Brookfield backed CWC to acquire C&J’s Canadian operations for $37.5M

CWC Energy Services Corp. (TSX-V: CWC), a portfolio company of Brookfield Capital Partners Ltd., has agreed to acquire the service and swabbing rig assets and ongoing operations of C&J Production Services-Canada Ltd. from C&J Energy Services, Inc. (NYSE: CJ) for $37.5 million.

The transaction includes C&J’s Canadian fleet of 75 workover rigs, 13 swabbing rigs, and the real estate associated with six operating facilities (valued at $15 million) throughout Western Canada.

The transaction is expected to close on or about November 6, 2017.

On July 8, 2016, C&J Energy Services’ predecessor company and consolidated subsidiaries filed for Chapter 11 bankruptcy in the US and similar proceedings in Canada and Bermuda. On January 6, 2017, C&J emerged from bankruptcy.

In 2002, Nabors Industries, Inc. (NYSE: NBR) acquired Calgary based Enserco Energy Service Company Inc. for $400 million. In 2015, C&J acquired Nabors’ completion and production services business.

CWC Energy Services intends to finance the acquisition initially from its expanded credit facilities with CWC’s existing banking syndicate and then through an equity rights offering.

CWC and its syndicated lenders have agreed to CWC’s exercise of the accordion feature to expand its credit facilities from $65 million to $100 million. The expanded credit facilities provide financial security and flexibility to July 31, 2020. The syndicate lenders have also provided consent to permit the acquisition of the C&J Canada assets with the expanded credit facilities.

To repay a portion of the debt incurred to complete the acquisition, CWC intends to close a rights offering to holders of its common shares of record at the close of business on November 15, 2017 for gross proceeds of up to $26 million.

Brookfield Capital Partners and affiliates, BCP II AIV LP and Brookfield Business Partners Canada LP, collectively control approximately 72.7% of CWC outstanding common shares.

Brookfield intends to participate in the rights offering to the fullest extent possible. Brookfield’s ownership interest may increase if the rights offering is not fully subscribed.

CWC Energy Services Corp. is a premier contract drilling and well servicing company operating in the Western Canadian Sedimentary Basin with a complementary suite of oilfield services including drilling rigs, service rigs, and coil tubing. Headquartered in Calgary, CWC has operational locations in Nisku, Grande Prairie, Slave Lake, Red Deer, Drayton Valley, Lloydminster, Provost, and Brooks, Alberta.

photo credit: C&J Energy Services

Ted Liu

Ted Liu, M.Sc. (Mining), MBA (Finance), is the Editor of Private Capital Journal, CanadaMetals.ca, TechWire.ca, and the former Editor of Canadian Private Equity. Ted has been passionately tracking Canadian private capital industry since 1992, having most recently served as Research Director for The Canadian Venture Capital and Private Equity Association (CVCA).

Ted is the architect of CVCA infobase, and is the architect of CPE Media's Financings.ca, Canada's most sophisticated and advanced all private capital and public market financing database.