Pursuant to the Transaction, holders of common shares (“Jupiter Shares”) in the capital of Jupiter (the “Shareholders”) received the equivalent of approximately 0.2365 of a common share (a “Tourmaline Share”) in the capital of Tourmaline for each Jupiter Share held, subject to withholdings as described below.
Additional information regarding the Transaction is provided in the management information circular of Jupiter dated November 23, 2020, which was mailed to Shareholders and is available on Jupiter’s investor portal at www.jupiterresources.com/investors.
Approval of the Plan of Arrangement
At a special meeting of Shareholders held on December 17, 2020, 100% of the votes cast by Shareholders (representing approximately 96.43% of the outstanding Jupiter Shares) were voted, in person or by proxy, in favour of the Transaction and the Court of Queen’s Bench of Alberta granted a final order approving the Transaction on December 18, 2020.
Withholding and Tax Matters Applicable to All Shareholders
All Shareholders must complete and return a Letter of Confirmation (a copy of which was enclosed with the management information circular mailed to Shareholders and is available in the investor portal on Jupiter’s website) indicating whether they are a resident of Canada for purposes of the Income Tax Act (Canada) (the “Tax Act”). If Jupiter has not yet received a Letter of Confirmation from a Shareholder, the consideration to which such Shareholder is entitled to under the Transaction has been subject to withholding for Canadian taxes in an amount equal to 35% of the fair market value of the Tourmaline Shares to which the Shareholder is entitled. All Shareholders are strongly urged to complete and return the Letter of Confirmation as soon as possible and by no later than January 28, 2021, failing which, Jupiter is authorized, under the plan of arrangement pursuant to which the Transaction has been implemented, to sell all or a portion of the withheld Tourmaline Shares and remit the cash proceeds of such sale to the Canada Revenue Agency (the “CRA“) to comply with remittance requirements under the Tax Act. Refer to the management information circular for further important details, including on where and when to submit a Letter of Confirmation.
Shareholders who are non-residents of Canada for purposes of the Tax Act (“Non-Residents”) must obtain a tax clearance certificate from the CRA pursuant to section 116 of the Tax Act in order to receive the full amount of the Tourmaline Shares (or any cash portion from the sale of all or a portion of such Tourmaline Shares that Jupiter has sold pursuant to the terms of the plan of arrangement) to which that Non-Resident is entitled.
Jupiter is authorized under the plan of arrangement to sell all or a portion of the withheld Tourmaline Shares as is necessary to comply with any remittance requirements under the Tax Act and the terms of the plan of arrangement. Jupiter is also authorized to sell all or a portion of the withheld Tourmaline Shares if, at any time, the current trading price of the Tourmaline Shares is such that a sale of the withheld shares would result in proceeds of disposition for those shares that is less than 30% of the fair market value of the Tourmaline Shares on the closing date.
Information regarding tax matters in this press release is for general information purposes only and does not constitute tax advice. Further details are included in the management information circular. Obtaining a tax clearance certificate from the CRA can be a lengthy process and Non-Residents should consult with their tax advisors as soon as possible.
Jupiter Shares Following Closing
Following closing of the Transaction (which includes, as a step in the plan of arrangement, the repurchase for cancellation of 99% of the Jupiter Shares from Shareholders), certificates or direct registration system statements formerly representing Jupiter Shares (other than Jupiter Shares held by dissenting Shareholders) shall represent only the remaining 1% of the Jupiter Shares previously held by the Shareholders, together with the right to receive a proportionate amount of any final amounts to be distributed to Shareholders on the dissolution of Jupiter. Pursuant to the plan of arrangement, the dissolution of Jupiter is contemplated to occur as soon as reasonably practicable following the release from escrow of all withheld Tourmaline Shares and the discharge of all remaining obligations of Jupiter, if any. Further details are included in the management information circular.
Jupiter is an independent Calgary-based energy company with an operations office in Grande Cache, Alberta. The Company is focused on the acquisition, development and production of unconventional liquids-rich natural gas properties in the Western Canadian Sedimentary Basin. For more information visit: www.jupiterresources.com
Tourmaline is a Canadian senior crude oil and natural gas exploration and production company focused on long-term growth through an aggressive exploration, development, production and acquisition program in the Western Canadian Sedimentary Basin. For more information visit: www.tourmalineoil.com