Bonterra Energy Corp. announces brokered private placement debt financing, restructuring of credit facilities to fully conforming state and subordinated debt conversion

CALGARY, AB – Bonterra Energy Corp. ( (TSX: BNE) (“Bonterra” or the “Company“) is pleased to announce that it has successfully closed a brokered private placement debt financing (the “Initial Offering“), enhancing financial flexibility and achieving its goal of restructuring all bank debt to a fully conforming revolving credit facility.

The Initial Offering consists of an aggregate of 32,000 units (the “Units“) of the Company, with each Unit being comprised of one senior unsecured debenture (each a “Debenture“), with a face value of $1,000 which bears interest at 9.0% per annum and has a four year term, and 56 common share purchase warrants (the “Warrants“) of Bonterra, with each Warrant exercisable to acquire one common share (“Common Share“) of Bonterra at price of $7.75 per Common Share (representing a 15% premium to the 5-day volume weighted average trading price of the Common Shares on the TSX ended October 20, 2021), for a period of four years from October 20, 2021. Each Unit was issued at a price of $1,000 (the “Issue Price“) for gross proceeds to Bonterra of $32 million.

The Company intends to use the net proceeds of the Initial Offering and the Follow On Offering (as defined herein) primarily to pay down existing bank debt and for general corporate purposes.

Amended and Restated Credit Agreement (the “Facility”)

In conjunction with the closing of the Initial Offering, Bonterra and its syndicate of lenders have agreed to amend the Facility. The amendments include the following:

  • Reflecting the Company’s ongoing strategy of focusing on the repayment of outstanding bank debt, Bonterra has agreed with its lenders to a fully conforming borrowing base Facility of $220 million, consisting of a $195 million syndicated revolving credit facility and a $25 million non-syndicated revolving facility;
  • This represents an elimination of the non-revolving term loan of $65 million, leading to improved financial flexibility; and
  • The Facility has $10 million step-downs at December 31, 2021 and March 31, 2022 and revolves to May 31, 2022 with a maturity date of November 30, 2022.

The Company is pleased to have successfully transitioned its bank debt to a Facility that is fully conforming. With this enhanced flexibility and liquidity, Bonterra is confident it has established a stronger position from which to execute on its business plan through the balance of 2021 and 2022. In order to benefit from a strong commodity price environment, Bonterra intends to continue investing capital to support further generation of free cash flow that can be allocated to incremental growth initiatives while maintaining balance sheet strength.

Subordinated Debt Conversion

Bonterra has also entered into agreements with the holders of its existing subordinated promissory note and due-to-related-party loan (the “Subordinated Debt“) to convert their principal amounts of an aggregate of $19.5 million into Units under the same terms and conditions as subscribers under the Initial Offering.

Initial Offering Details

Paradigm Capital Inc. and Peters & Co. Limited (collectively, the “Agents“) and Bonterra entered into an agency agreement dated October 20, 2021, pursuant to which the Agents acted as co-lead agents for the Initial Offering, which was conducted by way of private placement exemptions from the prospectus requirements under National Instrument 45-106 – Prospectus Exemptions (“NI 45-106“) in certain provinces in Canada. The securities issued pursuant to the Initial Offering are subject to applicable regulatory hold periods.

As part of the Initial Offering, the current CEO of Bonterra, George Fink, subscribed for 7,000 Units.

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