CALGARY, ALBERTA–(Marketwired – Feb. 24, 2017) – Athabasca Oil Corporation (TSX:ATH) (“Athabasca” or the “Company”) is pleased to announce that it has closed its previously announced balance sheet refinancing transactions, marking the conclusion of a series of strategic steps undertaken over the past year to transform the Company. The comprehensive refinancing plan provides Athabasca multi-year funding certainty and a strong liquidity outlook that will allow the Company to continue to advance its strategic objectives and maintain business flexibility.
Athabasca has established itself as an intermediate oil weighted producer with a funded five-year growth outlook and exposure to several of the largest resource plays in Western Canada including the Montney, Duvernay and oil sands. A complementary asset base of high rate of return light oil opportunities and low decline thermal production positions the Company for strong financial sustainability and free cash flow generation in the current environment while maintaining significant exposure to improving oil prices.
Athabasca has closed a private placement of US$450 million aggregate principal amount of 9.875% senior secured second lien notes due 2022 (the “New Notes”). Proceeds from the sale of the New Notes will be directed towards the retirement of the Company’s existing $550 million second lien notes due November 2017 (the “Notes”).
The Company has also closed a $120 million reserve-based credit facility supported by growth in its proved developed producing reserves. The facility is syndicated with seven major financial institutions.
Contingent Bitumen Royalty
Athabasca has granted a contingent bitumen royalty (the “Royalty”) on its Leismer and Corner assets to Burgess Energy Holdings LLC (“Burgess Energy”). The transaction closed on February 24, 2017 and the Company received $90 million of cash consideration. The Royalty follows the same structure as the existing thermal oil contingent bitumen royalties and ensures the assets are not encumbered at low commodity prices. Over the past year Athabasca has raised approximately $400 million through the series of Royalty transactions with Burgess Energy. These transactions unlocked long dated resource value and facilitated the recent acquisition of top tier producing Leismer thermal assets.
Tender and Redemption Details
The Early Tender Deadline of the Company’s previously announced Tender Offer (the “Offer”) to purchase any and all of its outstanding Canadian dollar denominated 7.50% Senior Secured Second Lien Notes due 2017 (CUSIP No. 04682RAB3/04682RAA5; ISIN CA04682RAB39/CA04682RAA55) (the “Notes”) was February 23, 2017 at 5:00pm ET. As reported by the tender agent, $439 million principal amount of the Notes has been validly tendered and not withdrawn, representing approximately 80% of the aggregate outstanding principal amount. Athabasca accepted for purchase all of the Notes that were validly tendered and not validly withdrawn prior to the Early Tender Deadline.
Athabasca paid for the Notes validly tendered on February 24, 2017 (the “Early Payment Date”). Holders who validly tendered their Notes and delivered their consents at or prior to the Early Tender Deadline and who did not withdraw their Notes prior to the withdrawal deadline received the total consideration equal to $1,004.25 per $1,000 principal amount of Canadian Notes, which included an Early Tender Payment of $30 per $1,000 principal amount of Canadian Notes, plus accrued and unpaid interest from the last interest payment date up to but not including the Early Payment Date.
Athabasca has also received consents from holders representing a majority in aggregate principal amount of Notes outstanding to adopt the proposed amendments to the indenture governing the Notes. Athabasca has entered into a supplemental indenture effecting the proposed amendments, and the proposed amendments became operative upon payment for the Notes.
The Offer will expire at 11:59pm ET on March 9, 2017 (such time and date, as it may be extended, the “Expiration Time”) unless earlier terminated by Athabasca. Holders who have not already tendered their Notes may do so at any time at or prior to the Expiration Time. Holders who tender their Notes and whose Notes are accepted for purchase at or prior to the Expiration Time but after the Early Tender Deadline will be eligible to receive the tender offer consideration equal $974.25 per $1,000 principal amount of Notes, plus accrued and unpaid interest from the last interest payment date up to but not including the final payment date. The final payment date for the Notes is expected to occur promptly following the Expiration Time.
Athabasca is conducting the Offer and consent solicitation in accordance with the terms and conditions described in its Offer to Purchase and Consent Solicitation Statement (the “Statement”) dated February 9, 2017. Athabasca’s obligation to consummate the Offer is subject to the satisfaction or waiver of certain conditions, which are more fully described in the Statement.
Athabasca has also issued a notice of redemption for remaining aggregate outstanding principal amount of the Notes, which will be redeemed on March 27, 2017 at their principal amount plus any accrued and unpaid interest. The Company has satisfied and discharged the indenture governing the Notes.
The tender agent for the Offer and consent solicitation is TSX Trust Company. Holders with questions or who would like additional copies of the offer documents may call the tender agent, TSX Trust Company, toll-free at 1-866-600-5869 or 416-342-1091. Questions regarding the terms of the Offer and consent solicitation can be directed to the dealer manager for the Offer and solicitation agent for the consent solicitation, RBC Capital Markets, LLC (1-877-381-2099 toll-free or 416-842-6311 collect or 212-618-7822 collect).
This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the New Notes in any state in which such offer, solicitation or sale would be unlawful. The New Notes have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements thereof.
About Athabasca Oil Corporation
Athabasca Oil Corporation is a Canadian energy company with a focused strategy on the development of thermal and light oil assets. Situated in Alberta’s Western Canadian Sedimentary Basin, the Company has amassed a significant land base of extensive, high quality resources. Athabasca’s common shares trade on the TSX under the symbol “ATH”. For more information, visit www.atha.com.