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CALGARY, AB, Oct. 20, 2021 /CNW/ - Bonterra Energy Corp.
(www.bonterraenergy.com) (TSX: BNE) ("Bonterra" or the
"Company") is pleased to announce that it has successfully
closed a brokered private placement debt financing (the
"Initial Offering"), enhancing financial flexibility
and achieving its goal of restructuring all bank debt to a fully
conforming revolving credit facility.
The Initial Offering consists of an aggregate of 32,000 units
(the "Units") of the Company, with each Unit being comprised
of one senior unsecured debenture (each a "Debenture"), with
a face value of $1,000 which bears
interest at 9.0% per annum and has a four year term, and 56 common
share purchase warrants (the "Warrants") of Bonterra, with
each Warrant exercisable to acquire one common share ("Common
Share") of Bonterra at price of $7.75 per Common Share (representing a 15%
premium to the 5-day volume weighted average trading price of the
Common Shares on the TSX ended October 20,
2021), for a period of four years from October 20, 2021. Each Unit was issued at a price
of $1,000 (the "Issue Price")
for gross proceeds to Bonterra of $32
million.
The Company intends to use the net proceeds of the Initial
Offering and the Follow On Offering (as defined herein) primarily
to pay down existing bank debt and for general corporate
purposes.
Amended and Restated Credit Agreement (the
"Facility")
In conjunction with the closing of the Initial Offering,
Bonterra and its syndicate of lenders have agreed to amend the
Facility. The amendments include the following:
- Reflecting the Company's ongoing strategy of focusing on the
repayment of outstanding bank debt, Bonterra has agreed with its
lenders to a fully conforming borrowing base Facility of
$220 million, consisting of a
$195 million syndicated revolving
credit facility and a $25 million
non-syndicated revolving facility;
- This represents an elimination of the non-revolving term loan
of $65 million, leading to improved
financial flexibility; and
- The Facility has $10 million
step-downs at December 31, 2021 and
March 31, 2022 and revolves to
May 31, 2022 with a maturity date of
November 30, 2022.
The Company is pleased to have successfully transitioned its
bank debt to a Facility that is fully conforming. With this
enhanced flexibility and liquidity, Bonterra is confident it has
established a stronger position from which to execute on its
business plan through the balance of 2021 and 2022. In order to
benefit from a strong commodity price environment, Bonterra intends
to continue investing capital to support further generation of free
cash flow that can be allocated to incremental growth initiatives
while maintaining balance sheet strength.
Subordinated Debt Conversion
Bonterra has also entered into agreements with the holders of
its existing subordinated promissory note and due-to-related-party
loan (the "Subordinated Debt") to convert
their principal amounts of an aggregate of $19.5 million into Units under the same terms and
conditions as subscribers under the Initial Offering.
Initial Offering Details
Paradigm Capital Inc. and Peters & Co. Limited
(collectively, the "Agents") and Bonterra entered into an
agency agreement dated October 20,
2021, pursuant to which the Agents acted as co-lead agents
for the Initial Offering, which was conducted by way of private
placement exemptions from the prospectus requirements under
National Instrument 45-106 – Prospectus Exemptions ("NI
45-106") in certain provinces in Canada. The securities issued pursuant to the
Initial Offering are subject to applicable regulatory hold
periods.
As part of the Initial Offering, the current CEO of Bonterra,
George Fink, subscribed for 7,000
Units.
Follow On Offering
Concurrent with the closing of the Initial Offering, the Company
has entered into an agreement with the Agents providing for a
separate offering of up to $5 million
of Units (the "Follow On Offering"), on a "best efforts"
basis, under the same terms and conditions as the Initial Offering.
The Units issuable pursuant to the Follow On Offering will be
offered by way of private placement exemptions from the prospectus
requirements under NI 45-106 in each of the provinces in
Canada and in the United States pursuant to exemptions from
the registration requirements of the
United States Securities Act of 1933, as amended, and
in accordance with applicable laws and subject to applicable
regulatory hold periods. As a part of the Follow On Offering,
insiders of the Company will be given the option to subscribe for
up to $1 million in Units.
