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CALGARY, Alberta, April 16, 2019 (GLOBE NEWSWIRE) — Bellatrix Exploration Ltd. (“Bellatrix” or the “Company”) (TSX: BXE) announced today that the Ontario Superior Court of Justice (Commercial List) (the “Court”) has issued an interim order (the “Interim Order”) authorizing, among other things, the holding of the following meetings (collectively, the “Meetings”): (i) a meeting (the “Senior Unsecured Noteholders’ Meeting”) of holders of the Company’s outstanding 8.5% senior unsecured notes due 2020 (the “Senior Unsecured Notes”); (ii) a meeting (the “Convertible Debentureholders’ Meeting”) of holders of the Company’s outstanding 6.75% convertible debentures due 2021 (the “Convertible Debentures”); and (iii) a meeting (the “Shareholders’ Meeting”) of holders of the Company’s common shares (collectively, the “Shares”), in each case to consider and vote upon a corporate plan of arrangement (the “Plan of Arrangement”) under the Canada Business Corporations Act (the “CBCA”) to implement the previously announced proposed recapitalization transaction (the “Recapitalization Transaction”).
As previously announced by the Company in its March 29, 2019 news release (the “Transaction Announcement”), the proposed Recapitalization Transaction would on implementation, among other things, (i) reduce the Company’s total outstanding debt by approximately C$110 million (approximately 23%), (ii) reduce annual cash interest payments by over C$12 million annually until December 31, 2021, (iii) address certain debt maturities such that the Company would have no maturity dates in respect of any non-revolving debt until 2023; and (iv) improve and strengthen the Company’s overall financial position. Additional key terms of the Recapitalization Transaction are described in the Transaction Announcement.
To date, the proposed Recapitalization Transaction has the support of holders of approximately 90% of the Senior Unsecured Notes and approximately 50% of the Convertible Debentures that have agreed to vote in favour of the Plan of Arrangement pursuant to support agreements entered into with the Company.
The Meetings, Voting and Early Consent Matters
The Meetings in respect of the Plan of Arrangement are scheduled to be held on May 23, 2019, at 610 10 Ave SW, Calgary, Alberta, T2R 1M3 in the Gerwing Room at the Residence Inn by Marriott. Pursuant to the Interim Order, the Senior Unsecured Noteholders’ Meeting is scheduled to begin at 9:30 a.m. (Calgary time), the Convertible Debentureholders’ Meeting is scheduled to begin at 10:00 a.m. (Calgary time) and the Shareholders’ Meeting is scheduled to begin at 10:30 a.m. (Calgary time).
The record date (the “Record Date”) for voting at the Meetings is 5:00 p.m. (EDT) on April 16, 2019.
Holders of the Senior Unsecured Notes (the “Senior Unsecured Noteholders”) and holders of the Convertible Debentures (the “Convertible Debentureholders”) as at the Record Date will each be entitled to vote on the Plan of Arrangement at the applicable Meeting based on one vote per US$1,000 of principal amount of Senior Unsecured Notes or one vote per C$1,000 of principal amount of Convertible Debentures, respectively, held by the applicable Senior Unsecured Noteholder or Convertible Debentureholder as at the Record Date. Holders of the Shares (the “Existing Shareholders”) as at the Record Date will be entitled to vote on the Plan of Arrangement at the Shareholders’ Meeting based on one vote per Share held as at the Record Date.
To be approved at the applicable Meetings, the Plan of Arrangement requires the affirmative vote of at least 66⅔% of the votes cast at each of such Meetings, provided that the Company has the right under the Interim Order to seek Court approval of the Plan of Arrangement even if it is not approved by the Existing Shareholders at the Shareholders’ Meeting. As noted above, holders of approximately 90% of the Senior Unsecured Notes and approximately 50% of the Convertible Debentures have agreed to vote in favour of the Plan of Arrangement pursuant to support agreements entered into with the Company.
