Pieridae Energy Limited (“Pieridae” or the “Company”) (TSX: PEA) is pleased to announce that it is offering rights (the “Rights Offering”) to eligible holders of its common shares (the “Common Shares”) of record at the close of business on September 9, 2024 (the “Record Date”).
Pursuant to the Rights Offering, each holder of Common Shares resident in a province or territory in Canada (the “Eligible Jurisdictions”) will receive one right (a “Right”) for each one Common Share held. Each Right will entitle the holder to subscribe for 0.71286 of a Common Share (the “Basic Subscription Privilege”). As a result, holders of Common Shares may exercise 1.4028 Rights and pay $0.2448 per share (the “Subscription Price”) to acquire one Common Share. The Subscription Price represents a discount of 25% to the 5-day volume weighted average trading price of the Common Shares on the Toronto Stock Exchange (the “TSX”) prior to the date hereof, the discount applied to meet the requirements of the TSX.
Pieridae expects to raise gross proceeds of up to $30 million from the Rights Offering and intends to use the proceeds to repay indebtedness, for working capital and general corporate purposes and to fund certain value-accretive optimization projects. The expected closing date of the Rights Offering is October 7, 2024.
The Rights issued under the Rights Offering will expire at 3:00 p.m. MDT on October 2, 2024 (the “Expiry Date”), after which time unexercised Rights will be void and of no value. The Rights Offering includes an additional subscription privilege under which eligible holders of Rights who fully exercise their Basic Subscription Privilege will be entitled to subscribe for additional available Common Shares on a pro rata basis that are not otherwise subscribed for under the Basic Subscription Privilege.
In connection with the Rights Offering, the Company has entered into a standby purchase agreement (the “Standby Purchase Agreement”) with Alberta Investment Management Corporation (“AIMCo”), which has agreed, subject to the satisfaction of certain conditions, to fully exercise its Basic Subscription Privilege to purchase 24,498,749 Common Shares and to purchase up to an additional 77,625,434 Common Shares not otherwise subscribed for under the Rights Offering (the “Standby Commitment”), which will ensure that the Company receives gross proceeds under the Rights Offering of at least $25 million. If the Standby Commitment is utilized in full and no other Pieridae shareholders exercise Rights, AIMCo will own approximately 49.81% of the issued and outstanding Common Shares on completion of the Rights Offering. Completion of the Rights Offering is subject to the satisfaction or waiver of the conditions under the Standby Purchase Agreement.
Darcy Reding, President and CEO commented, “We are extremely pleased to provide our shareholders with the opportunity to directly participate in Pieridae’s future through a backstopped rights offering. The ongoing support of our valued shareholders, particularly AIMCo which is committing up to $25 million, is instrumental in accelerating our strategic execution. Investing in value-enhancing well optimization, facility consolidation and debottlenecking projects is expected to improve revenue, lower costs and increase processing capacity to meet growing third-party demand at our processing facilities.”
On closing of the Rights Offering, Pieridae will enter into an investor rights agreement (the “Investor Rights Agreement”) and a registration rights agreement (the “Registration Rights Agreement”) with AIMCo. The Investor Rights Agreement will grant AIMCo certain board nomination and observer rights, and the Registration Rights Agreement will grant AIMCo certain distribution and registration rights, in each case as mutually agreed by Pieridae and AIMCo. The Investor Rights Agreement and Registration Rights Agreement will each terminate at such time that AIMCo and its affiliates together hold less than 10% of the Common Shares.
Copies of the Standby Purchase Agreement, Investor Rights Agreement, and Registration Rights Agreement will be filed under Pieridae’s profile on SEDAR+ at www.sedarplus.ca.
There are currently 171,911,336 Common Shares outstanding. An aggregate of 171,911,336 Rights are expected to be issued to subscribe for up to 122,549,019 Common Shares pursuant to the Rights Offering. The final number of Rights to be issued will depend on the actual number of issued and outstanding Common Shares on the Record Date. Following completion of the Rights Offering and assuming the exercise of all Rights, Pieridae expects that there will be approximately 294,460,355 Common Shares outstanding.
No fractional Common Shares will be issued and, where the exercise of Rights would otherwise entitle the holder of Rights to fractional Common Shares, the holder’s entitlement will be reduced to the next lowest whole number of Common Shares. No cash or other consideration will be paid in lieu thereof.
The Rights will be listed for trading on the TSX under the symbol “PEA.RT” commencing on September 9, 2024 and will be de-listed from the TSX at 10:00 a.m. MDT on the Expiry Date.
The Rights Offering will be conducted only in the Eligible Jurisdictions. Accordingly, and subject to the detailed provisions of Pieridae’s Rights Offering circular (the “Circular”), Rights will not be delivered to, nor will they be exercisable by, persons resident outside of the Eligible Jurisdictions (“Ineligible Holders”), unless an Ineligible Holder satisfies Pieridae that their participation in the Rights Offering is lawful and in compliance with all applicable securities and other legislation, in which case Pieridae may direct the depositary and subscription agent, Odyssey Trust Company (“Odyssey”), to issue Rights to such Ineligible Holder who will no longer be an Ineligible Holder. After 3:00 p.m. MDT on September 22, 2024 (10 days prior to the Expiry Date), any Rights still held by Odyssey on behalf of Ineligible Holders may be sold on their behalf by Odyssey.
Details of the Rights Offering are set out in Pieridae’s Rights Offering notice (the “Notice”) and Circular, which will be available under Pieridae’s profile on SEDAR+ at www.sedarplus.ca. It is expected that the Notice, a direct registration system advice representing the Rights (the “DRS Advice”) and a subscription form (the “Subscription Form”) will be mailed to each registered shareholder of the Company resident in the Eligible Jurisdictions as at the Record Date. Registered shareholders who wish to exercise their Rights must deliver the DRS Advice, together with the completed Subscription Form and the applicable funds, to Odyssey at or before 3:00 p.m. MDT on the Expiry Date. Shareholders who hold their Common Shares through an intermediary, such as a bank, trust company, securities dealer, or broker, are expected to receive materials and instructions from their intermediary.
The Rights and the Common Shares issuable upon exercise of the Rights have not been, and will not be, registered under the United States Securities Act of 1933, as amended and, accordingly, the Rights and the Common Shares are not being publicly offered for sale in the “United States” or to “U.S. persons” (as such terms are defined in Regulation S under the United States Securities Act of 1933, as amended). This press release does not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction. There shall be no sale of the securities in any jurisdiction in which an offer to sell, a solicitation of an offer to buy, or a sale would be unlawful.
