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Calfrac Well Services Ltd. has rejected a takeover bid from Texas-based Wilks Brothers LLC, instead tabling a new recapitalization plan in the latest episode of a continuing battle for the Calgary oil field service company.

The sweetened deal announced by the Calfrac board Thursday morning underscores the Canadian company’s determination to preserve its independence. It is trying to restructure its finances to save itself from insolvency, rather than slip into the control of one of its largest competitors.

Under the new proposal, shareholders can elect to retain or sell each of their common shares for 15 cents cash and receive two warrants that would allow them to buy another share for five cents any time in the next three years. The $26.13-million takeover deal by Wilks, on the other hand, offers stakeholders 18 cents a share.

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Calfrac announced the new plan at the same time that it rejected the hostile takeover, saying the American deal is not in the best interests of the Calgary company or its shareholders. It argued that there is “no reasonable prospect” the takeover would work because it doesn’t address obligations that rank senior unsecured noteholders.

Calfrac’s founder and executive chairman, Ron Mathison, told The Globe and Mail Thursday that he’s “guardedly optimistic” that the company can move forward and prosper once the recapitalization is behind it.

“Obviously, we wouldn’t do it if we didn’t think that was the case. But in any of these instances, you have to be a little bit of an optimist and hope that things improve in the industry,” he said.

The updated recapitalization plan is Calfrac’s latest attempt to avoid insolvency and continue operating. Stakeholders will vote Oct. 16 on whether to accept the proposal.

Like most companies in the patch, Calfrac has been hammered by a storm of macroeconomic factors – first the 2014-15 oil-price collapse, followed by the pandemic-related plunge in demand and the crude price war.

The company’s share price on the Toronto Stock Exchange hovers around 15 cents these days, down from $20 six years ago. It reported a net loss of $277-million for its second quarter ended June 30, after revenue fell sharply by 79 per cent and is staggering under $947-million in long-term debt.

To stay afloat, Calfrac’s board initially proposed to swap roughly $510-million worth of debt for equity as part of a court-supervised restructuring. Under that proposal, holders of Calfrac’s senior unsecured debt were to get shares in the company in exchange for what they were owed. The company also planned to issue $60-million in new notes.

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Wilks – which already owns around 20 per cent of the company – countered with a plan to buy up a large swath of the Calfrac debt it doesn’t already own, swap the debt for shares and pay the struggling company $80-million in cash. The swap and payment would have given Wilks a 60-per-cent equity stake in Calfrac.

A special committee struck by the Calfrac board declined, so Wilks came back a month later with a takeover offer, which was also firmly rejected by the special committee.

Matt Wilks, vice-president of investments for Wilks Brothers, told The Globe Thursday that he wasn’t surprised the committee said no to the takeover bid.

“But it’s good to see that they acknowledge just how bad their original offer was. It’s good to see them get some movement on it and to validate every argument that we’ve made to this point,” he said.

Mr. Mathison countered that the Wilks takeover bid comes with a raft of conditions that would never be met anyway.

He said the new recapitalization plan, on the other hand, offers significantly improved value to shareholders, while also enabling those that want to cash out their investment the ability to do so.

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And while Mr. Wilks doesn’t believe the new proposal tabled Thursday is acceptable, because Calfrac would “have a very difficult time” proving second-lien noteholders such as Wilks are unaffected, Mr. Mathison said he’s certain the deal will pass legal muster.

Still, Mr. Wilks said “there’s a lot of common ground” between Wilks and Calfrac.

“If he’d put his guns down, then we could do a lot of good for the stakeholders of Calfrac together,” he said.

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