Petrus Resources Ltd. ("
Petrus" or the
"
Company") (TSX: PRQ) is pleased to announce that
it has completed the previously announced transactions (the
“
Transactions”) that will significantly reduce the
Company's total debt and also extend the maturity date of the
Company’s senior secured credit facility (the "
First Lien
Loan").
Pursuant to the Transactions, the Company’s
subordinated secured term loan (the "Second Lien
Loan"), in the principal amount of approximately $39.3
million, has been settled in full (the "Second Lien
Settlement") in consideration for the issuance of $15.8
million of common shares of Petrus ("Common
Shares") to the holders of the Second Lien Loan at an
issue price of $0.55 per share. Additionally, the Company has
completed a private placement financing of an aggregate of $10
million of Common Shares at an issue price of $0.55 per share (the
"Equity Financing"). All proceeds from the Equity
Financing have been applied to outstanding indebtedness under the
First Lien Loan. The First Lien Loan is now Petrus’ sole credit
facility and currently has approximately $63 million drawn.
Support of Major Investors
The Second Lien Settlement and Equity Financing
have been made possible by further investment from Don Gray, Glen
Gray and Stuart Gray (the Company’s “Major
Investors”). Each of the Major Investors are siblings of
one another and of Ken Gray, the President, Chief Executive Officer
and a director of Petrus. For generations, the Gray family has been
active in the Alberta energy industry through investment and
involvement in various energy related companies. Since Petrus’
inception in 2011, the Grays have invested considerable resources
in the Company and their willingness to acquire additional Common
Shares through these Transactions reinforces their support of the
Company and their confidence in the future of Alberta’s energy
sector.
Transformative Transactions
As a result of the completion of the
Transactions:
-
The term of the First Lien Loan has been extended from December 31,
2021 to May 31, 2022.
-
All indebtedness and other obligations outstanding under the Second
Lien Loan of approximately $39.3 million have been eliminated in
their entirety.
-
The Company has realized $10 million of proceeds from new equity
investments, which has been fully applied towards repayment of
Company's debt under its First Lien Loan.
-
The payment of $10 million to the First Lien Loan and the
elimination of the Second Lien Loan has resulted in a reduction of
Petrus' debt from approximately $112 million to approximately $63
million, a decrease of approximately 44%.
-
Petrus expects to realize annual interest savings of approximately
$5 million and an effective interest rate reduction of 2.4% from
7.4% to 5.0%.
The completion of the Transactions transforms
Petrus from a company with limited capital resources to one with
the ability to create meaningful shareholder value. The substantial
debt reduction associated with the Second Lien Settlement and
Equity Financing has bolstered the Company’s financial position and
provides the flexibility required to invest in the development of
its land base and unlock proven value for the benefit of all
stakeholders.
Petrus has a concentrated land base in its core
area of Ferrier, where the liquids rich Cardium is one of the
leading plays in North America. The asset includes owned and
operated infrastructure, which affords optionality, operational
efficiency and a low cost structure. The results of recent operated
drills in the area show superior rates of return with payouts of
less than 6 months at current commodity prices. The Company also
has a material land position and ownership in critical
infrastructure in North Ferrier where recent non-operated drilling
results have proven to be highly competitive. The Company’s premier
land position in these areas combined with a strengthened balance
sheet make Petrus well positioned for growth. The Company expects
to gain significant momentum in the coming months as it focuses on
maximizing production and the generation of funds flow while also
continuing to further reduce debt.
Early Warnings
Pursuant to the Equity Financing, Don Gray
acquired 15,636,364 Common Shares at an issue price of $0.55 per
share for total proceeds of $8.6 million. After giving effect to
the Common Shares acquired by Don Gray pursuant to the Equity
Financing Mr. Don Gray currently beneficially owns, or exercises
control or direction over, 28,658,840 Common Shares or
approximately 29.7% of the issued and outstanding Common Shares (on
a non-diluted basis) after giving effect to the issuance of the
Common Shares pursuant to the Equity Financing and the Second Lien
Settlement. Mr. Don Gray acquired the 15,636,364 Common Shares
described herein for investment purposes. Mr. Don Gray may,
depending on market and other conditions, increase or decrease his
ownership of Common Shares or other securities of the Company,
whether in the open market, by privately negotiated agreement or
otherwise. Mr. Don Gray will file an early warning report, pursuant
to National Instrument 62-103, in respect of his acquisition of
Common Shares, and this report will be available on the Company’s
SEDAR profile at www.sedar.com or by contacting Mr. Don Gray at
(403) 817-4576.
Pursuant to the Equity Financing and the Second
Lien Settlement, Glen Gray acquired 15,636,364 Common Shares at an
issue price of $0.55 per share. After giving effect to the Common
Shares acquired by Glen Gray pursuant to the Equity Financing and
Second Lien Settlement Mr. Glen Gray currently beneficially owns,
or exercises control or direction over, 22,352,231 Common Shares or
approximately 23.2% of the issued and outstanding Common Shares (on
a non-diluted basis) after giving effect to the issuance of the
Common Shares pursuant to the Equity Financing and the Second Lien
Settlement. Mr. Glen Gray acquired the 15,636,364 Common Shares
described herein for investment purposes. Mr. Glen Gray may,
depending on market and other conditions, increase or decrease his
ownership of Common Shares or other securities of the Company,
whether in the open market, by privately negotiated agreement or
otherwise. Mr. Glen Gray will file an early warning report,
pursuant to National Instrument 62-103, in respect of his
acquisition of Common Shares, and this report will be available on
the Company’s SEDAR profile at www.sedar.com or by contacting Mr.