As set out in the Transaction Announcement, and as will be described in further detail in the Circular (as defined below): (i) Senior Unsecured Noteholders that vote in favour of the Plan of Arrangement by 5:00 p.m. (EDT) on the early consent date of May 15, 2019, as such date may be extended by Bellatrix (the “Early Consent Date”) will be entitled to receive a portion of their consideration issued in exchange for their Senior Unsecured Notes in the form of new 8.5% second lien notes due 2023 (“New Second Lien Notes”); and (ii) Convertible Debentureholders that vote in favour of the Plan of Arrangement by 5:00 p.m. (EDT) on the Early Consent Date of May 15, 2019, as such date may be extended by Bellatrix, will be entitled to receive as additional early consent consideration in exchange for their Convertible Debentures their pro rata share of new early consent common shares of Bellatrix representing approximately 5% of the Shares of Bellatrix to be outstanding immediately following the implementation of the Recapitalization Transaction (“Early Consent Common Shares”). In order for a Senior Unsecured Noteholder to be entitled to receive New Second Lien Notes and for a Convertible Debentureholder to be eligible to receive Early Consent Common Shares under the Plan of Arrangement, such holder must submit a vote in favour of the Plan of Arrangement by 5:00 p.m. (EDT) on the Early Consent Date, make an early consent election and follow such other applicable procedures as set forth in the Interim Order and the Circular.
The deadline for Senior Unsecured Noteholders, Convertible Debentureholders and Existing Shareholders to submit their proxies or voting instructions in order to vote on the Plan of Arrangement and other items to be considered at the applicable Meeting is 5:00 p.m. (EDT) on May 21, 2019 (the “Voting Deadline”).
Banks, brokers or other intermediaries (each, an “Intermediary”) that hold the Senior Unsecured Notes, Convertible Debentures or Shares on a securityholder’s behalf may have internal deadlines that require securityholders to submit their votes by an earlier date in advance of the Early Consent Date and/or the Voting Deadline, as applicable, and may have internal requirements for the submission of voting instructions. Securityholders are encouraged to contact their Intermediaries directly to confirm any such internal deadline or voting instruction requirements.
Information Circular
The management information circular for the Meetings (the “Circular”) will contain, among other things, information regarding procedures for voting on the Plan of Arrangement and eligibility for early consent consideration pursuant to the terms of the Plan of Arrangement and the Interim Order, as well as other background and material information regarding the Recapitalization Transaction. The Company expects the mailing of the Circular to begin on or about April 26, 2019. The Circular, the forms of proxies, the voting information and election forms and the form of letter of transmittal will also be available as follows:
- on Bellatrix’s website at www.bxe.com;
- under Bellatrix’s SEDAR profile at www.sedar.com and EDGAR profile at www.sec.gov/edgar.html; and/or
- through Kingsdale Advisors by calling toll free at 1-866-229-8874 or 416-867-2272 or by email at [email protected] or on Kingsdale Advisors’ website at www.KingsdaleAdvisors.com.
Any questions or requests for further information regarding voting at the Meetings or eligibility for early consent consideration should be directed to Kingsdale Advisors at 1-866-229-8874 or 416-867-2272, or by email at [email protected].
Shareholder Approvals
In connection with the Recapitalization Transaction, it is anticipated that the Company will (i) continue from the Business Corporations Act (Alberta) to the CBCA (the “Continuance”) and implement new by-laws of the Company (the “New By-laws”) in connection with the Continuance, and (ii) reduce the stated capital of its Shares by $800 million (the “Stated Capital Reduction”). The Continuance, the New By-laws and the Stated Capital Reduction require the affirmative vote of at least 66⅔% of the votes cast at the Shareholders’ Meeting.
In addition, under the rules of the Toronto Stock Exchange (“TSX”), shareholder approval is required in connection with the Recapitalization Transaction as it is expected to (i) “materially affect control” of the Company by creating a holding in excess of 20% of the Company’s voting securities, (ii) result in dilution exceeding 25% of the outstanding common shares at an issue price that is less than the current market price, and (iii) include the issuance of common shares at an issue price that is lower than the discount to the market price permitted by the TSX (the “TSX Plan Approval Matters”).
Further, as previously disclosed in the Company’s Transaction Announcement, in connection with the Recapitalization Transaction, Bellatrix has also agreed to, on implementation of the Recapitalization Transaction, (i) amend the exercise price of the warrants (the “Second Lien Exchange Warrants”) issued to the holders of the Company’s existing 8.5% second lien notes due 2023 (the “Existing Second Lien Noteholders”), and (ii) issue to the Existing Second Lien Noteholders additional warrants on the same terms as the Second Lien Exchange Warrants which, together with the Second Lien Exchange Warrants, would be exercisable for Shares equal to approximately 5% of the number of Shares outstanding immediately following the implementation of the Recapitalization Transaction (the “Warrant Transactions”). In connection with the Warrant Transactions, shareholder approval is also required under the rules of the TSX as the Warrant Transactions will result in (i) the amendment of the exercise price of the Second Lien Exchange Warrants to an exercise price which exceeds the maximum discount permitted by the TSX; and (ii) the issuance of additional warrants at an exercise price which exceeds the maximum discount permitted by the TSX (collectively, the “TSX Warrant Approval Matters”).
