Debt Refinancing Transaction
Bellatrix Exploration Ltd. (“Bellatrix” or the “Company”) (TSX:BXE)
(NYSE:BXE) today announces that it has entered into an agreement
with funds advised by FS/EIG Advisor, LLC and FS/KKR Advisor, LLC
(the “
Exchanging Noteholders”) to exchange US$80
million of the Company’s outstanding 8.5% senior unsecured notes
due 2020 (the “
2020 Notes”) for US$72 million of
8.5% second lien notes due 2023 (the “
Second Lien
Notes”). In addition, the Exchanging Noteholders have
agreed to subscribe for between US$30 million and US$40 million of
additional Second Lien Notes (the “
New Money
Notes”), with the proceeds to be used for drilling and
further acquisitions and exchanges of 2020 Notes. The
Exchanging Noteholders have also agreed to allow for up to US$50
million in additional Second Lien Note issuances to be used
exclusively for future 2020 Note exchanges on or before December
31, 2018. The agreement also provides for the ability to
issue additional subordinate secured and unsecured debt in
subsequent refinancing and capital raising transactions. Finally,
Bellatrix has agreed to issue warrants representing approximately
5% of the Company’s issued and outstanding shares to the Exchanging
Noteholders, with the actual number of warrants and the exercise
price thereof to be determined at the time of their issuance, and
subject to applicable Toronto Stock Exchange rules. The warrants
will only vest if and when the Company accesses any of the
incremental US$50 million of Second Lien Note capacity, and the
issuance of Bellatrix common shares pursuant to the exercise of the
warrants will be subject to the approval of the Toronto Stock
Exchange. In addition, if any of the incremental US$50 million of
Second Lien Note capacity is utilized, then the New Money Notes
will be limited to US$30 million.
The transactions announced today are the result
of discussions that occurred over the past several months with
holders of a majority of the Company’s outstanding 2020 Notes, and
the consideration by the board of directors of Bellatrix, and an
independent special committee thereof, with advice from legal and
financial advisors, of a variety of financing and strategic
alternatives. The Company has also been in active dialogue with its
syndicate of lenders under its $100 million senior credit
facilities (the “Credit Facilities”) about the
transactions announced today.
In combination, the transactions announced today
will extend the maturity of over one-third of the Company’s
existing 2020 Notes by three years, reduce outstanding debt by US$8
million, and set the stage for additional 2020 Note exchanges
and/or acquisitions in the future that, the Company expects, will
significantly increase its ability to refinance all of the
remaining 2020 Notes in advance of their stated maturity, all while
minimizing equity dilution to the Company’s shareholders.
The completion of the transactions announced
today is subject to customary closing conditions, including the
approval of such transactions by the lenders under Bellatrix's
Credit Facilities and the negotiation and entering into of certain
documentation and agreements between the lenders under Bellatrix's
Credit Facilities and the Exchanging Noteholders; although
Bellatrix expects that such conditions will be satisfied in the
next several weeks, if such conditions are not satisfied the
transaction contemplated hereby may not be completed on the terms
and timeline as currently contemplated herein, or at all.
Bellatrix is being represented in these
transactions by Vinson & Elkins LLP and Burnet, Duckworth &
Palmer LLP. FS/EIG Advisor, LLC and FS/KKR Advisor, LLC are being
represented by Kirkland & Ellis LLP and Stikeman Elliott
LLP.
NYSE Listing Update
Bellatrix also announces that on July 23, 2018,
it received a continued listing standard notice from the New York
Stock Exchange (the “NYSE”) because the average
closing price of Bellatrix’s common shares was less than US$1.00
per share over a period of 30 consecutive trading days.
In accordance with NYSE rules, Bellatrix has six
months following receipt of the notification to regain compliance
with the minimum share price requirement. Bellatrix can regain
compliance at any time during the six-month cure period if the
Company’s common shares have a closing share price of at least
US$1.00 on the last trading day of any calendar month during the
period and also have an average closing share price of at least
US$1.00 over the 30 trading-day period ending on the last trading
day of that month or on the last day of the cure period. Bellatrix
has notified the NYSE of its intent to cure this deficiency within
the six-month cure period. If at the expiration of the
applicable cure period Bellatrix has not regained compliance, the
NYSE would commence suspension and delisting procedures. At this
time management would not expect the Company to propose a share
consolidation as a means of curing the deficiency.
Bellatrix’s common shares continue to trade on
the NYSE. However, starting on July 30, 2018, the NYSE will
transmit the Company’s trading symbol with a “.BC” indicator until
the price condition has been cured. The Company’s common shares
also continue to trade on the Toronto Stock Exchange under the
symbol “BXE” and that listing is not affected by the receipt of the
NYSE notification. In addition, the Company’s U.S. Securities and
Exchange Commission and Canadian securities regulatory authority
reporting requirements are not affected by receipt of the NYSE
notification.
