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Pump jacks pump oil at an Encana well near Standard, Alberta, May 12, 2014.

A judge has denied a bid by Sanjel Corp.'s bondholders to block the sale of the family-owned fracking company's businesses under court supervision.

The holders of $300-million in Sanjel bonds had complained that they had been left out of the process, which has resulted in deals to sell the Canadian business to STEP Energy Services Ltd. and U.S. holdings to Liberty Oilfield Services LLC. The group, represented by Nordic Trustee ASA, described the sale as "a quick flip."

But a Calgary court on Thursday rejected Nordic's application, a person familiar with the proceedings said.

Nordic represents bondholders Ascribe Capital LLC and Clearlake Capital Group LP, which claimed the purchase agreements Sanjel signed with STEP and Liberty Oilfield Services would result in liquidation of the company, leaving nothing to restructure.

Sanjel, a provider of hydraulic fracturing and well completion services, expanded quickly, and took on debt just before oil and gas prices collapsed in 2014. Founded in 1982 by chairman Don MacDonald and run by chief executive officer Darin MacDonald, the company had grown to be the No. 3 Canadian-based "pressure pumper" with revenue of more than $1.5-billion (Canadian). It filed for court protection in early April.

In a filing this week, the bondholder group said Sanjel hammered out the sales "in an atmosphere tainted by manoeuvring for advantage, bad faith, deception, secrecy, artificial haste and excessive deference by the company to the [banking] syndicate."

The syndicate, led by Alberta government-owned ATB Financial, supports the company's proposals.

Nordic had sought to put forward its own restructuring plan and wanted the case heard under Chapter 11 bankruptcy provisions in the United States.

Price tags for the assets have not been disclosed, but in a supplementary affidavit from its chief financial officer earlier this month, Sanjel said it expects to recover between $325-million and $375-million from the sales – well short of the $1.4-billion it said its assets were worth in earlier filings.

The estimated recovery also includes working capital and potential proceeds from additional asset sales, CFO Paul Crilly said in the document. That means the Canadian and U.S. divisions probably fetched considerably less than the stated range.

The lending syndicate has stressed that it is the only creditor with security over all of Sanjel's assets, and that it will still suffer a shortfall in the sales of the assets. It said it believes that the deals Sanjel has struck are appropriate under the Companies Creditors Arrangement Act process given its weakened financial position.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 18/03/24 4:00pm EDT.

SymbolName% changeLast
STEP-T
Step Energy Services Ltd
+0.86%3.51

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