Prairie Provident Assets Declares Amendments to Recapitalization Transactions that Considerably Improve Worth to Shareholders, The Canadian Enterprise Journal

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CALGARY, Alberta, April 11, 2023 (GLOBE NEWSWIRE) — Prairie Provident Assets Inc. (TSX: PPR) (“Prairie Provident” or the “Firm”) declares amendments to the phrases of the fairness financing and debt settlement parts of its beforehand introduced recapitalization transactions (collectively, the “Recapitalization”).

Pursuant to the amended phrases, the Firm’s brokered non-public placement fairness providing (the “Fairness Financing”) of models (“Models”) on a commercially affordable efforts foundation, for gross proceeds of C$4,000,000, can be carried out at an amended challenge worth of C$0.09 per Unit, with every Unit now comprised of 1 widespread share of Prairie Provident (“Widespread Share”) and one entire Widespread Share buy warrant (“Warrant”) exercisable at an amended train worth of C$0.10 per share. The Warrant time period is unchanged at 60 months from closing. The Fairness Financing is being led by Analysis Capital Company, as the only real agent and sole bookrunner (the “Agent”).

The Firm has additionally agreed with PCEP Canadian Holdco, LLC (the “Noteholder”), as holder of all of the Firm’s excellent subordinated notes (the “Subordinated Notes”), to amend the worth per share at which Widespread Shares are proposed to be issued in reimbursement of all excellent indebtedness below the Subordinated Notes (roughly US$52.8 million) (the “Subordinated Notes Conversion”), to an agreed reimbursement worth of C$0.14 per share (representing a 56% premium to the amended Unit providing worth, and a 33% enhance to the beforehand agreed reimbursement worth) based mostly on the brand new Unit providing worth and Warrant train worth. The Noteholder is not directly managed by the funding administration arm of one of many world’s largest monetary establishments, which has over US$1 trillion in belongings below administration.

Along with diminished pricing and a further half Warrant per Unit for subscribers to the Fairness Financing, these amended phrases provide present shareholders and new fairness traders a considerably elevated stake within the Firm, with present shareholders and new fairness traders retaining roughly 24% of the Firm’s professional forma widespread shares, a rise of roughly 27% from the phrases initially introduced on March 29, 2023. See “Professional Forma Shareholding Info” under.

The providing worth below the Fairness Financing is positioned as a lovely alternative for fairness traders. Primarily based on its year-end 2022 reserves knowledge analysis, the Firm’s estimated internet current worth of future internet income from proved plus possible (2P) reserves (NPV10%)⁽¹⁾is C$588.8 million, or C$0.676 per share on a professional forma absolutely diluted foundation assuming completion of the Recapitalization, and its 2P reserve life index⁽²⁾ is 20.1 years (based mostly on estimated 2P reserves and present manufacturing ranges). The Firm has roughly C$860 million in tax swimming pools (C$560 million of which can be found as tax shelter towards present earnings) to enhance its reserves worth. These tax swimming pools symbolize vital potential worth to the Firm and its shareholders; if the entire swimming pools have been instantly deductible, they may shelter an equal quantity of the Firm’s earnings, thus representing as much as C$0.18 per share in worth.

(1) Primarily based on the Firm’s year-end 2022 impartial reserves knowledge analysis by Sproule Associates Restricted, impartial certified reserves evaluator, efficient as of December 31, 2022 and based mostly on forecast costs and prices on the efficient date.

(2) Reserve life index (RLI) is an oil and gasoline metric calculated by dividing whole firm share reserves by annualized manufacturing. RLI offers a abstract measure of the relative magnitude of the Firm’s reserves by a sign as to how lengthy they’d final based mostly on a present, annualized manufacturing fee and assuming no additions to reserves.

