CALGARY, Sept. 13, 2018 /CNW/ - Cequence Energy Ltd. (TSX:
CQE) ("Cequence" or the "Company") is pleased to
announce the successful completion of its previously announced
equity rights offering (the "Rights Offering"), which was
over-subscribed and raised the maximum available gross proceeds of
$8,593,476. Cequence issued a total
of 245,527,883 common shares under the Rights Offering and now has
a total of 491,055,766 common shares issued and outstanding.
Although Cequence had standby commitments in place from two of its
directors, no funds were required under the standby commitments as
a result of the Rights Offering being over-subscribed.
Cequence is also pleased to announce the closing of its
previously announced refinancing of its existing $60 million senior notes due October 3, 2018 (the "Notes"). Pursuant to
a refinancing agreement dated July 26,
2018 with CPPIB Credit Investments Inc. ("CPPIB
Credit"), a wholly owned subsidiary of Canada Pension Plan
Investment Board, the Notes have been refinanced with a
$60 million second lien senior
secured term loan facility due October 3,
2022 (the "Term Loan"). Further information about the
Term Loan can be found in the Company's press release of
July 27, 2018, available under the
Company's profile on SEDAR at www.sedar.com.
In connection with the Term Loan, Cequence issued CPPIB Credit
warrants to purchase 36,829,182 common shares of the Company at an
exercise price of $0.10 per share at
any time until September 13,
2022.
Concurrently with the closing of the Rights Offering and the
Term Loan, Cequence has also entered into an amended and restated
credit agreement (the "Amended and Restated Credit
Agreement") with its senior lenders to amend its senior secured
credit facility (the "Credit Facility"). Under the terms of
the Amended and Restated Credit Agreement, the Credit Facility has
been extended to May 31, 2019 with a
borrowing base of $7 million.
The common shares of the Company issued pursuant to the Rights
Offering were issued on a flow-through basis, entitling the holders
thereof to receive renunciations of Canadian development expenses
from the Company as contemplated under the Income Tax Act
(Canada). In order to receive such
renunciations subscribers or their brokers under the Rights
Offering must submit a completed Subscription and Renunciation
Agreement to the Company. More information about the Rights
Offering, including a copy of the Subscription and Renunciation
Agreement, can be found in the Company's Rights Offering Circular
dated July 27, 2018 which is
available under the Company's profile on SEDAR.
The net proceeds from the Rights Offering are being used to
drill 2.0 gross oil wells (2.0 net) in the Dunvegan formation at Simonette. The greater
financial flexibility provided by the Term Loan and renewed Credit
Facility will help the Company continue to develop this light oil
play. The previously disclosed 3 gross (2.0 net) first quarter 2018
wells are all above Company expectations with the 100% working
interest 15-4 well having produced approximately 100,000 bbls in
120 operating days.
"We are very pleased that over 80% of the rights issued to
eligible shareholders were exercised, and that additional
subscriptions for common shares exceeding the maximum number of
shares available under the offering were received, as this is a
strong endorsement from our shareholders about the quality of the
company's assets and its prospects for the future" commented
Todd Brown, the Company's President
and Chief Executive Officer. Cequence's Executive Chairman,
Don Archibald, stated "thanks to the
support of our shareholders and the collaborative relationship we
have with our lenders, we were able to complete these significant
steps to increase the company's financial flexibility, allowing it
to focus on developing its Dunvegan assets, which continue to surpass our
expectations in terms of economic results."
Share Consolidation
Following the Rights Offering, the Company intends to
consolidate its issued and outstanding Common Shares. The proposed
basis for the share consolidation is one (1) post-consolidation
Common Share for every twenty (20) pre-consolidation Common Shares
(the "Share Consolidation"). Cequence plans to hold a
special meeting of shareholders for the purposes of voting on the
Share Consolidation. The Meeting is planned for October 22, 2018 and the record date for the
Meeting is September 21, 2018.
Further information about the Meeting and the Share Consolidation
will be provided to the Company's shareholders in a Notice of
Meeting and Management Information Circular, to be sent to
shareholders following the record date.
Advisors
Peters & Co. Limited acted as financial advisor to Cequence.
Norton Rose Fulbright Canada LLP acted as legal counsel to the
Company.
About Cequence
Cequence is a publicly-traded Canadian energy company involved
in the acquisition, exploitation, exploration, development and
production of natural gas and crude oil in western Canada. Further information about Cequence may
be found in its continuous disclosure documents filed with Canadian
securities regulators at www.sedar.com.
Forward-looking Statements or Information
Certain statements included in this press release constitute
forward-looking statements or forward-looking information under
applicable securities legislation. Such forward-looking statements
or information are provided for the purpose of providing
information about management's current expectations and plans
relating to the future. Readers are cautioned that reliance on such
information may not be appropriate for other purposes, such as
making investment decisions. Forward-looking statements or
information typically contain statements with words such as
"anticipate", "believe", "expect", "plan", "intend", "estimate",
"propose", "project" or similar words suggesting future outcomes or
statements regarding an outlook. Forward-looking statements or
information in this press release may include, but are not limited
to: the use of the proceeds from the Rights Offering; the impact of
the completion of Cequence's debt refinancing; and the Company's
continued development of its Dunvegan assets and the financial and economic
performance of those assets. 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. 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
in this press release, assumptions have been made regarding, among
other things: the impact of increasing competition; the timely
receipt of any required regulatory approvals; the ability of the
Company to obtain qualified staff, equipment and services in a
timely and cost efficient manner; the ability of the operator of
the projects which the Company has an interest in to operate the
field in a safe, efficient and effective manner; the ability of the
Company to obtain financing on acceptable terms; field production
rates and decline rates; the ability to replace and expand oil and
natural gas reserves through acquisition, development of
exploration; the timing and costs of pipeline, storage and facility
construction and expansion and the ability of the Company to secure
adequate product transportation; future oil and natural gas prices;
currency, exchange and interest rates; the regulatory framework
regarding royalties, taxes and environmental matters; and the
ability of the Company to successfully market its oil and natural
gas products. Readers are cautioned that the foregoing list is not
exhaustive of all factors and assumptions which have been
used.
Forward-looking statements or information are based on
current expectations, estimates and projections that involve a
number of risks and uncertainties which could cause actual results
to differ materially from those anticipated by the Company and
described in the forward-looking statements or information. These
risks and uncertainties may cause actual results to differ
materially from the forward-looking statements or information. The
material risk factors affecting the Company and its business are
contained in the Company's Annual Information Form which is
available on SEDAR at www.sedar.com.
The forward-looking statements or information contained in
this press release are made as of the date hereof and the Company
undertakes no obligation to update publicly or revise any
forward-looking statements or information, whether as a result of
new information, future events or otherwise unless required by
applicable securities laws. The forward-looking statements or
information contained in this press release are expressly qualified
by this cautionary statement.
SOURCE Cequence Energy Ltd.