Global and CALGARY, AB, December 29, 2023 /CNW/ – With production and development operations concentrated in Converse and Natrona Counties, Wyoming, USA, Canadian Overseas Petroleum Limited (“COPL” or the “Company”) (XOP: CSE) & (COPL: LSE), an international oil and gas exploration, production and development company, announces (the “Announcement”) (i) US$2.5 million of committed common share financing and certain amendments to the outstanding Bonds (as defined below) of the Company, as described herein (collectively, the “Financing”) (ii) the senior lender’s signature of a forbearance agreement, and (iii) the designation of a chief restructuring officer.
It is anticipated that the financing will be completed by January 15, 2024, and it will be utilised for working capital.
The purchase payment (the “Subscription Price”) for 1,312,232,633 common shares (the “New Shares”) will be made by Anavio Capital Partners LLP or one or more of its affiliated companies (the “Purchaser”).
In minimum quantity, the Company will issue warrants to the Purchaser equivalent to 100% of the New Shares. Each warrant will entitle the holder to buy a Common Share at the Subscription Price and will expire on August 26, 2028.
The Subscription Price per conversion share will be used as the new conversion price for the Bonds. The 2027 Bonds’ maturity date (as described below) will now be on January 26, 2028, while the 2028 Bonds’ maturity date (as defined below) will now be on January 26, 2029.
The date on which the Company can exercise its parity call option under each of the Bonds will now be January 1, 2025, rather than the original date.
The current warrants’ expiration date will be extended until August 26, 2028, and their exercise price will be changed to the subscription fee.
By no later than March 31, 2024, the Purchaser will nominate one additional independent non-executive director to be appointed by the Company.
Together with the Financing, COPL and its affiliates named Peter Kravitz of Province Fiduciary Services as Chief Restructuring Officer and signed a Forbearance Agreement with their current Senior Credit Facility Lender.
The senior lender agrees not to enforce certain rights, remedies, powers, and privileges available to it as a result of existing defaults under the terms of the senior loan facility before February 29, 2024, subject to certain conditions precedent and continued compliance with the Forbearance Agreement.
The Company is required by the Forbearance Agreement, among other things, to submit a cash flow-generating business plan that includes a sales procedure for the Company’s assets.
The Company has 1,038,771,819 common shares issued and outstanding as of the date of this release. There are 1,038,771,819 voting rights in the company altogether since there are no common shares kept in treasury. Shareholders of the Company may use this number as the denominator in their calculations to determine whether they are required to notify the Financial Conduct Authority of their interest in, or a change in, the Company’s share capital under the Disclosure Guidance and Transparency Rules.
The Financing is also exempt from the formal valuation and minority approval requirements applicable to related party transactions defined under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”), according to the Company’s determination that it is a “related party transaction” under the terms of the financial hardship exemption as stated in sections 5.5(g) and 5.7(1)(e) of MI 61-101.
The Company depends on the aforementioned exemptions because: (i) as stated in the Company’s announcement dated December 20, 2023, the Company is in serious financial difficulties because it lacks the working capital necessary to meet its current requirements without the Financing; (ii) the Financing is intended to strengthen the Company’s financial position; (iii) the transaction is not subject to court approval or an order; (iv) the Company’s Board of Directors and all independent directors, each of the aforementioned acting in good faith, have determined that (i) and (ii) above apply and that the terms of the Financing are reasonable for the Company; and (v) as of this date,
Regarding the issuance of US$20,000,000 Senior Convertible Bonds due in 2027 (the “2027 Bonds”), which have an outstanding principal amount of US$10.6 million, reference is made to the Bond Instrument dated 26 July 2022 as amended on 30 December 2022, 24 March 2023, and 10 October 2023 regarding the issuance of US$24,000,000 Senior Convertible Bonds due in 2028 (the “2028 Bonds”), which have an outstanding principal amount of US$10.8 million (2028 Bonds together with the 2027 Bonds collectively, the “Bonds”).