Perpetual Energy Inc. (Perpetual, the corporation or the company) has announced the closing of the disposition of its 30% partnership interest in Warwick Gas Storage LP (WGS LP) for US$20 million. The transaction included the disposition of Perpetual's share of WGS LP's US$8.3 million of debt net of working capital held by the partnership. In addition, Perpetual received a net dividend of US$ 500 000 at closing, for effective total value of approximately US$23 million.
Perpetual has also announced that it has swapped an additional US$62.5 million aggregate principal amount of senior notes pursuant to the previously announced securities swap proposal whereby Perpetual offered to swap a portion of the Tourmaline Oil Corp. shares (the Tourmaline Shares) owned by Perpetual (the Securities Swap Proposal) on the basis of 21 Tourmaline Shares for each US$1000 principal amount of the 8.75% senior notes due 15 March 2018 (the 2018 Senior Notes) and 20 Tourmaline Shares for each US$1000 principal amount of the 8.75% senior notes due 23 July 2019 (the 2019 Senior Notes and together with the 2018 Senior Notes, the Senior Notes). The additional US$62.5 million Senior Notes swapped include US$35.4 million of the 2018 Senior Notes and US$27.2 million of the 2019 Senior Notes for 1 286 006 Tourmaline Shares owned by Perpetual.
In combination with US$152 million aggregate principal amount of Senior Notes previously swapped pursuant to Securities Swap Proposal on 27 April and 10 May 2016, an aggregate of US$214.4 million Senior Notes have been swapped for 4.402 million Tourmaline Shares owned by Perpetual. This includes US$114.1 million of the 2018 Senior Notes and US$100.3 million of the 2019 Senior Notes. All Senior Notes tendered to the Securities Swap Proposal were swapped and subsequently cancelled.
Giving effect to the aggregate US$214.4 million swap and cancellation of Senior Notes, the company estimates its total net debt, net of the market value of the remaining Tourmaline Shares held is approximately US$29.5 million, down close to 86% from US$203.6 million at year end 2015. The current estimate of total net debt is comprised of: US$60.6 million in face value Senior Notes (US$36.1 million 2018 Senior Notes and US$24.5 million 2019 Senior Notes); US$21.3 million due November 16, 2016 as per the financing arrangement secured by 1 million Tourmaline Shares; a margin loan of US$10.6 million secured by the remaining 850 000 Tourmaline Shares due April 2017; offset by estimated net working capital of US$5 million and by the market value of the remaining 1.85 million Tourmaline Shares of approximately US$58 million (based on a market price of US$31.38 per Tourmaline Share on 25 May 2016).
Perpetual remains focused on strengthening its balance sheet, managing liquidity and restoring positive funds flow as top priorities in the current depressed commodity price environment.
Adapted from press release by Francesca Brindle
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