Perpetual Energy To Vend Clearwater Assets Into New Firm To Restructure Balance Sheet

Perpetual Energy (TSX: PMT) this morning announced that it is effectively spinning out certain of its assets to enable the company to better manage its balance sheet. The company has formed Rubellite Energy, which is to take over the firms Clearwater assets in Northern Alberta.

The transaction will see Rubellite effectively acquire all of the lands, wells, roads, and facilities related to Perpetual’s Clearwater operations in Alberta, for which it will pay $58 million in cash, and an option to acquire four million common shares. The transaction is to be funded via a number of financings that have been arranged by Perpetual, with the company targeting a minimum figure of $72.8 million to be raised in aggregate.

The transaction is set to see Perpetual shareholders receive both shares and what are referred to as arrangement warrants in the newly formed company, the latter of which are effectively a rights offering to acquire additional Rubellite shares. Priced at $2.00, the program is expected to raise $32.3 million for the new company in a transaction that is reportedly fully backstopped.

Additional funds are to come from a $30 million subscription receipt financing being conducted at $2.00 per receipt with institutional investors, with an additional $10.5 million financing to occur at the same price upon the closing of the arrangement warrant rights offering. Finally, $7.9 million in funding is to come via the sale of a 3% to 5% overriding royalty at the Figure Lake property.

Notably, the sale of the royalty is targeted to fund four wells to be drilled and equipped, as well as partially fund twelve additional wells.

The transaction is being conducted by Perpetual as a means of deleveraging its balance sheet and improve liquidity. The company is expected to own a 45.6% stake in Rubellite following the close of the transactions, while enabling the firm to restructure its balance sheet to meet loan obligations.

Rubellite is expected to subsequently list its shares on the TSX.

Perpetual Energy last traded at $0.32 on the TSX.

Information for this briefing was found via Sedar and Perpetual Energy. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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