Perpetual places $45 million loan with Alberta Investment Management

By Devika Patel

Knoxville, Tenn., Feb. 17 – The week in private placements ended with the issue of a $45 million second-lien senior secured term loan offered by Calgary, Alta., energy company Perpetual Energy Inc.

Perpetual signed a commitment letter with Alberta Investment Management Corp., which has agreed to provide a four-year 8.1% second-lien senior secured term loan facility.

Borrowings under the loan facility will be made available in an initial drawdown in a minimum amount of $35 million on the closing date, expected to be in early March 2017. A second drawdown of the remaining $10 million prior to Nov. 30, 2017 provides flexibility to optimize financing costs and increase funding efficiency.

Alberta Investment Management also will receive 5.4 million three-year warrants, at a ratio of 120 warrants for every $1,000 committed, which are each exercisable on a one for one basis at an exercise price equal to a 45% premium to the volume weighted average trading price of the common shares for the 10 trading days preceding settlement.

The company also announced an increase and extension of its bank lending arrangements to Oct. 31, 2017, providing for a $14 million increase in total borrowing capacity under the credit facility to $20 million. Perpetual also plans a $9 million non-brokered private placement of units.

Proceeds will provide the company with a strong financial foundation and capital structure to execute its $70 million 2017 capital program, primarily focused on the development of its East Edson and Mannville assets and expected to deliver an increase in exit rate, based on average December forecast production, of close to 60% over 2016.

The new financings also afford Perpetual Energy the flexibility required to optimally manage its senior notes maturing in March 2018 and July 2019.

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