Matthew Shyba and sure different officers and staff of the Firm have suggested the Firm of their intention to take part within the Fairness Financing alongside different traders, and have supplied a sign of pursuits for the mixture quantity of roughly C$700,000 (17.5% of the providing dimension) below the Accredited Investor Exemption. Matthew Shyba is presently one in all Prairie Provident’s largest shareholders and a director of the Firm since July 2022. The Firm welcomes Mr. Shyba’s continued help and his enter into refocusing the enterprise to boost shareholder worth, a key step of which is finishing the Recapitalization.

On the amended providing worth of C$0.09 per Unit, a complete of 44,444,444 Models can be provided below the Fairness Financing for gross proceeds of C$4,000,000. A portion of the whole providing can be made in reliance on the ‘listed issuer financing exemption’ (LIFE) in Half 5A of Nationwide Instrument 45-106 – Prospectus Exemptions (“NI 45-106”) (the “Listed Issuer Financing Exemption”) to purchasers resident in Canada, besides Québec, and/or different qualifying jurisdictions. The steadiness of the whole providing can be made in reliance on the ‘accredited investor’ exemption below Part 2.3 of NI 45-106 (the “Accredited Investor Exemption”) and different obtainable exemptions from the prospectus necessities of relevant Canadian securities legal guidelines, to eligible purchasers resident in Canada and/or different qualifying jurisdictions.

Of the whole Models provided below the Fairness Financing, as much as 31,111,111 Models (roughly C$2,800,000) are anticipated to be provided pursuant to the Listed Issuer Financing Exemption, and as much as 13,333,333 Models (roughly C$1,200,000) are anticipated to be provided pursuant to the Accredited Investor Exemption and different obtainable prospectus exemptions. Pricing and different phrases can be equivalent below each exempt choices.

Models bought pursuant to the Listed Issuer Financing Exemption (and any Widespread Shares issued on a future train of the Warrants included in such Models) won’t be topic to any restricted maintain interval pursuant to relevant Canadian securities legal guidelines. Models bought pursuant to the Accredited Investor Exemption and different obtainable prospectus exemptions (and any Widespread Shares issued on a future train of the Warrants included in such Models) can be topic to a restricted maintain interval of 4 months and at some point from the date on which the Models are issued.

The closing of the Fairness Financing is anticipated to happen on or in regards to the week of April 26, 2023, or such later or earlier dates because the Agent and the Firm might decide.

The Firm will use commercially affordable efforts to acquire the mandatory approvals to listing the Warrants on the Toronto Inventory Alternate (“TSX”) upon closing of the Fairness Financing. Itemizing can be topic to the approval of the TSX in accordance with its unique itemizing necessities.

Completion of the Fairness Financing and the Subordinated Notes Conversion is topic to receipt of all vital approvals of the TSX. On this regard, Prairie Provident has utilized to the TSX for an exemption from shareholder approval necessities below TSX guidelines, pursuant to the ‘monetary hardship’ provisions of the TSX Firm Handbook. See “TSX Approvals” under.

Completion of the Subordinated Notes Conversion additionally stays conditional upon completion of an providing of latest fairness for gross proceeds of a minimum of C$4,000,000.

There’s an amended and restated providing doc dated April 11, 2023 associated to the LIFE providing that may be accessed below the Firm’s issuer profile at www.sedar.com and on the Firm’s web site at www.ppr.ca. Potential traders below the LIFE providing ought to learn this providing doc earlier than investing choice.

Additional particulars concerning the Recapitalization are supplied within the Firm’s information releases dated March 29, 2023 and March 31, 2023.

Professional Forma Shareholding Info

The next desk units forth data concerning the whole professional forma holdings of Widespread Shares (undiluted) of the Noteholder, of subscribers below the Fairness Financing, and of present Prairie Provident shareholders, after completion of the Recapitalization, based mostly on the assumptions recognized therein and within the notes to the desk.

