(TSX: AAV)
CALGARY,
AB, June 18, 2024 /CNW/ - Advantage
Energy Ltd. ("Advantage" or the "Corporation"), is pleased to
announce that it has completed its previously announced bought deal
financing (the "Offering") pursuant to a prospectus supplement
dated June 12, 2024 to Advantage's
short form base shelf prospectus dated June
10, 2024 (collectively, the "Prospectus"). Advantage,
through a syndicate of underwriters (the "Underwriters") co-led by
TD Securities Inc. and Scotiabank, issued a total of 5,910,000
subscription receipts (the "Subscription Receipts") at a price of
$11.00 per Subscription Receipt and
$125,000,000 aggregate principal
amount of 5.0% extendible convertible unsecured subordinated
debentures (the "Debentures") at a price of $1,000 per Debenture for aggregate gross proceeds
of the Offering of $190,010,000.
In addition, Advantage has granted the Underwriters an
over-allotment option, exercisable, in whole or in part, at any
time and from time to time until the earlier of: (i) July 18, 2024; and (ii) the Termination Time (as
defined below) or the Debenture Termination Time (as defined
below), as applicable, to purchase up to an additional 886,500
Subscription Receipts and up to an additional $18,750,000 aggregate principal amount of
Debentures, on the same terms and conditions as the Offering.
Each Subscription Receipt entitles the holder thereof to
receive, automatically upon closing of Advantage's previously
announced acquisition of certain Charlie
Lake and Montney assets
(the "Acquisition") from a private seller (the "Vendor"), without
any further action on the part of the holder or payment of any
additional consideration, one common share of Advantage (each, a
"Common Share").
The gross proceeds from the sale of the Subscription Receipts,
less one-half of the fee payable to the Underwriters on such
Subscription Receipts in connection with the Offering (the
"Escrowed Proceeds") have been deposited with Computershare Trust
Company of Canada, as subscription
receipt agent (the "Subscription Receipt Agent").
If (i) by 5:00 p.m. (Calgary time) on July
31, 2024: (a) an escrow release notice and direction (the
"Escrow Release Notice and Direction") is not delivered to the
Subscription Receipt Agent prior to such time; or (b) an Escrow
Release Notice and Direction has been delivered to the Subscription
Receipt Agent prior to such time, but the Escrowed Proceeds are
subsequently returned to the Subscription Receipt Agent and no
further Escrow Release Notice and Direction is delivered to the
Subscription Receipt Agent prior to such time; (ii) the definitive
agreement for the Acquisition is terminated; (iii) the Corporation
gives notice to TD Securities Inc. and Scotiabank, on behalf of the
Underwriters, that it does not intend to proceed with the
Acquisition; or (iv) the Corporation announces to the public that
it does not intend to proceed with the Acquisition (each, a
"Termination Event" and the time of the earliest of such
Termination Event to occur, the "Termination Time" and the date on
which such Termination Time occurs, the "Termination Date"), the
Subscription Receipt Agent will pay to each holder of Subscription
Receipts, no earlier than the third business day following the
Termination Date, an amount per Subscription Receipt equal to the
issue price in respect of such Subscription Receipt, plus such
holder's proportionate share of any interest and other income
received or credited on the investment of the Escrowed Proceeds
between the date hereof and the Termination Date, in each case net
of any applicable withholding taxes.
In the event that the Corporation and the Vendor are able to
complete the Acquisition in all material respects in accordance
with the terms of the definitive agreement for the Acquisition but
for the payment of the purchase price for the Acquisition, and the
Corporation has available to it all other funds required to
complete the Acquisition, the Corporation will provide the Escrow
Release Notice and Direction to the Subscription Receipt Agent and
the Subscription Receipt Agent will release the Escrowed Proceeds,
less the remaining one-half of the fee payable to the Underwriters
on the Subscription Receipts, to or at the direction of the
Corporation.
The Debentures bear interest at a rate of 5.0% per annum payable
semi-annually in arrears on June 30
and December 31 in each year,
commencing December 31, 2024.
