Petrus Resources Ltd. ("
Petrus" or the
"
Company") (TSX: PRQ) is pleased to announce that
it has entered into agreements with new lenders to the Company
which provide two new credit facilities (the “
New Credit
Facilities”) totaling $55 million. The New Credit
Facilities, together with the net proceeds of the Company's
recently closed $20 million rights offering (the "
Rights
Offering" and together with the New Credit Facilities, the
“
Transactions”), will be used to repay in full all
amounts owing under the Company's existing secured revolving credit
facility (the "
Existing RCF"), which will be
approximately $27 million at the end of May.
The refinancing completes the Company’s debt
restructuring. Replacing the Existing RCF with the New Credit
Facilities is an opportunity for Petrus to move forward with
supportive lenders and benefit from a debt structure with greater
liquidity and stability. The refinancing is the product of
strategic efforts made by management, the Board and major
shareholders over the past year to strengthen the Company’s balance
sheet. As a result, Petrus is well positioned to capitalize on its
financial flexibility, invest in the continued development of the
Company’s high quality assets and create meaningful value through
strategic growth.
ATB Facility
Petrus has entered into a commitment letter with
ATB Financial ("ATB") providing for a $30 million
reserve-based, secured operating revolving loan facility (the
"ATB Facility") that is repayable in full on
demand. Upon closing of the Transactions, up to $15 million will be
drawn on the ATB Facility and used to repay a portion of the
amounts owing under the Existing RCF and the balance of which will
be used for general corporate purposes. The interest rate on this
facility is the Canadian Prime Rate plus 2.5%, which currently
totals 5.7% per annum.
The availability of the ATB Facility is subject
to the satisfaction of certain conditions precedent, including the
execution of outstanding definitive documentation in respect of the
ATB Facility; the execution of definitive documentation and a
subordination and postponement agreement in respect of the Second
Lien Facility (as defined below); receipt of the proceeds from the
Second Lien Facility; and the concurrent repayment in full and
termination of the Existing RCF. Petrus anticipates satisfying all
conditions precedent in May 2022.
Second Lien Facility
In addition to the ATB Facility, Petrus has also
entered into a term sheet with Stuart Gray (the
"Lender"), a principal shareholder of the Company,
providing for a second lien secured term facility in the amount of
$25 million (the "Second Lien Facility"). On
closing of the Transactions, approximately $12 million of the
Second Lien Facility will be used to repay amounts owing under the
Existing RCF and the balance will be used for selected development
activities and general corporate purposes.
Principal amounts due under the Second Lien
Facility, together with accrued and unpaid interest thereon, will
be due and payable in full on the last day of the month that is 36
months following the month in which the closing of the Transactions
occurs. Amounts outstanding under the Second Lien Facility will
bear interest at a fixed rate of 11% per annum for the duration of
the loan. The repayment terms of the Second Lien Facility are
flexible with no additional fees, making it attractive compared to
alternative borrowing opportunities available to the Company.
The availability of the Second Lien Facility is
subject to the satisfaction of certain conditions precedent,
including: the execution of definitive documentation; the closing
of the Rights Offering; the satisfaction of the conditions
precedent to the ATB Facility; the concurrent repayment in full and
termination of the Existing RCF; and the approval of the Toronto
Stock Exchange ("TSX"). Petrus anticipates
satisfying all conditions precedent in May 2022.
Related Party Matters
The Second Lien Facility is a related party
transaction under applicable securities legislation as the Lender
is a controlling shareholder of Petrus who currently owns or
exercises control or direction over (directly or indirectly)
22,575,750 common shares of Petrus ( representing approximately
21.2% of the outstanding common shares on a non-diluted basis). The
board of directors of Petrus (the "Board")
established a committee of independent and disinterested directors
of Petrus (the "Independent Committee"), comprised
of Don Cormack, Patrick Arnell and Peter Verburg, to review and
recommend approval of the Second Lien Facility to the Board. The
Board (with Ken Gray and Don Gray abstaining), based on, among
other things, the recommendation of the Independent Committee and
the advice received from ATB Capital Markets Inc., the Company's
financial advisor for the Second Lien Facility, approved the Second
Lien Facility after determining that it is on reasonable commercial
terms that are not less advantageous to Petrus than if the Second
Lien Facility were obtained from a person dealing at arm's length
with Petrus.
