CALGARY, Alberta – Bellatrix Exploration Ltd. (“Bellatrix” or the “Company”) announces a transaction (the “Transaction”) pursuant to which 1184262 B.C. Ltd. (the “Purchaser”), an affiliate of Hillcore Group Ltd. (“Hillcore”), will acquire 33,433,255 new common shares issued by Bellatrix (the “Purchased Shares”), which would represent approximately 45% of the aggregate issued and outstanding common shares of Bellatrix upon implementation of the Transaction. The Transaction was approved today by the Court of Queen’s Bench of Alberta (the “Court”) pursuant to an Approval and Vesting Order (the “Court Order”) in the Company’s proceedings under the Companies’ Creditors Arrangement Act (the “CCAA”), and remains subject to certain remaining conditions.
In connection with the Transaction, Bellatrix has entered into a subscription agreement dated as of June 8, 2021 (the “Subscription Agreement”) with the Purchaser and 2350810 Alberta Ltd. (“Newco”), a wholly-owned subsidiary of Bellatrix. Pursuant to the Transaction: (i) the Purchaser will loan $2,499,000 to Bellatrix (the “Loan”), and Bellatrix will issue a promissory note to the Purchaser in respect thereof (the “Promissory Note”); (ii) certain assets (including, without limitation, all existing cash, the proceeds of the Loan and the subscription proceeds in respect of the Purchased Shares), and all existing liabilities of Bellatrix (other than the obligations under the Promissory Note) will be transferred and novated to Newco, (iii) the Purchaser will subscribe for the Purchased Shares for $1,000, (iv) all equity interests existing immediately prior to the closing time of the Transaction, other than the issued and outstanding common shares of Bellatrix, will be cancelled for no consideration or claims therefor, and (v) any directors of Bellatrix immediately prior to the closing time of the Transaction will be deemed to resign, and two new directors will be, and will be deemed to be, appointed as directors of Bellatrix.
The Transaction is the result of the Bellatrix’s efforts to maximize additional value for the benefit of its stakeholders, following the sale transaction completed by Bellatrix in June 2020 pursuant to its CCAA proceedings. The Company, with the assistance of its advisors, reviewed the potential transaction options and alternatives available to Bellatrix, and determined that the Transaction represents the best available alternative in the circumstances.
Subject to obtaining applicable regulatory approvals and/or a further Court order in respect of the transfer of certain regulatory licenses, and related assets and obligations in respect thereof (collectively, the “License Transfers”), and the satisfaction or waiver of the other conditions to the Transaction, the Company expects to implement the Transaction in July 2021.
Other than with respect to the License Transfers, the Court Order is the only authorization required by Bellatrix or Newco to proceed with the Transaction. The Court Order provides that no director or shareholder approval shall be required and no authorization, approval or other action by or notice to or filing with any governmental authority or regulatory body exercising jurisdiction in respect of Bellatrix is required for the due execution, delivery and performance by Bellatrix and by Newco of the Subscription Agreement and the completion of the Transaction. Without limiting the foregoing, pursuant to the Court Order, the Transaction shall not be subject to, and Bellatrix shall not be required to comply with the requirements of National Policy 11-207 – Failure-to-File Cease Trade Orders or the cease trade order issued by the Executive Director of the Alberta Securities Commission in respect of Bellatrix dated July 22, 2020 (the “CTO”) in connection with implementing the transaction steps contemplated as part of the Transaction; however, the CTO shall remain in effect after the Transaction is fully implemented.
The Court Order also provides for releases in favour of (i) the present and former directors, officers, employees, legal counsel and advisors of Bellatrix and Newco (or either of them), and (ii) the Monitor and its legal counsel, in respect of any claims relating to any act or omission, transaction, dealing or other occurrence in connection with the Transaction or completed pursuant to the Court Order, other than those claims that are not permitted to be released pursuant to section 5.1(2) of the CCAA.
Materials publicly filed in the CCAA proceedings are made available on the website of PricewaterhouseCoopers Inc., the Court-appointed monitor in the CCAA proceedings, at http://www.pwc.com/ca/bellatrix.
Goodmans LLP is acting as legal counsel to Bellatrix in connection with the Transaction and the CCAA proceedings.