CALGARY, Alberta, Sept. 13, 2024 (GLOBE NEWSWIRE) -- September 13, 2024 – Prairie Provident Resources Inc. ("Prairie Provident" or the "Company") (TSX:PPR) announces an agreement to extend the maturity of its senior secured credit facility (the "First Lien Loan") to March 31, 2026 and enhance its flexibility with modified covenants. The Company also announces a $13.2 million rights offering (the "Rights Offering") supported by participation commitments of $12 million, comprised of $11.6 million from its largest shareholder, PCEP Canadian Holdco, LLC ("PCEP"), and $400,000 from directors and management, as well as complementary amendments to its outstanding second lien notes.
Net proceeds from the Rights Offering are expected to fund a capital program focused on drilling at least two wells in the Basal Quartz formation before the end of 2024, workovers to enhance the productivity of existing wells and general corporate purposes. A portion of the net proceeds will be directed towards settlement of a US$2.3 million advance under the Company's second lien note facility received in May 2024, by way of a $3.13 million setoff (being the Canadian dollar equivalent of the advance) against the subscription price payable by PCEP under the Rights Offering.
Prairie Provident expects that these transactions will improve financial flexibility and significantly increase the capital available to execute its strategy to optimize its producing assets as well as develop its land base. The Company plans to use the forecasted cash flow from incremental production from the initial Basal Quartz drilling program to fund additional Basal Quartz wells in 2025 as it continues to expand its participation in this emerging play. Prairie Provident has 167,869 net acres in its Michichi core area with approximately 40 Basal Quartz potential drilling opportunities targeting light/medium oil. The Company is excited by the results achieved from offsetting industry activity.
Loan Amendments
The amendments to the First Lien Loan (the "First Lien Amendments") include:
extension of the maturity date to March 31, 2026, subject to acceleration if (i) PCEP's basic subscription commitment under the Rights Offering for $10.0 million is not completed by September 30, 2024 or (ii) the Company does not raise at least $12.0 million in total equity capital (which amount includes PCEP's $10.0 million basic subscription commitment) by October 31, 2024, with these two requirements intended to be satisfied by the $10.0 million basic subscription commitment of PCEP under the Rights Offering, $400,000 in aggregate subscription commitments by directors and management, and a $1.6 million standby commitment for the Rights Offering from PCEP, all as more particularly described below;
deferral of a portion of cash interest obligations on amounts owed under the First Lien Loan, through capitalization as additional principal of all accrued interest amounts through December 31, 2024; and
adjustment of financial covenants, to replace existing covenants with new measures and thresholds that align with the Company's current expectations for the remaining term to maturity.
Amendments have also been agreed with respect to the Company's outstanding second lien notes (the "Second Lien Amendments"), to extend the maturity date to September 30, 2026 and amend the covenants for consistency with the amended covenants under the First Lien Loan.
The First Lien Amendments and Second Lien Amendments are subject to receipt of necessary approvals of the TSX.
Rights Offering
Pursuant to the Rights Offering, each holder of record of Prairie Provident common shares at the close of business on September 24, 2024 (the "Record Date") will receive one subscription right (a "Right") for each common share held. Each Right will entitle the holder to subscribe for 0.739474 of a common share, at a subscription price (the "Subscription Price") of $0.025 per whole common share (the "Basic Subscription Privilege"). Rights are exercisable for whole common shares only, and holders will therefore need to exercise 1.352313 Rights to purchase one additional common share under the Basic Subscription Privilege. Up to 529,579,000 common shares are issuable under the Rights Offering for an aggregate Subscription Price, if fully subscribed, of $13,239,475.
The Subscription Price per share represents a 29% discount to the 5-day volume weighted average trading price of the common shares on the Toronto Stock Exchange (the "TSX") for the last 5 trading days, and is consistent with TSX requirements that securities offered in a rights offering be priced at a minimum 25% discount to the market price.
The Rights Offering is expected to expire at 5:00 p.m. (Mountain time) (the "Expiry Time") on October 28, 2024 (the "Expiry Date"). Any Rights not exercised at or before the Expiry Time on the Expiry Date will be void and will have no value. The Rights are expected to be listed for trading on the Toronto Stock Exchange ("TSX") under the trading symbol "PPR.RT", commencing on September 24, 2024, and remain posted for trading until 12:00 p.m. (Eastern time) on the Expiry Date.
In accordance with applicable securities regulations, eligible holders of Rights who fully exercise their Rights with respect to the Basic Subscription Privilege will also be entitled to subscribe for additional common shares, at the Subscription Price, that are not validly subscribed for under the Basic Subscription Privilege (the "Additional Subscription Privilege"), subject to certain limitations set out in the rights offering notice and circular of the Company for the Rights Offering (the "Rights Offering Documents"), including a pro rata allocation if more additional shares are subscribed for under the Additional Subscription Privilege than are available.
Completion of the Rights Offering is conditional upon the satisfaction of certain conditions, including receipt of all necessary approvals of the TSX.
Full details of the Rights Offering are contained in the Rights Offering Documents, which will be filed on SEDAR+ under the Company's issuer profile at www.sedarplus.ca on or before September 16, 2024.
Immediately before the Rights Offering, the Company has 716,155,736 common shares outstanding. Upon closing of the Rights Offering, if all Rights are exercised in full, there will be 1,245,734,736 common shares outstanding.
Committed Participation
The Company's largest shareholder, PCEP, has agreed to subscribe for its pro rata share (approximately 75.5%) of the Rights Offering, amounting to 400,000,000 common shares for an aggregate Subscription Price of $10.0 million (partially payable by way of a $3.13 million setoff in respect of a US$2.3 million advance under the Company's second lien note facility received in May 2024), and directors and management have ...