The formal valuation requirements of applicable
securities legislation are not applicable to the Second Lien
Facility. The Second Lien Facility is exempt from the minority
shareholder approval requirements of applicable securities
legislation because (i) the Board has determined that the Second
Lien Facility is on reasonable commercial terms that are not less
advantageous to Petrus than if the Second Lien Facility were
obtained from a person dealing at arm’s length with Petrus, and
(ii) advances under the Second Lien Facility are not (A)
convertible, directly or indirectly, into equity or voting
securities of Petrus or a subsidiary thereof, or otherwise
participating in nature, or (B) repayable as to principal or
interest, directly or indirectly, in equity or voting securities of
Petrus or a subsidiary thereof.
Advisors
ATB Capital Markets Inc. acted as a financial
debt advisor and Burnett, Duckworth & Palmer LLP is acting as
legal advisor to the Company with respect to the New Credit
Facilities.
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
FORWARD-LOOKING STATEMENTS:
This news release contains forward‐looking
statements regarding: the Company's ability to obtain the ATB
Facility and the Second Lien Facility; the use of proceeds of the
Transactions; the amounts that will be drawn on the New Credit
Facilities in order to repay all amounts owing under the Existing
RCF; our forecast for the amounts owing under the Existing RCF in
May 2022; the expected material terms of each facility; the timing
of obtaining the facilities; the Company's ability to satisfy the
conditions precedent to obtaining each facility; the Company's
forecast for the amounts that will be drawn on the New Credit
Facilities following the closing of the Transactions; Petrus'
belief that the Transactions will provide it with a debt structure
with greater liquidity and stability; Petrus' belief that it is
well positioned to capitalize on its financial flexibility, invest
in the continued development of its high quality assets and create
meaningful value through strategic growth. 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 it. 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: TSX approval of the Second
Lien Facility will be obtained in a timely manner; all conditions
precedent to obtaining each credit facility will be satisfied in a
timely manner; that the Rights Offering closes on the terms and on
the timetable anticipated; that the material terms of each credit
facility do not change prior to closing; that the credit facilities
are obtained on the timetable anticipated; Petrus' debt levels in
May 2022 will be as forecast. 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: the failure to receive TSX
approval of the Second Lien Facility; the failure to satisfy all
conditions precedent to obtaining each credit facility; a delay in
obtaining (or failure to obtain) one or both credit facilities; a
material change in the terms of one or both credit facilities; debt
levels exceeding those currently forecast due to changes in
production levels, commodity prices or other factors; the
possibility that the Company continues to experience liquidity
challenges, whether due to changes in credit availability under the
New Credit Facilities, changes in production levels or commodity
prices, or other factors; the risk that Petrus fails to capitalize
on its financial flexibility, develop its assets and/or create
meaningful value through strategic growth; and the additional risks
described in the Company's latest Annual Information Form, and
other disclosure documents filed by the Company on SEDAR. This
press release contains future-oriented financial information and
financial outlook information (collectively, "FOFI") about Petrus'
indebtedness under the Existing RCF in May 2022 before completing
the Transactions and Petrus' indebtedness under the New Credit
Facilities in May 2022 after completing the Transactions, which are
subject to the same assumptions, risk factors, limitations, and
qualifications as set forth above. Readers are cautioned that the
assumptions used in the preparation of such information, although
considered reasonable at the time of preparation, may prove to be
imprecise and, as such, undue reliance should not be placed on
FOFI. Petrus' actual results, performance or achievement could
differ materially from those expressed in, or implied by, these
FOFI, or if any of them do so, what benefits Petrus will derive
therefrom. Petrus has included the FOFI in order to provide readers
with a more complete perspective on Petrus' future operations and
such information may not be appropriate for other purposes. The
foregoing list of factors that may affect future results is not
exhaustive. When relying on Petrus' forward‐looking statements and
FOFI, 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 or FOFI,
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.
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