GasFrac Energy Services Inc.
TSX : GFS

GasFrac Energy Services Inc.

January 17, 2012 16:08 ET

GASFRAC Announces $30 Million, Bought Deal Public Offering of Convertible Debentures

CALGARY, ALBERTA--(Marketwire - Jan. 17, 2012) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE U.S.

GASFRAC Energy Services Inc. (TSX:GFS) ("GASFRAC" or the "Company") today announced that it has entered into an agreement with a syndicate of underwriters led by Raymond James Ltd. and including BMO Capital Markets, Cormark Securities Inc., TD Securities Inc., Scotia Capital Inc., AltaCorp Capital Inc. and Haywood Securities Inc. pursuant to which the underwriters will purchase on a "bought deal basis" $30 million principal amount of convertible unsecured subordinated debentures ( the "Debentures") at a price of $1,000 per debenture ( the "Offering"). GASFRAC has also granted the underwriters an over-allotment option to purchase up to an additional $4.5 million aggregate principal amount of debentures for a period of 30 days following closing to cover over-allotments.

The Debentures will mature on February 28, 2017 and will accrue interest at the rate of 7.00% per annum payable on a semi-annual basis in arrears on August 31 and February 28th each year commencing on August 31, 2012. At the holder's option, the Debentures may be converted into common shares in the capital of GASFRAC at any time up to the earlier of the maturity date and the business day immediately preceding the date specified by the Company for redemption of the Debentures. The conversion price, subject to adjustment in certain circumstances, will be $ 10.50 for each common share being the conversion rate of approximately 95.2381 GASFRAC common shares for each $1000 principal amount of Debentures.

The Debentures will be direct, unsecured obligations of GASFRAC, subordinated to other indebtedness of the Company for borrowed money and ranking equally with all other unsecured subordinated indebtedness.

The Debentures will not be redeemable by the Company before February 28, 2015. From February 28, 2015 through to maturity date, GASFRAC may, at its option, redeem the convertible debentures, in whole or in part, at par plus accrued and unpaid interest provided that the volume weighted average trading price of the common shares of the Company on the Toronto Stock Exchange during a specified period prior to redemption is not less than 125% of the conversion price.

Subject to specified conditions, GASFRAC will have the right to repay the outstanding principal amount of the convertible debentures, on maturity or redemption, through the issuance of common shares of the Company. GASFRAC also has the option to satisfy its obligation to pay interest through the issuance and sale of additional common shares of the Company.

The net proceeds of the financing will be used for funding of the remaining capital expenditure of the previously announced capital equipment expansion program, working capital and for general corporate purposes.

The offering is scheduled to close on or about February 8, 2012 and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals including the approval of the Toronto Stock Exchange.

A preliminary short-form prospectus will be filed with securities regulatory authorities in all provinces of Canada, except Quebec.

This news release shall not constitute an offer to sell or the solicitation of any offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities offered will not be and have not been registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") and may not be offered or sold in the United States except pursuant to exemptions from the registration requirements of the U.S. Securities Act and applicable state securities laws.

About GASFRAC

GASFRAC is an oil and gas service company headquartered in Calgary, Alberta, Canada, whose primary business is to provide LPG fracturing services to oil and gas companies in Canada and the USA.

FORWARD-LOOKING STATEMENTS

This news release contains certain forward-looking information and statements that are based on GASFRAC's current expectations, estimates, projections and assumptions in light of its experience and its perception of historical trends. In this news release, such forward-looking information and statements can be identified by terminology such as "will", "to be", "expected", "anticipated" and similar expressions.

In particular, this news release contains forward-looking statements and information relating to the planned use of proceeds and timing for the Offering. These forward-looking statements and information are being made by GASFRAC based on certain assumptions that GASFRAC has made in respect thereof as at the date of this document, including: that favourable growth parameters continue to exist in respect of current and future growth plans (including the ability to finance such plans on favourable terms); and that GASFRAC's businesses will continue to achieve sustainable financial results. These forward-looking statements are not guarantees of future performance and are subject to a number of known and unknown risks and uncertainties, including, but not limited to: non-performance of agreements in accordance with their terms; the seasonal nature of the North American oil and gas industry; the impact of competitive entities and pricing; reliance on suppliers for components; reliance on intellectual property rights; the strength and operations of the oil and natural gas production industry and related commodity prices; the continuation or completion of third-party projects; regulatory environment and inability to obtain required regulatory approvals; tax laws and treatment; fluctuations in operating results; the ability of GASFRAC to raise sufficient capital to complete future projects and satisfy future commitments; construction delays; labour and material shortages; and certain other risks detailed from time to time in GASFRAC's public disclosure documents including, among other things, those detailed under the heading "Risk Factors" in the annual information form of GASFRAC dated March 17, 2011 which can be found at www.sedar.com.

Accordingly, readers are cautioned that events or circumstances could cause results to differ materially from those predicted, forecasted or projected. Such forward-looking statements are expressly qualified by the above statements. GASFRAC does not undertake any obligation to publicly update or revise any forward-looking statements or information contained herein, except as required by applicable laws.

Contact Information

  • GASFRAC Energy Services Inc.
    James M Hill
    Chief Financial Officer
    403-515-3387
    jhill@gasfrac.com