	Assuming Gross Proceeds of C$4,000,000 below Fairness Financing (1)
Noteholder per Subordinated Notes Conversion (2)	71.8% (514 million Widespread Shares)
Noteholder per cashless train of 34,292,360 excellent warrants presently held (the “Warrant Train”) (3)	3.8% (27 million Widespread Shares)
Noteholder Subtotal	75.6% (541 million Widespread Shares)
Subscribers below Fairness Financing	6.2% (1) (44 million Widespread Shares)
TOTAL NEW SHARES (Subordinated Notes Conversion plus Warrant Train plus Fairness Financing)	81.8% (4) (586 million Widespread Shares)
EXISTING SHAREHOLDERS	18.2% (130 million Widespread Shares)

Figures might not add as a result of rounding.

Notes:

(1) Assumes the issuance of 44 million Models at a worth of C$0.09 per Unit (being considerably the identical because the market worth of the Widespread Shares on the TSX at market shut on April 10, 2023 of C$0.0899 per share) for whole gross proceeds of C$4.0 million.

(2) Assumes (i) a reimbursement worth of C$0.14 per share, (ii) a completion date of April 1, 2023, at which period the excellent steadiness owed below the Subordinated Notes can be US$52.8 million and (iii) a USD-to-CAD trade fee of 1.3626.

(3) Assumes a market worth of the Widespread Shares on the TSX of C$0.0899 per share on the date of completion, which might lead to an ‘in-the-money’ quantity of C$0.0707 per warrant held by the Noteholder based mostly on the train worth of C$0.0192 per share, with the whole variety of Widespread Shares issuable pursuant to the Warrant Train being such variety of Widespread Shares as have a price, based mostly on such market worth, equal to the mixture in-the-money worth of all such warrants.

(4) Represents a rise of 586 million or roughly 550% within the variety of Widespread Shares excellent, from 130 million Widespread Shares excellent right now to 716 million excellent after completion of the Subordinated Notes Conversion, Warrant Train and Fairness Financing based mostly on the assumptions described above.

TSX Approvals

Completion of the Fairness Financing and the Subordinated Notes Conversion is topic to receipt of all vital approvals of the TSX. On this regard, Prairie Provident has utilized to the TSX for an exemption from shareholder approval necessities below TSX guidelines, pursuant to the ‘monetary hardship’ provisions of the TSX Firm Handbook. For additional data, please check with the Firm’s information launch dated March 29, 2023.

Pursuant to TSX guidelines, the Recapitalization (on the amended phrases described on this information launch) would ordinarily require approval of the Firm’s disinterested shareholders:

