World News: 12:30 GMT Friday 15th March 2019. [Toscana Energy Income Corporation via Globe Newswire via SPi World News]
CALGARY, Alberta, March 15, 2019 (GLOBE NEWSWIRE) -- Toscana Energy Income Corporation (“Toscana” or the “Corporation”) (TSX:TEI) has delivered a redemption notice (“Notice”) to the registered holders (“Debentureholders”) of 7.25% convertible unsecured subordinated debentures due June 30, 2021 (the “Debentures”) and has delivered a copy of the Notice to Computershare Trust Company of Canada, as debenture trustee. Pursuant to the Notice, Toscana will redeem in full the outstanding principal amount of Debentures inclusive of the 3% early redemption premium (the “Redemption Price”) along with all accrued but unpaid interest up to but excluding the date of redemption (the “Redemption Date”) and the interest payment deferral amount (the “Deferral Payment”) approved by Debentureholders at the extraordinary meeting of Debentureholders held on December 14, 2018, an aggregate payment of approximately $21,965,746 (the “Redemption Amount”). The Redemption Amount will be satisfied, subject to receipt of all necessary approvals including the Toronto Stock Exchange (“TSX”), the holders of Common Shares (“Shareholders”) and Debentureholders, by the issuance of common shares ("Common Shares") in the capital of Toscana at a price per Common Share of $0.13299 pursuant to the terms of the trust indenture between Toscana and Valiant Trust Company dated June 11, 2013, as supplemented by a supplemental trust indenture between Toscana and Computershare Trust Company of Canada dated June 30, 2018 (collectively, the “Indenture”) (the “Transaction”).
Pursuant to the Transaction, Toscana will issue approximately 165,168,194 Common Shares representing approximately 95.84% of the pro forma Common Shares outstanding upon closing of the Transaction which is expected to be on or about May 14, 2019 (the “Closing Date”). Upon closing of the Transaction and payment in full satisfaction of the Redemption Amount (such payment to be satisfied by the issuance of Common Shares), interest upon the Debentures shall cease to be payable from and after the Redemption Date.
Pursuant to the terms of the Indenture and subject to receipt of all necessary regulatory approvals and Debentureholder and Shareholder approvals (as discussed below), Toscana may, at its option, elect to satisfy its obligation to pay all or any portion of the Redemption Price by issuing and delivering or causing to have issued and delivered to Debentureholders on the Redemption Date, Common Shares. Such Common Shares are to be issued at a price per share being equal to 95% of the then Current Market Price (as such term is defined in the Indenture) with such Current Market Price being based on the weighted average price per share over 20 consecutive trading days ending on the fifth trading day preceding the date of the Notice. Toscana intends to seek all necessary regulatory approvals and Debentureholder and Shareholder approvals to allow for the full Redemption Amount to be satisfied with the issuance of Common Shares.
Management and the Board of Directors of Toscana (the “Board”) believe that the Transaction is in the best interests of all stakeholders, and provides a number of benefits, including the following:
On April 23, 2018, Debentureholders passed an extraordinary resolution approving certain amendments to the Indenture including, among other amendments, extending the maturity date of the Debentures to June 30, 2021. Toscana’s Board has determined that the Transaction and the early redemption of the Debentures is in the best interests of the Corporation and its stakeholders given, among other considerations, that it will reduce Toscana’s overall debt and interest burden, simplify its capital structure, provide for a more orderly issuance of Common Shares to Debentureholders relative to the alternatives, provide considerable improvement in Toscana’s financial liquidity and avoids the potential of cross-default with senior lenders pertaining to the non-payment of interest.
In connection with the Transaction, in addition to certain regulatory approvals, including the approval of the TSX, Toscana will require Debentureholder and Shareholder approvals, each such approval to be sought at a meeting of Debentureholders (the “Debentureholder Meeting”) and a meeting of Shareholders (the “Shareholder Meeting” and together with the Debentureholder Meeting, the “Meetings”), as applicable, such Meetings to be held consecutively. Specifically, Debentureholders will be asked at the Debentureholder Meeting, among other things, to approve certain amendments to the Indenture to allow for the payment of accrued but unpaid interest owing on the Debentures and payment of the Deferral Payment to be satisfied by the issuance of Common Shares. While the Indenture currently provides that the principal amount outstanding under the Debentures may be satisfied by issuing Common Shares upon election by the Corporation and such payment being made in accordance with the terms of the Indenture, accrued but unpaid interest may only be satisfied by a cash payment. Payment of the accrued but unpaid interest and the Deferral Payment by Toscana using Common Shares requires that the Indenture be amended accordingly. Pursuant to the Indenture, an extraordinary resolution requiring the approval of not less than 66 2/3% of Debentureholders entitled to receive notice and vote at the Debentureholder Meeting is required to approve the proposed amendment to the Indenture.
In addition, pursuant to the rules of the TSX, Shareholders will be asked at the Shareholder Meeting, among other things, to approve the Transaction on the basis that if approved and completed, the Transaction will be a transaction that “materially affects control” (as defined by the rules of the TSX) of Toscana. Pursuant to the rules of the TSX, a transaction that results in a new holding of more than 20% of the voting securities by one holder or combination of holders acting together, will be considered a transaction that “materially affects control” of the issuer requiring approval by shareholders. The Transaction, if completed as proposed, will be a transaction that “materially affects control” of Toscana thereby requiring approval by the Shareholders. In addition, pursuant to the rules of the TSX, an issuance of securities from the treasury of an issuer for cash consideration or in payment of an outstanding debt of the issuer without prospectus disclosure, in reliance on an exemption from the prospectus requirements under applicable securities laws will be considered a private placement. To satisfy the payment of accrued but unpaid interest and the Deferral Payment, Toscana will issue, in aggregate, in excess of 25% of the currently issued and outstanding Common Shares which, pursuant to the rules of the TSX, requires approval by the Shareholders. Toscana will therefore seek approval from the Shareholders at the Shareholder Meeting to allow for a transaction that will “materially affect control” of Toscana and for a private placement in which in excess of 25% of the currently issued and outstanding securities of Toscana will be issued on a private placement basis. Each of the foregoing resolutions to be considered by the Shareholders at the Shareholder Meeting require approval by a simple majority.
Further information about the Transaction, the Debentureholder Meeting and the Shareholder Meeting will be provided in an information circular expected to be mailed to Debentureholders and Shareholders entitled to receive notice of and to attend the applicable Meeting in the coming weeks, each of which will be filed and available under the electronic profile of Toscana on SEDAR as well as from the Corporation on request.
For further information, please contact:Joseph S. Durante, Chief Executive Officer Tel: (403) 410-6793 Fax: (403) 444-0090 SOURCE: Toscana Energy Income Corporation
Globe Newswire: 12:30 GMT Friday 15th March 2019
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