The initial maturity date of the Debentures is the Debenture
Termination Date (as defined below) (the "Initial Maturity Date"),
which will be no later than July 31,
2024. Upon closing of the Acquisition, the Initial Maturity
Date will be automatically extended to June
30, 2029 (the "Final Maturity Date"). Provided that
the maturity date for the Debentures is extended to the Final
Maturity Date, the Debentures will be convertible at the option of
the holder into Common Shares at any time prior to 5:00 p.m. (Calgary time) on the earliest of: (i) the last
business day immediately prior to the Final Maturity Date, and (ii)
the last business day immediately preceding the date specified by
the Corporation for redemption of the Debentures, at a conversion
price of $14.58 per Common Share,
being a ratio of 68.5871 Common Shares per $1,000 principal amount of Debentures, subject to
adjustment in certain events (the "Conversion Price") as described
in the trust indenture governing the Debentures entered into
between the Corporation and Computershare Trust Company of
Canada (the "Indenture").
If: (i) the closing of the Acquisition does not occur by
5:00 p.m. (Calgary time) on July
31, 2024; (ii) the definitive agreement for the Acquisition
is terminated; (iii) the Corporation gives notice to TD Securities
Inc. and Scotiabank, on behalf of the Underwriters, that it does
not intend to proceed with the Acquisition; or (iv) the Corporation
announces to the public that it does not intend to proceed with the
Acquisition (each, a "Debenture Termination Event" and the time of
the earliest of such Debenture Termination Event to occur, the
"Debenture Termination Time" and the date on which such Debenture
Termination Time occurs, the "Debenture Termination Date"), the
maturity date of the Debentures will remain the Initial Maturity
Date and holders of the Debentures will receive, within three
business days following the Initial Maturity Date, an amount equal
to the principal amount of the Debentures at par together with all
accrued and unpaid interest thereon up to, but excluding, the
Initial Maturity Date.
The Debentures will not be redeemable by the Corporation before
June 30, 2027, except in certain
limited circumstances following a change of control (as defined in
the Indenture). On or after June 30,
2027 and prior to June 30,
2028, the Debentures may be redeemed by the Corporation, in
whole or in part from time to time, on not more than 60 days' and
not less than 30 days' prior written notice, at a redemption price
equal to the principal amount thereof plus accrued and unpaid
interest thereon, if any, up to but excluding the date set for
redemption, provided that the current market price (as defined in
the Indenture) of the Common Shares on the date on which notice of
redemption is given is not less than 130% of the Conversion Price.
If the Debentures are redeemed by the Corporation prior to
June 30, 2028, a holder of Debentures
who elects to convert such Debentures into Common Shares during the
period from, and including, the date on which the Corporation sends
notice of such redemption to, and including, the last business day
immediately preceding the date of redemption will, subject to
Toronto Stock Exchange (the "TSX") approval, be entitled to
receive additional Common Shares on such conversion as a make-whole
premium. On or after June 30, 2028
and prior to the Final Maturity Date, the Debentures may be
redeemed by Advantage, in whole or in part from time to time, on
not more than 60 days' and not less than 30 days' prior written
notice, at a redemption price equal to the principal amount thereof
plus accrued and unpaid interest thereon.
The Acquisition is expected to close by the end of June 2024, subject to the satisfaction or waiver
of customary closing conditions. Upon closing of the
Acquisition, the net proceeds of the Offering are expected to be
used to fund a portion of the purchase price for the
Acquisition.
It is anticipated that the Subscription Receipts and the
Debentures will be posted for trading on the TSX at the open of
markets today. The Subscription Receipts and the Debentures will
trade on the TSX under the symbols "AAV.R" and "AAV.DB",
respectively, and the Common Shares currently trade on the TSX
under the symbol "AAV".
Forward-Looking Information Advisory
The information in this press release contains certain
forward-looking statements, including within the meaning of
applicable securities laws. These statements relate to future
events or our future intentions or performance. All statements
other than statements of historical fact may be forward-looking
statements. Forward-looking statements are often, but not always,
identified by the use of words such as "anticipate", "continue",
"demonstrate", "expect", "may", "can", "will", "believe", "would"
and similar expressions and include statements relating to, among
other things: the terms of the Subscription Receipts and the
Debentures; Advantage's expectations regarding the Acquisition,
including the anticipated timing of closing thereof; the
anticipated use of proceeds of the Offering; and the posting of the
Subscription Receipts and the Debentures for trading on the TSX,
including the anticipated timing thereof.
Advantage's actual decisions, activities, results,
performance or achievement could differ materially from those
expressed in, or implied by, such forward-looking statements and
accordingly, no assurances can be given that any of the events
anticipated by the forward-looking statements will transpire or
occur or, if any of them do, what benefits that Advantage will
derive from them.