• below part 604(a)(i) of the TSX Firm Handbook, on the idea that the Noteholder will, after giving impact to the Subordinated Notes Conversion and associated Warrant Train in addition to the Fairness Financing, maintain greater than 20% of the excellent Widespread Shares and the Recapitalization will subsequently be thought of by TSX to materially have an effect on management of Prairie Provident;
• below part 604(a)(ii) of the TSX Firm Handbook, on the idea that (i) the Noteholder is, by purpose of holding warrants pursuant to which it has the suitable to amass greater than 10% of the excellent Widespread Shares, an insider of Prairie Provident, and (ii) the Widespread Shares issuable to the Noteholder on the Subordinated Notes Conversion and Warrant Train, along with the whole curiosity plus deferred compensation payment payable to sure associates of the Noteholder over the time period of the US$3.64 million principal quantity of second lien notes due December 2024 (the “Second Lien Notes”) issued and bought to such associates on March 31, 2023 as a part of the Recapitalization, will present the Noteholder and such associates with greater than 10% of the Firm’s market capitalization;
• below part 607(g)(i) of the TSX Firm Handbook, on the idea that (i) the providing worth below the Fairness Financing (C$0.09 per Unit) is deemed below TSX guidelines to be lower than the market worth of the Widespread Shares due to the included Warrant, and (ii) the variety of new Widespread Shares issuable pursuant to the Fairness Financing (being a minimum of 44.4 million Widespread Shares forming a part of the variety of Models issuable to lift gross proceeds of not lower than C$4,000,000 plus an extra 44.4 million Widespread Shares probably issuable on future train of the Warrants forming a part of such Models) can be higher than 25% of the variety of Widespread Shares presently issued and excellent on an undiluted foundation (130,116,666);
• below part 607(g)(ii) of the TSX Firm Handbook, on the idea that (i) the Noteholder is, by purpose of holding warrants pursuant to which it has the suitable to amass greater than 10% of the excellent Widespread Shares, an insider of Prairie Provident, and (ii) the whole variety of Widespread Shares issuable to the Noteholder on the Subordinated Notes Conversion and Warrant Train, whether or not alone or taken along with any variety of Widespread Shares (together with Widespread Shares issuable below the Warrants) that any director or officer of the Firm might purchase below the Fairness Financing, is larger than 10% of the variety of Widespread Shares presently excellent (it being famous, nevertheless, that no director or officer that acquires Widespread Shares, together with Widespread Shares issuable below the Warrants, will individually purchase greater than 10% of the excellent Widespread Shares);
• below part 607(g)(ii) of the TSX Firm Handbook, on the idea that Matthew Shyba, a present director of Prairie Provident who has supplied a sign of curiosity for a lead order of C$600,000 below the Fairness Financing may, and another director or officer of the Firm that participates within the Fairness Financing (with as much as a further C$100,000 to C$200,000 of participation by different administrators or officers contemplated) may, relying on general market demand, purchase below the Fairness Financing such variety of Widespread Shares (together with Widespread Shares issuable below the warrants) as exceeds 10% of the variety of Widespread Shares presently excellent;
• below part 607(e) of the TSX Firm Handbook, on the idea that the ‘Adjustment Proper’ described within the March 29, 2023 information launch¹ constitutes an adjustment for which not all shareholders are compensated, and will lead to securities being issued at a worth decrease than market worth much less the permissible low cost below TSX guidelines; and
• on the idea that the compensation payable to Agent for its companies in respect of the Fairness Financing is increased than normal TSX pointers; and
• on the idea that (i) the amended providing worth below the Fairness Financing of C$0.09 per Unit was decided previous to public disclosure of the amended reimbursement worth for the Subordinated Be aware Conversion of C$0.14 per share, (ii) TSX would ordinarily in such circumstances limit insider participation to upkeep of their professional rata holding, except in any other case accepted by shareholders, and (iii) participation by the Noteholder (who’s, because of holding warrants, an insider of the Firm) within the Recapitalization will, and participation by any director or officer within the Fairness Financing might, lead to such events growing their professional rata holdings of Widespread Shares.

The TSX is contemplating the ‘monetary hardship’ utility in reference to its assessment of the Firm’s request for TSX approval of the relevant Recapitalization transactions. There isn’t a certainty that the TSX will approve such transactions, or settle for the Firm’s utility to depend on the monetary hardship exemption.

A particular committee of impartial and disinterested administrators (the “Impartial Committee”) has thought of the phrases of the Recapitalization transactions and, within the circumstances, really useful that the ‘monetary hardship’ utility be made to the TSX. The Impartial Committee decided, and the Board of Administrators unanimously agreed, that Prairie Provident is in critical monetary problem, and that the Recapitalization (together with, particularly, the Subordinated Notes Conversion and Fairness Financing) is cheap within the circumstances and designed to enhance the Firm’s monetary scenario.

Prairie Provident expects that, as a consequence of its ‘monetary hardship’ exemption utility, the TSX will place the Firm below a remedial delisting assessment, which is regular observe when a listed issuer seeks to depend on this exemption. Though the Firm believes that will probably be in compliance with all continued itemizing necessities of the TSX upon conclusion of a delisting assessment, no assurance might be supplied as to the end result of that assessment and, subsequently, on Prairie Provident’s continued qualification for itemizing on the TSX.

