CALGARY, Sept. 30, 2019 /CNW/ – Journey Energy Inc. (JOY – TSX) (“Journey” or the “Company“) today announced two significant financial transactions improving its balance sheet and liquidity.
Non-brokered private placement
Journey has entered into a non-brokered, private placement for $7.3 million of flow through common shares (within the meaning in the Income Tax Act (Canada) (the “Flow-Through Shares“). 2.8 million Flow-Through Shares were issued at a price of $2.60 per share, representing a premium of 13.5% to the five day, volume weighted average price of Journey’s shares preceding today. The proceeds from the issuance of the Flow-Through Shares will be used to incur eligible Canadian Development Expenses (“CDE“) prior to March 31, 2020. Journey is planning to use the funds for development activity in its Matziwin and Skiff core areas, which will be conducted between October 1, 2019 and March 31, 2020. Journey has had significant success in these two areas where they have been delineating portions of the reservoirs which are essentially undrained. Initially, Journey plans to drill 4 wells (3.6 net) in Matziwin prior to year-end, followed by a development program in Skiff in the first quarter of 2020. The 2019 drilling activity is already included in Journey’s current guidance.
Term Debt Extension
Journey announces that it has renegotiated its two outstanding tranches of promissory notes that were previously issued to the Alberta Investment Management Corporation, on behalf of certain of its clients, (“AIMCo“). Both sets of promissory notes were repaid and a new, second-lien, term debt financing was entered into with AIMCo and will be comprised of two tranches of $22 million each. The first tranche will mature on September 30, 2022 and bear interest at 7.65% per annum. The second tranche was extended three years past its original expiry and will now mature on October 31, 2023. This tranche will bear interest at 11.5% per annum. As part of the new term debt issuance, AIMCo received 1,137,331 warrants to purchase common shares of Journey at an exercise price of $3.15 per share. The warrants will expire on September 30, 2022. The warrant terms further provide that, subject to certain exceptions on a change of control, AIMCo shall only be permitted to exercise a percentage of the warrants determined such that, at no time shall AIMCo be deemed to have beneficial ownership of greater than 19.99% of the outstanding common shares.
In addition, today AIMCo increased its equity stake in Journey by 2,790,700 common shares through a private purchase with third parties. AIMCo now holds 7,740,700 common shares of Journey, representing approximately 18.4% of the basic outstanding shares, after incorporating the Flow-Through Share private placement.
Journey president Alex Verge commented that, “Journey is extremely fortunate to have the continuing support of a business partner like AIMCo, who, as both an equity partner, and a 2nd lien debt holder, has helped Journey continue to advance its business over the past three years. With no near-term debt maturities to be concerned with, Journey is now able to continue building upon the excellent drilling results we have achieved in Matziwin and Skiff since early 2018, and deliver enhanced value to our shareholders.”
AIMCo is one of Canada’s largest and most diversified institutional investment managers with more than $115 billion of assets under management. AIMCo was established on January 1, 2008 with a mandate to provide superior long-term investment results for its clients. AIMCo operates at arms-length from the Government of Alberta and invests globally on behalf of 31 pension, endowment and government funds in the Province of Alberta. For more information on AIMCo please visit www.AIMCo.alberta.ca.
About the Company
Journey is a Canadian exploration and production company focused on oil-weighted operations in western Canada. Journey’s strategy is to grow its production base by drilling on its existing core lands, implementing waterflood projects, and by executing on accretive acquisitions. Journey seeks to optimize its legacy oil pools on existing lands through the application of best practices in horizontal drilling and, where feasible, with water floods. Journey is also in the early phases of advancing development of an unconventional shale resource play in the oil window of the Duvernay, in the western shale basin of our central core area.