At the Shareholders’ Meeting, Existing Shareholders will be asked to consider and vote in respect of the Plan of Arrangement and the Warrant Transactions. By voting in respect of the Plan of Arrangement and the Warrant Transactions, Existing Shareholders will also be voting in respect of the TSX Plan Approval Matters and the TSX Warrant Approval Matters. Existing Shareholders will also be asked to consider and vote in respect of the Continuance (including the approval of the New By-laws), the Stated Capital Reduction and certain other annual matters.
Court Approval and Implementation
If the Plan of Arrangement is approved by the requisite majorities at the Senior Unsecured Noteholders’ Meeting and the Convertible Debentureholders’ Meeting, the Company and the Bellatrix Subsidiary will attend a hearing before the Court, currently scheduled for May 28, 2019, to seek a court order approving the Plan of Arrangement (the “Final Order”).
As part of the Court approval of the Recapitalization Transaction, the Company and the Bellatrix Subsidiary will seek a permanent waiver of (i) any and all defaults resulting from the commencement of their CBCA proceedings (the “CBCA Proceedings”) or the steps or transactions related to the CBCA Proceedings or Recapitalization Transaction, and (ii) third party change of control provisions that may be triggered by the implementation of the Recapitalization Transaction. At this time, the Interim Order provides for a stay of proceedings in favour of the Company and the Bellatrix Subsidiary in respect of any defaults resulting from their commencement of or involvement in the CBCA Proceedings, the steps contemplated by or related to the CBCA Proceedings or the proposed Recapitalization Transaction, the non-payment of any amounts due and payable in respect of the Senior Unsecured Notes or Convertible Debentures, or any cross-defaults relating to the foregoing, subject to the terms of the Interim Order.
Completion of the Recapitalization Transaction will be subject to, among other things, approval of the Plan of Arrangement by the requisite majorities of the Senior Unsecured Noteholders and the Convertible Debentureholders at the Meetings to be held on May 23, 2019, such other approvals as may be required by the Court or the TSX, other applicable regulatory approvals, the issuance of the Final Order approving of the Plan of Arrangement by the Court, and the satisfaction or waiver of applicable conditions precedent. Subject to the receipt of all requisite approvals and the satisfaction or waiver of the other conditions to completion of the Recapitalization Transaction, the Company is working towards completing the Recapitalization Transaction by the end of May 2019. Upon implementation, the Plan of Arrangement would bind all Senior Unsecured Noteholders, Convertible Debentureholders, and Existing Shareholders.
Additional information in connection with the implementation of the Recapitalization Transaction and the CBCA Proceedings will be made publicly available by the Company and certain additional documents relating to the Recapitalization Transaction and/or and the CBCA Proceedings will be hosted on the Company’s website (www.bxe.com) in the Investors section.
The Company’s legal advisors in connection with the Recapitalization Transaction are Goodmans LLP and Vinson & Elkins LLP and its financial advisor is National Bank Financial Inc. Burnet, Duckworth & Palmer LLP acted as legal counsel to the special committee of the board of directors of Bellatrix.
The securities to be issued pursuant to the Recapitalization Transaction have not been and will not be registered under the U.S. Securities Act of 1933 (the “1933 Act”), or the securities laws of any state of the United States, and may not be offered or sold within the United States except pursuant to an exemption from the registration requirements of the 1933 Act. The securities to be issued pursuant to the Recapitalization Transaction will be issued and distributed in reliance on the exemption from registration set forth in Section 3(a)(10) of the 1933 Act (and similar exemptions under applicable state securities laws).
About Bellatrix
Bellatrix Exploration Ltd. is a publicly traded Western Canadian based growth oriented oil and gas company engaged in the exploration for, and the acquisition, development and production of oil and natural gas reserves, with highly concentrated operations in west central Alberta, principally focused on profitable development of the Spirit River liquids rich natural gas play.
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