Calfrac Well Services Ltd T.CFW

pik notes

[BigWillie]

Gents, if someone can clarify that would be highly appreciated. I am reading the indenture for issuing pik notes. It is rather bulky document, and I am not sure I am getting it right. Chapter 4, conversion is where I read that conversion rate is 750 shares for each 1000$ principle. A few conditions, some adjustments, but really what it means that 60 mil cash infusion from pik notes will dilute Calfrac by another 45 mil shares. What am I missing, I must be missing something.

[HugeCrane]

Who cares. $300 million in debt on the balance sheet. That's all you should be reading right now. Over and over and over. 

[Contrarian333]

HugeCrane - You are correct about the debt levels but I think you need to look at what kind of cash flow this thing can generate in a non 2020 type year when oil doesn't go to zero, and also consider what it means that George Armoyan has added capital and taken a Board seat.  I think that capital structure has been made "adequate" for now and I don't expect to see a "

[HugeCrane]

I don't think we will see a going concern statement for the next several quarters but I still think George is only on the board to eventually stronghand a merger with Trican. I agree it could generate some decent cash flow, but that cash flow will be servicing debt for the foreseeable future. And George never added capital. It was a debt for ownership restructure. He was basically handed

[Holdernko123]

I agree that cfw will be combined with tcw. Tcw sold its us business a few years ago. I think these two company combined is good for both.

[HugeCrane]

And to add. Clark sold shares today. So if anything Georgey boy is pulling capital. HOWEVER. I strongly believe any stock selling by Clark is being done out of necessity given it is a public company. Clark also sold some Trican today. Honestly not a horrible time to sell considering where we have come from, plus when the two companies combine they won't need those shares anyways. 

[Contrarian333]

Clarke has to sell shares held in their pension plan by regulatory mandate. btw - calfrac has about $100m in cash 

[2020oilgamble]

This post has been removed in accordance with Community Policy

[Contrarian333]

HugeCrane - it is relatively easy to ball park the debt service costs and compare that to a normal year's EBITDA.  They have two pieces of remaining current interest debt. I think ou will find that the EBITDA from a "normal" year easily covers those debt service costs and that there would in fact be a significant amount of free cash flow. Also, from my reading of the facts

[BigWillie]

Ownership wasn't for nothing, the way I read it, debt for ownership was rouhly 12$ per share. Hense was my PIK Notes question, how is that they are converted at 1.33$ per share, it doesn't make sense. Also, to your previous posts a few days ago, it is not 37 mil, not 43 or 53 million but 100 mil shares fully diluted, considering PIk Notes PIK'ed and converted. I could not care less

[Contrarian333]

If you dig into the circular you will find that the PIK financing was done under the hardship exemption. The terms were obviously very favourable for the capital providers.  

[Holdernko123]

I don't understand why $C60 m 1.5Lien Load can take 53% shares and $US 431 m Note only take 38% shares?

[BigWillie]

those 60 million are principal value, which was exchanged at various actual rates, anywhere from 4.3$ to 17.7$ of junk-debt dollars per post-consolidated shares of Calfrac. I am talking former unsecure noteholders trading their notes for new pik notes and converting them into post-consolidated shares of Calfrac. Clear as mud, isn't it? The end point is, nobody is selling at profit at

[Contrarian333]

With respect I don't think that is quite right.  The former senior debentureholders converted their debt into equity.  Armoyan as an example was a debt holder.  My guess would be he bought that debt in the market at a huge discount because that is what he does but I don't know that for sure. In addition, new capital $60m was raised (and used to reduce other debts) by issuing

[BigWillie]

thank you Contrarian, you are the best contribution to this forum. The circular you pointed me out to reads like a novel, must have been very dramatic Summer for Calfrac.

[Contrarian333]

Thanks BigWillie - yes, its a pretty thick document.........maybe part of the reason why there seems to be some confusion around what the value proposition is...........but the more I dig, the more I think we may have a mispriced security here.

[Holdernko123]

Thanks Contrarian333. You provided great information for the group. I agree that CFW is really under valued. There are two main reasons, first, CFW paid the tender shareholder $0.15 cents cash per share = $7.5 per share plus 2 warrents. Second, all oil & gas related stocks have been up more than 2 times, only CFW is lower than orignal price $7.5 per share which was proposed in September, 2020.

[Contrarian333]

You are correct!