CALGARY, AB, March 30, 2021 /CNW/ - PetroShale Inc.
("PetroShale" or the "Company") (TSXV: PSH) (OTCQB:
PSHIF) is pleased to announce that it has entered into a formal
agreement with the syndicate of lenders under its senior secured
credit facility (the "Credit Facility") whereby such lenders
have agreed, subject to the satisfaction of certain conditions,
including the concurrent completion of the Company's previously
announced recapitalization transaction (the "Transaction"),
to (among other things) maintain the Company's current borrowing
base at US$177.5 million and to
extend the maturity date of the Credit Facility to June 2023 subject to semi-annual reviews by the
lenders to confirm the credit capacity of the Company (the
"Credit Facility Amendment").
The entering into a formal agreement with respect to the Credit
Facility Amendment represents a major milestone to complete the
Transaction, which includes the conversion of the outstanding
Preferred Shares (as described below) to common shares, a private
placement to the Company's two largest shareholders and the rights
offering to the remaining common shareholders, and is designed to
significantly improve the Company's financial flexibility and
sustainability. The gross proceeds from the private placement and
the rights offering will be between $30.0
million and $60.6 million and
will initially be applied against outstanding borrowings under the
Credit Facility.
The rights issued pursuant to the rights offering expire at
5:00 pm (Toronto time) on April
7, 2021 and eligible shareholders who intend to participate
in the rights offering, including the additional subscription
privilege provided thereunder, are encouraged to directly exercise
such rights (in the case of registered holders), or contact their
securities broker, dealer, bank or trust company or other
participant that holds such holder's rights sufficiently in advance
of the expiry date of the rights offering to ensure they can
properly exercise such rights.
The Company confirms that it has elected to exercise its right
to settle in kind the payment of the quarterly dividend due on
March 31, 2021 on the outstanding
preferred shares issued by its US subsidiary, PetroShale (US), Inc.
(the "Preferred Shares"). By electing to pay the first
quarter of 2021 dividend in kind, the ordinary cash dividend of
approximately US$1.9 million
(approximately CAD$2.4 million) will
be settled by way of increasing the current US$84.4 million liquidation preference of the
Preferred Shares by US$2.53 million
(approximately CAD$3.2 million). In
accordance with the terms of the Preferred Shares, the increase to
the liquidation preference increases the amount of voting and
exchange rights which accrue to the holder of the Preferred Shares.
As a result, the Company will issue an additional 1,327,251 special
voting shares to FR XIII PetroShale Holdings L.P. ("First
Reserve"). Following this issuance, First Reserve will own
2,702,702 common shares and 45,568,949 special voting shares,
representing approximately 20.6% of the outstanding voting shares
of the Company. On closing of the Transaction, all Preferred Shares
will be exchanged for 182,275,798 common shares and all special
voting shares will be cancelled.
Completion of the Transaction is subject to the satisfaction of
certain conditions to closing and is currently expected to be
completed on or about April 8th,
2021.
PetroShale also announces that pursuant to its Bonus Award
Incentive Plan (the "Plan"), an aggregate of 240,000
restricted awards and 960,000 performance awards were granted to
Rick Kessy, the newly appointed
Chief Operating Officer of the Company. The awards vest equally and
annually commencing on July 31, 2022
and expire on December 15, 2024. The
awards may be settled by PetroShale, in its sole discretion, in
cash and/or shares, in accordance with the terms of the
Plan.
About PetroShale
PetroShale is an oil company engaged in the acquisition,
development and production of high-quality oil-weighted assets in
the North Dakota Bakken / Three Forks.
Neither the TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Note Regarding Forward-Looking Statements and Other
Advisories:
This press release contains forward-looking statements and
forward-looking information (collectively "forward-looking
information") within the meaning of applicable securities laws
relating to, among other things, the completion of the Transaction
(including the various elements thereof) and the Credit Facility
Amendments, the potential benefits and effects of the Transaction
(including the Credit Facility Amendments) on the Company, the
timing for the completion of the Transaction and related matters,
including the expiry date for the rights offering, the anticipated
use of the net proceeds of the financing transactions proposed
under the Transaction, the anticipated elimination of the
liquidation preference represented by the Preferred Shares in
connection with the Transaction and First Reserve's ownership of
shares after giving effect to the payment in kind settlement of the
Preferred Shares.
PetroShale provided such forward-looking statements in reliance
on certain expectations and assumptions that it believes are
reasonable at the time, including expectations and assumptions
concerning the receipt of all regulatory and third party approvals
for Transaction, the ability of the Company to complete the
Transaction and satisfy the condition to effect the Credit Facility
Amendments in the manners described herein, prevailing commodity
prices, weather, regulatory approvals, liquidity, Bakken oil
differentials (including as a result of any interruptions from the
Dakota Access Pipeline ("DAPL") or otherwise), the ability
of the Company to transport its production through DAPL or other
forms of transportation (and the continued availability and
capacity of such transportation means); the Company's lenders
willingness to maintain the Company's borrowing capacity (including
as a result of the Credit Facility Amendments); activities by third
party operators; exchange rates, interest rates, applicable royalty
rates and tax laws; future production rates and estimates of
operating costs; performance of existing and future wells; plant
turnaround times and continued rail service to transport products;
reserve volumes; business prospects and opportunities; the future
trading price of the Company's shares; the availability and cost of
financing, labor and services; the impact of increasing
competition; ability to market oil and natural gas successfully;
and the Company's ability to access capital (including by way of
the completion of the Transaction).
Although the Company believes that the expectations and
assumptions on which such forward-looking information is based are
reasonable, undue reliance should not be placed on the
forward-looking information because the Company can give no
assurance that they will prove to be correct. Forward-looking
information addresses future events and conditions, which by their
very nature involve inherent risks and uncertainties. The Company's
actual results, performance or achievement could differ materially
from those expressed in, or implied by, the 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 so, what benefits the
Company will derive therefrom.
Management has included the above summary of assumptions and
risks related to forward-looking information provided in this press
release in order to provide security holders with a more complete
perspective on the Company's future operations and such information
may not be appropriate for other purposes. Readers are cautioned
that the foregoing lists of factors are not exhaustive. Additional
information on these and other factors that could affect our
operations or financial results are included in reports on file
with applicable securities regulatory authorities and may be
accessed through the SEDAR website (www.sedar.com). The
forward-looking information is made as of the date of this press
release and the Company disclaims any intent or obligation to
update publicly any forward-looking information, whether as a
result of new information, future events or results or otherwise,
other than as required by applicable securities laws.
All dollar figures included herein are presented in Canadian
dollars, unless otherwise noted.
SOURCE PetroShale Inc.