Bellatrix Exploration Ltd. is a publicly traded
Western Canadian based growth oriented oil and gas company engaged
in the exploration for, and the acquisition, development and
production of oil and natural gas reserves, with highly
concentrated operations in west central Alberta, principally
focused on profitable development of the Spirit River liquids rich
natural gas play.
For further information, please
contact:
Steve Toth, CFA, Vice President, Investor
Relations & Corporate Development (403) 750-1270
Bellatrix Exploration Ltd.1920,
800 – 5th Avenue SWCalgary, Alberta, Canada T2P 3T6Phone: (403)
266-8670Fax: (403) 264-8163www.bxe.com
FORWARD LOOKING STATEMENTS: Certain information
contained in this press release may contain forward looking
statements within the meaning of applicable securities laws. The
use of any of the words "forecast", "believe", "expect",
"position", "maintain", "continue", "plan", "future", "estimate",
"intend", "strategy", "anticipate", "enhance" and similar
expressions are intended to identify forward-looking statements.
More particularly and without limitation, this document contains
forward-looking statements concerning the expected details of the
Second Lien Notes; the expected terms and conditions of the Second
Lien Notes, New Money Notes and additional Second Lien Notes, the
conditions for completion of the transactions contemplated in this
press release and the expected timing for satisfying such
conditions; the expectation that the transactions contemplated
herein will allow Bellatrix to complete additional 2020 Note
exchanges and/or acquisitions in the future; the expectation that
the transactions contemplated herein and, if completed, additional
2020 Note exchanges and/or acquisitions in the future will
significantly increase the Company's ability to refinance all of
the remaining 2020 Notes in advance of their stated maturity, while
minimizing equity dilution to the Company’s shareholders;
Bellatrix’s intent to cure the NYSE continued listing standard
deficiency within the six-month cure period, and management’s
expectation that the Company will not propose a share consolidation
as a means of curing the deficiency. To the extent that any
forward-looking information contained herein constitute a financial
outlook, they were approved by management on July 24, 2018 and are
included herein to provide readers with an understanding of the
anticipated funds available to Bellatrix to fund its operations and
readers are cautioned that the information may not be appropriate
for other purposes. Forward-looking statements necessarily involve
risks, including, without limitation, the risk that the
transactions contemplated herein will not be completed as a result
of the conditions to completion of such transactions not being met;
the lenders under the Credit Facilities not consenting to the
transactions contemplated herein; the lenders under the Credit
Facilities insisting on certain terms that are not acceptable to
the Exchanging Noteholders, which results in the transactions
contemplated herein not being completed; the Exchanging Noteholders
insisting on certain terms that are not acceptable to the lenders
under the Credit Facilities, which results in the transactions
contemplated herein not being completed; failure to receive Toronto
Stock Exchange approval for listing of the Bellatrix common shares
on exercise of the warrants result in the Company not being able to
complete the additional note exchanges. Events or circumstances may
cause actual results to differ materially from those predicted, as
a result of the risk factors set out and other known and unknown
risks, uncertainties, and other factors, many of which are beyond
the control of Bellatrix. In addition, forward looking statements
or information are based on a number of factors and assumptions
which have been used to develop such statements and information but
which may prove to be incorrect and which have been used to develop
such statements and information in order to provide shareholders
with a more complete perspective on Bellatrix's future operations.
In addition, to other assumptions used for the purposes of the
forward-looking statements contained here, Bellatrix has made
assumptions that the conditions to completion of the transactions
contemplated hereby will be met; the lenders under the Credit
Facilities will consent to the transactions contemplated herein;
and the lenders under the Credit Facilities will come to agreeable
terms with the Exchanging Noteholders. Such information may prove
to be incorrect and readers are cautioned that the information may
not be appropriate for other purposes. Although the Company
believes that the expectations reflected in such forward looking
statements or information are reasonable, undue reliance should not
be placed on forward looking statements because the Company can
give no assurance that such expectations will prove to be correct.
In addition to other factors and assumptions which may be
identified herein, assumptions have been made regarding, among
other things, the closing of the exchange transaction and the
timely receipt of any required regulatory approvals. Readers are
cautioned that the foregoing list is not exhaustive of all factors
and assumptions which have been used. As a consequence, actual
results may differ materially from those anticipated in the
forward-looking statements. Additional information on these and
other factors that could affect Bellatrix's operations and
financial results are included in reports (including, without
limitation, under the heading "Risk Factors" in the Company's
Annual Information Form for the year ended December 31, 2017) on
file with Canadian and United States securities regulatory
authorities and may be accessed through the SEDAR website
(www.sedar.com), through the SEC website (www.sec.gov), and at
Bellatrix's website (www.bellatrixexploration.com). Furthermore,
the forward looking statements contained herein are made as at the
date hereof and Bellatrix does not undertake any obligation to
update publicly or to revise any of the included forward looking
statements, whether as a result of new information, future events
or otherwise, except as may be required by applicable securities
laws.