Toscana Energy Announces Proposal to Amend its Convertible Debentures

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CALGARY, Alberta, March 29, 2018 (GLOBE NEWSWIRE) — Toscana Energy Income Corporation (“Toscana” or the “Corporation”) (TSX:TEI) announces that it will seek the approval of holders (the “Debentureholders”) of its 6.75% convertible unsecured subordinated debentures due June 30, 2018 (the “Debentures”) to approve certain amendments to the trust indenture between the Corporation and Valiant Trust Company (which was acquired by Computershare Trust Company of Canada) dated as of the 11th day of June 2013 (the “Indenture”) and governing the Debentures at a meeting of Debentureholders to be held on April 23, 2018 (the “Meeting”).

Debenture Amendments:

The proposed amendments (the “Amendments”) to the Debentures will:

1. Extend the maturity date of the Debentures from June 30, 2018 to June 30, 2021;
2. Increase the interest rate of the Debentures from 6.75% to 7.25% per annum effective June 30, 2018;
3. Reduce the conversion price in effect for each common share in the capital of the Corporation (“Common Share”) to be issued upon the conversion of the Debentures from $19.70 per Common Share to $1.00 per Common Share;
4. Permit the Corporation to redeem all or a part of the Debentures, upon notice as provided in the Indenture, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest, if any, on the Debentures redeemed, to the applicable date of redemption, if redeemed during the 12-month period beginning on June 30 of the years indicated below:

5. Make such other consequential amendments as required to give effect to the foregoing.

At the Meeting, Debentureholders will be asked to approve the Amendments by an extraordinary resolution authorizing Toscana and the trustee of the Debentures to enter into a supplemental indenture (the “Supplemental Indenture”) to give effect to the Amendments. For the Amendments to be approved, holders of not less than 25% of the principal amount of the Debentures outstanding must be represented in person or by proxy at the Meeting, and the extraordinary resolution must be passed by Debentureholders’ votes representing no less than 66 2/3% of the principal amount of the Debentures represented at the Meeting.  In addition, pursuant to the policies of the Toronto Stock Exchange (“TSX”), the Amendments, as they relate to amending the conversion price, must also be approved by a simple majority (50% plus 1) of the holders (“Shareholders”) of Common Shares.

A form of proxy and management information circular has been mailed to Debentureholders in connection with the Meeting to approve the Amendments.  In addition, a form of proxy and management information circular has been mailed to the Shareholders in connection with a meeting of Shareholders to be held concurrently with the Meeting to approve the Amendments to the extent that such amendments relate to the amendment of the conversion price.

Sequeira Partners Inc. (“Sequeira”) has provided the independent committee of the Board of Directors of Toscana (the “Toscana Board”) with an opinion (the “Fairness Opinion”) that, as of the date of the Fairness Opinion and subject to the scope of review, assumptions, limitations and qualifications contained therein, if adopted in its entirety, the Amendments are fair, from a financial point of view, to the Debentureholders.

The Toscana Board believes the Amendments are in the best interests of all stakeholders including Debentureholders and Shareholders and recommends that Debentureholders and Shareholders (in so far as the Amendments relate to the amendment of the conversion price) vote in favour of the Amendments for the following reasons:

1. The extension of the maturity date will afford Debentureholders a longer period of time during which to receive interest at a more favourable rate.  The extended term also creates additional value in the form of a significantly lower conversion price and will allow the Corporation to defer the repayment of principal to a time when the commodity markets may be improved.
2. The Corporation believes that the 7.25% interest rate represents an attractive yield, especially in the current low-interest rate environment and when considering alternative reinvestment opportunities.
3. The decrease in the conversion price of the Debentures from $19.70 per Common Share to $1.00 per Common Share increases the number of Common Shares underlying each $1,000 of principal amount of Debentures from approximately 50 Common Shares to 1,000 Common Shares, providing Debentureholders with a better opportunity to benefit from potential future increases in the Corporation’s share price.
4. Sequeira provided the Fairness Opinion which provided that, as of the date of the Fairness Opinion and subject to the scope of review, assumptions, limitations and qualifications contained therein, if adopted in its entirety, the Amendments are fair, from a financial point of view, to the Debentureholders.

About Toscana Energy Income Corporation

Toscana Energy Income Corporation is a conventional oil and gas producer with the mandate to acquire high quality, long life oil and gas assets including royalties, non-operated working interests and unitized production for yield and capital appreciation.

For further information, please contact:
Joseph S. Durante, Chief Executive Officer
Tel: (403) 410-6793
Fax: (403) 444-0090

Debentureholders with any questions or who require any assistance executing your form of proxy, please call D.F. King at:
North American Toll Free Number: 1-800-622-1678
Outside North America, Banks, Brokers and Collect Calls: 1-201-806-7301
Email: [email protected]
North American Toll Free Facsimile: 1-888-509-5907
Facsimile: 1-647-351-3176

Forward-Looking Statements:

This news release contains forward‐looking statements and forward‐looking information within the meaning of applicable securities laws. These statements relate to future events or future performance.  All statements other than statements of historical fact may be forward‐looking statements or information.  Forward‐looking statements and information are often, but not always, identified by the use of words such as “appear”, “seek”, “anticipate”, “plan”, “continue”, “estimate”, “approximate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe”, “would” and similar expressions.

More particularly and without limitation, this news release contains forward‐looking statements and information concerning the Corporation’s intention to seek approval from the Debentureholders in respect of the Amendments and from the Shareholders insofar as the Amendments relate to the amendment of the conversion price, the proposed Amendments, the timing with respect to holding the Meeting and the meeting of Shareholders, future share price and the expected advantages associated with the Amendments.  The forward‐looking statements and information are based on certain key expectations and assumptions made by management of the Corporation. Although management of the Corporation believes that the expectations and assumptions on which such forward looking statements and information are based are reasonable, undue reliance should not be placed on the forward‐looking statements and information since no assurance can be given that they will prove to be correct.

Forward-looking statements and information are provided for the purpose of providing information about the current expectations and plans of management of the Corporation relating to the future. Readers are cautioned that reliance on such statements and information may not be appropriate for other purposes, such as making investment decisions. Since forward‐looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the risks associated with the oil and gas industry in general such as operational risks in development, exploration and production delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to reserves, production, costs and expenses; health, safety and environmental risks; commodity price and exchange rate fluctuations; marketing and transportation; loss of markets; environmental risks; competition; incorrect assessment of the value of acquisitions and failure to realize the anticipated benefits of acquisitions; ability to access sufficient capital from internal and external sources; failure to obtain required regulatory and other approvals and changes in legislation, including but not limited to tax laws, royalties and environmental regulations. Accordingly, readers should not place undue reliance on the forward‐looking statements, timelines and information contained in this news release. Readers are cautioned that the foregoing list of factors is not exhaustive.

The forward‐looking statements and information contained in this news release are made as of the date hereof and no undertaking is given to update publicly or revise any forward‐looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws or the TSX.  The forward-looking statements or information contained in this news release are expressly qualified by this cautionary statement.

SOURCE: Toscana Energy Income Corporation

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