These statements involve substantial known and unknown risks
and uncertainties, certain of which are beyond Advantage's control,
including, but not limited to: changes in general economic, market
and business conditions; industry conditions; actions by
governmental or regulatory authorities including increasing taxes
and changes in investment or other regulations; changes in tax
laws, royalty regimes and incentive programs relating to the oil
and gas industry; Advantage's success at acquisition, exploitation
and development of reserves; unexpected drilling results; changes
in commodity prices, currency exchange rates, net capital
expenditures, reserves or reserves estimates and debt service
requirements; the occurrence of unexpected events involved in the
exploration for, and the operation and development of, oil and gas
properties, including hazards such as fire, explosion, blowouts,
cratering, and spills, each of which could result in substantial
damage to wells, production and processing facilities, other
property and the environment or in personal injury; changes or
fluctuations in production levels; delays in anticipated timing of
drilling and completion of wells; individual well productivity;
competition from other producers; the lack of availability of
qualified personnel or management; credit risk; changes in laws and
regulations including the adoption of new environmental laws and
regulations and changes in how they are interpreted and enforced;
our ability to comply with current and future environmental or
other laws; stock market volatility and market valuations;
liabilities inherent in oil and natural gas operations; competition
for, among other things, capital, acquisitions of reserves,
undeveloped lands and skilled personnel; incorrect assessments of
the value of acquisitions; geological, technical, drilling and
processing problems and other difficulties in producing petroleum
reserves; ability to obtain required approvals of regulatory
authorities; the risk that the Acquisition may not close when
anticipated, or at all; the risk that Advantage may not satisfy all
closing conditions for the Acquisition when anticipated, or at
all; and the risk that the Subscription Receipts and the
Debentures may not be posted for trading on the TSX when
anticipated, or at all. Many of these risks and
uncertainties and additional risk factors are described in the
Prospectus and the Corporation's Annual Information Form, copies of
which are available at
www.sedarplus.ca ("SEDAR+") and
www.advantageog.com. Readers are also referred to risk
factors described in other documents Advantage files with Canadian
securities authorities.
With respect to forward-looking statements contained in this
press release, Advantage has made assumptions regarding, but not
limited to: conditions in general economic and financial markets;
effects of regulation by governmental agencies; current and future
commodity prices and royalty regimes; the Corporation's current and
future hedging program; future exchange rates; royalty rates;
future operating costs; future transportation costs and
availability of product transportation capacity; availability of
skilled labor; availability of drilling and related equipment;
timing and amount of net capital expenditures; the impact of
increasing competition; the price of crude oil and natural gas; the
number of new wells required to achieve the budget objectives; that
the Corporation will have sufficient cash flow, debt or equity
sources or other financial resources required to fund its capital
and operating expenditures and requirements as needed; that the
Corporation's conduct and results of operations will be consistent
with its expectations; that the Corporation will have the ability
to develop the Corporation's properties in the manner currently
contemplated; current or, where applicable, proposed assumed
industry conditions, laws and regulations will continue in effect
or as anticipated; the estimates of the Corporation's production
and reserves volumes and the assumptions related thereto (including
commodity prices and development costs) are accurate in all
material respects; the closing of the Acquisition will occur when
anticipated and on the terms anticipated; and the ability to meet
the conditions to closing of the Acquisition on a timely basis; and
the ability of Advantage to meet the conditions to posting of the
Subscription Receipts and Debentures for trading on the TSX.
Readers are cautioned that the foregoing lists of factors are not
exhaustive.
Management has included the above summary of assumptions and
risks related to forward-looking information above and in its
continuous disclosure filings on SEDAR+ in order to provide
shareholders with a more complete perspective on Advantage's future
operations and such information may not be appropriate for other
purposes. Advantage's actual results, performance or achievement
could differ materially from those expressed in, or implied by,
these forward-looking statements and, accordingly, no assurance can
be given that any of the events anticipated by the forward-looking
statements will transpire or occur, or if any of them do so, what
benefits that Advantage will derive there from. Readers are
cautioned that the foregoing lists of factors are not exhaustive.
These forward-looking statements are made as of the date of this
news release and Advantage disclaims any intent or obligation to
update publicly any forward-looking statements, whether as a result
of new information, future events or results or otherwise, other
than as required by applicable securities laws.
SOURCE Advantage Energy Ltd.