Overview of Debentures
The Debentures have a four year term and bear interest at a rate
of 9.0% per annum, payable semi-annually in arrears on June 30 and December
31 of each year, commencing December
31, 2021. Interest shall be computed on the basis of a
360-day year composed of twelve 30-day months. The December 31, 2021 interest payment will represent
accrued interest for the period from, and including, October 20, 2021 to, but excluding,
December 31, 2021. The Debentures are
direct senior unsecured obligations of the Company and rank
subordinate to all existing and future senior secured
indebtedness of the Company. The Debentures are subject to the
terms and conditions of a debenture indenture between the Company
and Odyssey Trust Company dated October 20,
2021.
Overview of Warrants
Each Warrant is exercisable to acquire one Common Share at an
exercise price of $7.75, subject to
customary anti-dilution adjustment, until October 20, 2025. The Warrants are subject to the
terms and conditions of a warrant indenture between the Company and
Odyssey Trust Company dated October 20,
2021.
Financial Advisor
Peters & Co. Limited has acted as financial advisor to
Bonterra in connection with the foregoing series of
transactions.
About Bonterra
Bonterra Energy Corp. is a conventional oil and gas corporation
with operations in Alberta,
Saskatchewan and British Columbia, focused on its strategy of
long-term, sustainable growth and value creation for shareholders.
The Company's shares are listed on the Toronto Stock Exchange under
the symbol "BNE".
Forward-Looking Information
Certain statements contained in this release include statements
which contain words such as "anticipate", "could", "should",
"expect", "seek", "may", "intend", "likely", "will", "believe" and
similar expressions, relating to matters that are not historical
facts, and such statements of our beliefs, intentions and
expectations about development, results and events which will or
may occur in the future, constitute "forward-looking information"
within the meaning of applicable Canadian securities legislation
and are based on certain assumptions and analysis made by us
derived from our experience and perceptions. Forward-looking
information in this release includes, but is not limited to: the
use of net proceeds of the Initial Offering and the Follow On
Offering; the anticipated benefits of the Facility; the terms and
anticipated closing date of the Follow On Offering; and other
related matters.
All such forward-looking information is based on certain
assumptions and analyses made by us in light of our experience and
perception of historical trends, current conditions and expected
future developments, as well as other factors we believe are
appropriate in the circumstances. The risks, uncertainties, and
assumptions are difficult to predict and may affect operations, and
may include, without limitation: that the actual use of net
proceeds of the Initial Offering and the Follow On Offering may
differ from those indicated; the Company's inability to capture the
benefits associated with the Facility; foreign exchange
fluctuations; equipment and labour shortages and inflationary
costs; general economic conditions; industry conditions; changes in
applicable environmental, taxation and other laws and regulations
as well as how such laws and regulations are interpreted and
enforced; the ability of oil and natural gas companies to raise
capital or maintain the Facility; the effect of weather conditions
on operations and facilities; the existence of operating risks;
volatility of oil and natural gas prices; oil and gas product
supply and demand; risks inherent in the ability to generate
sufficient cash flow from operations to meet current and future
obligations; increased competition; stock market volatility;
opportunities available to or pursued by us; and other factors,
many of which are beyond our control.
Actual results, performance or achievements could differ
materially from those expressed in, or implied by, this
forward-looking information and, accordingly, no assurance can be
given that any of the events anticipated by the forward-looking
information will transpire or occur, or if any of them do, what
benefits will be derived there from. Except as required by law,
Bonterra disclaims any intention or obligation to update or revise
any forward-looking information, whether as a result of new
information, future events or otherwise.
The forward-looking information contained herein is expressly
qualified by this cautionary statement.
Numerical Amounts
The reporting and the functional currency of the Company is the
Canadian dollar.
The TSX does not accept responsibility for the
accuracy of this release.
SOURCE Bonterra Energy Corp.