Calgary – Sanjel Corporation announced on April 4 announce the signing of two transformative agreements for its sale to two separate North American pressure pumping providers.
Sanjel has signed a definitive agreement for the sale of its Canadian fracturing, coiled tubing and cementing assets to STEP Energy Services Ltd., an ARC Financial Corp. sponsored company. STEP is a privately owned, technically focused, oilfield services company providing specialized coiled tubing and associated pressure pumping equipment and fracturing services.
Concurrently, Sanjel has also announced that it has signed a definitive agreement for the sale of its United States fracturing, coiled tubing and cementing assets to Liberty Oilfield Services. Liberty is an innovative oilfield service company providing specialized stimulation services to optimize well production. Liberty currently operates in the Williston, DJ and Powder River basins and is headquartered in Denver, CO.
Sanjel also announced on April 4 that it has initiated a Court-supervised restructuring process to facilitate the closing of the two sale agreements. The company today obtained an initial order from the Court of Queen’s Bench of Alberta under the Companies’ Creditors Arrangement Act. The Court appointed PricewaterhouseCoopers Inc. as monitor of Sanjel during this process. The company has also applied for recognition of the Initial Order under Chapter 15 of the US Bankruptcy Code.
The creditor summary filed with the court includes US$300 million in unsecured senior bonds, a further US$45.7 million in listed unsecured creditors, C$18 million in listed unsecured creditors and a further C$18.7 million in unsecured interest. Their secured credit facility was C$396.7 million. The total creditor summary is $779.1 million, although it is not indicated whether that is Canadian funds, American funds, or a blend of the two.
The originating application for the court action noted that Sanjel had issued US$300 million in unsecured senior bonds on June 18, 2014. Those bonds, at 7.5 per cent, had semi-annual interest payments. On Dec. 19, 2015, they missed a US$11.3 million interest payment. “Sanjel Corp. had sufficient cash availiability to make this interest payment, but it decided not to do so given the extremely constrained working capital situation it was facing at the time and instead entered into possible restructuring discussions …,” it said.
Sanjel sought to negotiate with its lending syndicate, but the conditions of those agreements were not met. On March 18, the syndicate demanded repayment.
In its April 4 press release, Sanjel said it anticipates operating on an uninterrupted basis throughout the CCAA process until closing of the transactions. The company has arranged interim financing for this purpose with its existing twelve member banking syndicate. Closing of the sale transactions are anticipated over the following 30 days.
The company ended its release saying, “Over the past 34 years, Sanjel has been providing premium pressure pumping services to a wide variety of oil and gas companies in North America. Its reputation for best in class service quality and Health, Safety and Environmental performance will continue with its new owners in Canada and the United States.”
