Pieridae announces sale of Goldboro, equity financing, full repayment of bridge loan, production shut-in
Pieridae Energy Ltd. has completed the sale of its Goldboro assets and has issued notice to repay in full the company’s subordinated secured bridge loan.
The balance of the Bridge Loan repayment in excess of the Goldboro Sale proceeds will be funded by the company’s existing liquidity. Pieridae has agreed to a private placement of common shares with Alberta Investment Management Corp. (AIMCo), an existing Pieridae shareholder (the “Private Placement”), the proceeds of which will be used to repay a portion of the company’s existing credit facilities. Also, in response to sustained low natural gas prices, Pieridae is shutting-in approximately 6,250 boe/d of production that flows to a third-party owned and operated facility in the company’s Central Alberta core area.
Darcy Reding, President & CEO, commented, “We are excited to conclude the sale of Goldboro, an important step in concentrating our strategy onto our upstream and midstream businesses. We are also very pleased with the ongoing support of our lenders and of AIMCo, who have each made additional commitments to enable the repayment of the highest cost loan in our capital structure. Pieridae will be stronger financially with a lower risk profile and a clearer investment proposition that benefits our shareholders.”
Bridge loan repayment. On July 25, 2024, Pieridae issued a binding repayment notice to Third Eye Capital Corp. (TEC), pursuant to which the company has agreed to fully repay the 18% fixed rate, subordinated convertible bridge loan which matures December 13, 2024. Pursuant to the Repayment Notice, the bridge loan will be settled in cash on or prior to August 24, 2024 in the amount of $24 MM, including outstanding principal and accrued interest. Extinguishing the bridge loan with cash reduces the company’s total debt and avoids more significant equity dilution that would otherwise occur in the event of a full conversion of the bridge loan to common shares.
Goldboro sale. In November 2023, Pieridae announced its intention to sell its Goldboro assets. On July 25, 2024 Pieridae finalized the Goldboro sale for cash consideration of $12 MM, subject to normal closing adjustments and the release of security by TEC, concurrent with repayment of the bridge loan.
The conclusion of the Goldboro sale is an important step in the company’s previously announced strategic pivot away from the legacy of an integrated east coast LNG project. Pieridae has now completed the shift to focus on operating and growing the company’s natural gas, natural gas liquids (NGL) and sulfur production and optimizing its midstream processing facilities in the Foothills region of Alberta.
Private placement. Concurrent with the closing of the sale of the Goldboro assets, Pieridae has entered into a subscription agreement with AIMCo to issue 12,800,000 common shares to AIMCo at a price of $0.35 per share, for proceeds of $4.48 MM in a non-brokered private placement. Pieridae has 159,111,336 common shares outstanding prior to the Private Placement and will have 171,911,336 common shares outstanding following the Private Placement. Proceeds from the Private Placement will be used to repay a portion of the Company’s existing credit facilities.
The company has received conditional approval for the Private Placement from the Toronto Stock Exchange (TSX) and, pursuant to National Instrument 45-102 - Resale of Securities, the shares issued under the Private Placement are subject to a four month plus one day hold period, commencing on the day of closing which is anticipated to occur on or about the date of repayment of the Bridge Loan.
Production shut-in. Pieridae has initiated the shut-in of approximately 6,250 boe/d of uneconomic sour gas production in its Central Alberta core area due to extremely low AECO natural gas prices and high processing costs. The production flows to a third-party processing facility and is expected to be completely shut-in by July 26, 2024. Pieridae continually evaluates the economic performance of its producing assets to optimize net operating income during periods of sustained low commodity prices.
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