Noteholders and 99.98% of the votes cast by Shareholders were voted in favour of resolutions approving the Plan of Arrangement.
Election of Directors
The following seven nominees for election to Source’s board of directors (the “Board”) were elected by Shareholders present or represented by proxy at the Shareholders’ meeting. The voting results are as follows:
|Name of Nominee||Votes For||Votes Withheld|
As described in Source’s management information circular dated November 2, 2020 (the “Circular”), the Recapitalization Transaction is conditional on, among other things, the composition and size of the Board being acceptable to holders of a majority of the Notes held by the Noteholders that entered into the support agreement with the Company on October 7, 2020. Accordingly, there may be appointments and resignations from the Board in connection with the completion of the Recapitalization Transaction. The Company will provide a further update on these matters at the appropriate time.
Shareholder Approval of Other Matters
In addition to approving the Plan of Arrangement, Shareholders also voted at the Shareholders’ meeting to approve each of the other resolutions described in the Circular, as follows: (i) the special resolution approving the consolidation of the common shares of the Company was approved by 99.98% of the votes cast by Shareholders; (ii) the special resolution to reduce the stated capital of the Company’s common shares to $10,000,000 was approved by 99.98% of the votes cast by Shareholders; (iii) the ordinary resolution to fix the number of directors to be elected at the meeting at seven (7) was approved by 99.93% of the votes cast by Shareholders; and (iv) the ordinary resolution approving the appointment of PricewaterhouseCoopers LLP as the auditor of the Company was approved by 99.99% of the votes cast by Shareholders.
Court Approval and Implementation
The hearing to seek Court approval of the Plan of Arrangement is scheduled for November 27, 2020 at 9:00 a.m. (Calgary time). Subject to obtaining Court approval of the Plan of Arrangement and the satisfaction or waiver of the other conditions to the implementation of the Plan of Arrangement (including the finalization and execution of definitive documentation relating to the New Secured Notes, the Company’s senior bank financing arrangements, and a revised intercreditor agreement), the Company is working to complete the Recapitalization Transaction in December 2020.
As part of the Court approval of the Recapitalization Transaction, the Company will seek a permanent waiver of any defaults, third party change of control rights or any non-compliance with any agreement relating to, among other things, the commencement of the CBCA proceedings, the non-payment of interest or any other amounts due and payable in respect of the Notes, the implementation of the Amended Credit Facility and the Additional Liquidity Facility (as those terms are defined in the Plan of Arrangement) and the completion of the Recapitalization Transaction.
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.
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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 expected process for and timing of implementing the Recapitalization Transaction, the expected process for and timing of implementing the Plan of Arrangement, the expectation around changes to the Company’s Board of Directors in connection with implementation of the Plan of Arrangement and the provision of additional information in respect thereof, the expectation that the Company will attend a hearing before, and seek certain relief from, the Court and the expected timing for such hearing. In certain cases and without limitation, forward-looking statements can be identified by the use of words such as “seeks” 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 contains forward-looking statements pertaining, but not limited, to: expectations regarding the Recapitalization Transaction, the CBCA proceedings and the Plan of Arrangement.
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, the CBCA proceedings and the Plan of Arrangement.
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, and the final terms, timing and implementation of the Recapitalization Transaction and related transactions.
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.