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1}  As extra significantly described in Prairie Provident’s information launch of March 29, 2023, the Firm has agreed to enter into an Investor Rights Settlement and a Registration Rights Settlement with the Noteholder and sure of its associates (the “Holders” for the needs of the next) in reference to completion of the Subordinated Notes Conversion. Pursuant to the Investor Rights Settlement, amongst different issues, the Holders will, with respect to the Widespread Shares issued on the Subordinated Notes Conversion, obtain an anti-dilution adjustment proper (the “Adjustment Proper”) entitling the Holders to obtain, for no extra consideration and topic to sure exceptions, within the occasion of Prairie Provident issuing, inside 6 months after completion of the Subordinated Notes Conversion, Widespread Shares a worth (or securities convertible or exercisable into Widespread Shares at a conversion or train worth) that’s lower than the C$0.14 reimbursement worth per share at which the Subordinated Notes Conversion is accomplished, such variety of extra Widespread Shares as (i) reduces the efficient worth per share of the Widespread Shares issued on the Subordinated Notes Conversion, when taken along with such extra Widespread Shares issued for no extra consideration, to such lower cost, or (ii) maintains the Holders’ voting curiosity, whichever quantity is the lesser.

ABOUT PRAIRIE PROVIDENT

Prairie Provident is a Calgary-based firm engaged within the exploration, improvement and manufacturing of its low decline, lengthy life oil reserves in Alberta. The Firm is presently producing oil and gasoline in western Canada with vital development alternatives from a deep stock of low-risk horizontal drilling areas and waterflood potential.

For additional data, please contact:

Prairie Provident Assets Inc.

Patrick R. McDonald
Adam Smith
Tel: (403) 292-8150
E-mail: [email protected]

CAUTIONARY STATEMENTS:

Ahead-Wanting Statements

This information launch accommodates ahead‐trying statements concerning the Fairness Financing and different Recapitalization transactions, and the completion and anticipated timing of the identical. These ahead‐trying statements are supplied as of the date of this information launch, or the efficient date of the paperwork referred to on this information launch, as relevant, and mirror predictions, expectations or beliefs concerning future occasions based mostly on the Firm’s beliefs on the time the statements have been made, in addition to numerous assumptions made by and data presently obtainable to Prairie Provident. In making the forward-looking statements included on this information launch, the Firm has utilized a number of materials assumptions, together with, however not restricted to, the well timed receipt of TSX approvals in respect of the relevant Recapitalization transactions; that each one circumstances precedent to the completion of the Recapitalization can be accomplished in a well timed method; and that normal financial circumstances and commodity worth circumstances won’t change in a materially adversarial method. Though administration considers these assumptions to be affordable based mostly on data obtainable to it, they could show to be incorrect. By their very nature, ahead‐trying statements contain inherent dangers and uncertainties, each normal and particular, and dangers exist that estimates, forecasts, projections and different ahead‐trying statements won’t be achieved or that assumptions on which they’re based mostly don’t mirror future expertise. We warning readers to not place undue reliance on these ahead‐trying statements as quite a few essential elements might trigger the precise outcomes to vary materially from the expectations expressed in them. These threat elements could also be usually said as the chance that the assumptions expressed above don’t happen, however particularly embrace, with out limitation, dangers referring to: normal market circumstances; the Firm’s capability to safe financing on beneficial phrases; the failure to obtain all relevant third get together and regulatory approvals for the Recapitalization transactions, and the extra dangers described within the Firm’s newest Annual Info Kind, and different disclosure paperwork filed by the Firm on SEDAR. The foregoing listing of things which will have an effect on future outcomes will not be exhaustive. When counting on our ahead‐trying statements, traders and others ought to fastidiously contemplate the foregoing elements and different uncertainties and potential occasions. The Firm doesn’t undertake to replace any ahead‐trying assertion, whether or not written or oral, which may be made on occasion by the Firm or on behalf of the Firm, besides as required by legislation.

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