Glen Gray at (587) 333-0948.
Pursuant to the Second Lien Settlement, Stuart
Gray acquired 15,636,364 Common Shares at an issue price of $0.55
per share. After giving effect to the Common Shares acquired by
Stuart Gray pursuant to the Second Lien Settlement Mr. Stuart Gray
currently beneficially owns, or exercises control or direction
over, 20,578,231 Common Shares or approximately 21.3% of the issued
and outstanding Common Shares (on a non-diluted basis) after giving
effect to the issuance of the Common Shares pursuant to the Equity
Financing and the Second Lien Settlement. Mr. Stuart Gray acquired
the 15,636,364 Common Shares described herein for investment
purposes. Mr. Stuart Gray may, depending on market and other
conditions, increase or decrease his ownership of Common Shares or
other securities of the Company, whether in the open market, by
privately negotiated agreement or otherwise. Mr. Stuart Gray will
file an early warning report, pursuant to National Instrument
62-103, in respect of his acquisition of Common Shares, and this
report will be available on the Company’s SEDAR profile at
www.sedar.com or by contacting Mr. Stuart Gray at (403)
930-0885.
As a result of completing the Transactions, none
of the Major Investors are "joint actors" in respect of the
Transactions and none of the Major Investors are otherwise "joint
actors" in respect of their ownership of Common Shares of the
Company.
TSX Matters
The Toronto Stock Exchange (the
"TSX") has informed the Company that the Company
will be the subject of a remedial delisting review as a result of
its reliance on the previously disclosed "financial hardship"
exemption for the Equity Financing and the Second Lien Settlement.
Pursuant to this delisting review, the TSX has required that, prior
to January 5, 2022, the Company demonstrate to the TSX that the
Company complies with all of the TSX requirements for continued
listing after the completion of the Equity Financing and the Second
Lien Settlement. No assurance can be provided as to the outcome of
such review and, therefore, on the Company's continued
qualification for listing on the TSX.
ABOUT PETRUS
Petrus is a public Canadian oil and gas company
focused on property exploitation, strategic acquisitions and
risk-managed exploration in Alberta.
FOR FURTHER INFORMATION PLEASE
CONTACT:
Ken Gray President and Chief Executive Officer
T: 403-930-0889 E: kgray@petrusresources.com
CAUTIONARY STATEMENTS:
Forward-Looking Statements
This news release contains forward‐looking
statements regarding the Second Lien Settlement and Equity
Financing, closing of the Second Lien Settlement and Equity
Financing and the timing of the same and the Company’s continued
qualification for listing on the TSX. These forward‐looking
statements are provided as of the date of this news release, or the
effective date of the documents referred to in this news release,
as applicable, and reflect predictions, expectations or beliefs
regarding future events based on the Company's beliefs at the time
the statements were made, as well as various assumptions made by
and information currently available to them. In making the
forward-looking statements included in this news release, the
Company has applied several material assumptions, including, but
not limited to, the assumption that regulatory approval of the
Second Lien Settlement and Equity Financing will be obtained in a
timely manner; that all conditions precedent to the completion of
the Second Lien Settlement and Equity Financing will be satisfied
in a timely manner; and that general economic and business
conditions will not change in a materially adverse manner, well
production rates and commodity prices,. Although management
considers these assumptions to be reasonable based on information
available to it, they may prove to be incorrect. By their very
nature, forward‐looking statements involve inherent risks and
uncertainties, both general and specific, and risks exist that
estimates, forecasts, projections and other forward‐looking
statements will not be achieved or that assumptions on which they
are based do not reflect future experience. We caution readers not
to place undue reliance on these forward‐looking statements as a
number of important factors could cause the actual outcomes to
differ materially from the expectations expressed in them. These
risk factors may be generally stated as the risk that the
assumptions expressed above do not occur, but specifically include,
without limitation, risks relating to: general market conditions;
the Company’s ability to secure financing on favourable terms; the
failure to receive all applicable third party and regulatory
approvals for the Transaction, and the additional risks described
in the Company's latest Annual Information Form, and other
disclosure documents filed by the Company on SEDAR. The foregoing
list of factors that may affect future results is not exhaustive.
When relying on our forward‐looking statements, investors and
others should carefully consider the foregoing factors and other
uncertainties and potential events. The Company does not undertake
to update any forward‐looking statement, whether written or oral,
that may be made from time to time by the Company or on behalf of
the Company, except as required by law.
This press release shall not constitute
an offer to sell or the solicitation of an offer to buy securities
of the Company in the United States nor shall there be any sale of
securities of the Company in any jurisdiction in which such offer,
solicitation or sale would be unlawful. The securities described
herein have not been, and will not be, registered under the United
States Securities Act of 1933, as amended, or the securities laws
of any state of the United States. Accordingly, any of the
securities described herein may not be offered or sold in the
United States or to U.S. persons unless an exemption from
registration is available.
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