Bonterra Energy Corp. Reiterates Recommendation for Shareholders to Reject the Hostile Bid by Taking No Action
- Custodians reporting holdings indicated under 1% of Bonterra's shares have been tendered
- Close to 40% of Bonterra shareholders continue to advise the Company they will NOT tender their shares
- Second amendment to extend the offer demonstrates the continued failure of the Hostile Bid
- Shareholders need to take no action to REJECT the offer
CALGARY, AB, Jan. 28, 2021 /CNW/ - Bonterra Energy Corp. (www.bonterraenergy.com) (TSX: BNE) ("Bonterra" or the "Company") and its Board of Directors reiterates the previous recommendation that shareholders reject Obsidian Energy Ltd.'s ("Obsidian") highly-conditional, unsolicited bid to acquire all of the issued and outstanding common shares of Bonterra in exchange for shares of Obsidian (the "Hostile Bid") and continues to strongly recommend that Bonterra shareholders TAKE NO ACTION and REJECT the Hostile Bid by NOT TENDERING their shares.
Second Extension to Hostile Bid Made Despite Having Little to No Shareholder Support
With the filing of the second Notice of Extension to the Hostile Bid, Obsidian has made no modifications other than to extend the tender date from January 25, 2021 to March 29, 2021. This extension is approximately three additional months from the original expiry of January 4, 2021, prolonging the process to a total of seven months, which demonstrates a lack of regard for shareholder value given the ongoing waste of considerable time and resources. This is meaningfully longer than customary for successful transactions and clearly illustrates Obsidian's continued failure to convince Bonterra shareholders that the Hostile Bid is in their best interests.
Custodians who have reported their holdings have indicated substantially less than 1% of Bonterra's outstanding shares have been tendered. Furthermore, Bonterra shareholders representing close to 40% of the shares outstanding have advised the Company they will not tender their shares.
Hostile Bid Lacks Lending Syndicate Support and Remains Subject to Financing
Obsidian has not secured the consents nor approvals required to complete the Hostile Bid, including from each of Obsidian's and Bonterra's lenders, exposing Bonterra shareholders to an uncertain financing plan and a potential capital structure that could result in future dilution to Bonterra shareholders.
Obsidian's latest credit facility extension is until February 26, 2021, with no extension beyond that date having been announced by its lending syndicate. This reflects negatively on Obsidian given the limited runway granted by their lending syndicate, particularly since this extension does not cover Obsidian's extension of the Hostile Bid to March 29, 2021.
Bonterra CEO is Aligned with Shareholders
Bonterra's CEO, George Fink, remains well aligned with the Company's shareholders and continues to hold a significant investment in Bonterra. Mr. Fink's share purchases over many years, as reported on SEDI, demonstrate his strong belief in the future value of the Company as a stand-alone entity. Mr. Fink remains the Company's largest shareholder, having added 238,600 common shares to his shareholdings in the past twelve months, representing an increase of approximately 5% of his total holdings of Bonterra shares.
Bonterra is Well Positioned for Stand-Alone Success
- Bonterra remains focused on generating strong, sustainable, free funds flow which can be directed to debt reduction and capital spending.
- Bonterra's strategic plan as a stand-alone entity is expected to grow production by approximately 30 percent, returning the average annual production to pre–COVID levels of 13,000 BOE per day1 in 2021.
- Bonterra's bank syndicate supports the Company's current plan and has extended the maturity date of its senior credit facility to the end of 2021 at the current borrowing base.
- The strong commitment of $45 million from the Business Development Bank of Canada ("BDC") strengthens Bonterra's liquidity profile and provides options and funding for development drilling and abandonment programs designed to enhance value for shareholders.
- Bonterra is dedicated to responsible corporate practices and the environment, and through a combination of the Site Rehabilitation Program ("SRP") and other provincial programs, it is expected that the Company could successfully reduce its inactive well count by approximately 60 percent over the next two years under current approvals.
- Through its longstanding history, Bonterra has the assets and the people in place to continue pursuing profitable development of its high-quality, light oil asset base to continue generating long-term net asset value growth as the economy recovers from the COVID-19 pandemic.
The Bonterra Board UNANIMOUSLY recommends that Shareholders REJECT the Hostile Bid by taking no action – DO NOT TENDER your Shares.
For more information, the Company's recent shareholder letters, Directors' Circular and other relevant materials are available for review on the Company's website at www.bonterraenergy.com or on SEDAR at https://www.sedar.com/.
Shareholders with questions are encouraged to call Bonterra's information agent, Laurel Hill Advisory Group at 1-877-452-7184 (+1-416-304-0211 outside North America) or email [email protected]
Bonterra Energy Corp. is a conventional oil and gas corporation with operations in Alberta, Saskatchewan and British Columbia, focused on its strategy of long-term, sustainable growth and value creation for shareholders. The Company's shares are listed on The Toronto Stock Exchange under the symbol "BNE".
1 Forecast 2021 production volumes are comprised of 7,250 BBLS per day light crude oil, 1,300 BBLS per day of natural gas liquids and 26,800 MCF per day of conventional natural gas.
Forward Looking Information
Certain statements contained in this release include statements which contain words such as "anticipate", "could", "should", "expect", "seek", "may", "intend", "likely", "will", "believe" and similar expressions, relating to matters that are not historical facts, and such statements of our beliefs, intentions and expectations about development, results and events which will or may occur in the future, constitute "forward-looking information" within the meaning of applicable Canadian securities legislation and are based on certain assumptions and analysis made by us derived from our experience and perceptions. Forward-looking information in this release includes, but is not limited to: expectations regarding the effect of the Hostile Bid, the lack of Bonterra shareholder support for the Hostile Bid and the Hostile Bid being unlikely to proceed; expectations regarding production growth and production volumes; expectations regarding Bonterra's inactive well count; business strategy and outlook; expansion and growth of our business and operations; and other such matters.
All such forward-looking information is based on certain assumptions and analyses made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. The risks, uncertainties and assumptions are difficult to predict and may affect operations, and may include, without limitation: risks and uncertainties relating to the satisfaction of all conditions relating to the availability of funding pursuant to government programs; foreign exchange fluctuations; equipment and labour shortages and inflationary costs; general economic conditions; industry conditions; changes in applicable environmental, taxation and other laws and regulations as well as how such laws and regulations are interpreted and enforced; the ability of oil and natural gas companies to raise capital; the effect of weather conditions on operations and facilities; the existence of operating risks; volatility of oil and natural gas prices; oil and gas product supply and demand; risks inherent in the ability to generate sufficient cash flow from operations to meet current and future obligations; increased competition; stock market volatility; opportunities available to or pursued by us; and other factors, many of which are beyond our control.
Actual results, performance or achievements could differ materially from those expressed in, or implied by, this forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do, what benefits will be derived therefrom. Except as required by law, Bonterra disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise. The forward-looking information contained herein is expressly qualified by this cautionary statement.
Oil and Gas Information
"BOE" refers to barrels of oil equivalent. Disclosure provided herein in respect of a BOE may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 MCF: 1 bbl is based on an energy conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
The reporting and the functional currency of the Company is the Canadian dollar.
The TSX does not accept responsibility for the accuracy of this release.
SOURCE Bonterra Energy Corp.