Razor Energy Corp. ("Razor”) (TSXV: RZE) is pleased to announce
that it is offering rights (the “Rights Offering”) to eligible
holders of its common shares (the “Common Shares”) of record at the
close of business on May 16, 2023 (the “Record Date”).
The Rights Offering is being conducted in
connection with Razor’s debt settlement agreement with Alberta
Investment Management Corporation (“AIMCo”), pursuant to which
AIMCo and Razor have agreed, subject to certain terms and
conditions, to the settlement of all obligations owing by Razor to
AIMCo under the senior second amended and restated loan agreement
dated February 16, 2021 through the transfer (the “FutEra Share
Transfer Transaction”) to AIMCo of equity interests held by Razor
in FutEra Power Corp., as disclosed in Razor’s press release dated
May 1, 2023 (the “Recapitalization Transaction”).
Pursuant to the Rights Offering, each holder of
Common Shares resident in a province or territory in Canada or in
the United States (subject to restrictions in certain states) (the
“Eligible Jurisdictions”) will receive one right (a “Right”) for
each one Common Share held. Each whole Right will entitle the
holder to subscribe for 0.494555 of a unit (a “Rights Unit”). Each
Rights Unit will consist of one Common Share (a “Unit Share”) and
one transferable Common Share purchase warrant (a “Unit Warrant”).
Each Unit Warrant will entitle the holder to purchase, subject to
adjustment in certain circumstances, one Common Share at a price of
$1.20 per Common Share for a period of five years from the date of
issuance.
Holders of Common Shares will need to exercise
2.022 Rights to acquire one Right Unit. A holder of Rights must pay
$0.80 (the “Subscription Price”) to purchase one Right Unit. No
fractional Rights Units, fractional Unit Shares or fractional Unit
Warrants will be issued and, where the exercise of Rights would
otherwise entitle the holder of Rights to a fractional Rights Unit,
fractional Unit Share or fractional Unit Warrant, the holder’s
entitlement will be reduced to the next lowest whole number of
Rights Unit, Unit Share or Unit Warrant, as applicable, and no cash
or other consideration will be paid in lieu thereof.
Razor expects to raise gross proceeds of up to
$10 million from the Rights Offering and intends to use the
proceeds to fund certain production enhancement activities and for
general working capital purposes. The expected closing date of the
Rights Offering and the Recapitalization Transaction is June 12,
2023.
The Rights will trade on the TSX Venture
Exchange ("TSXV") under the symbol RZE.RT commencing on May 15,
2023. Holders of Common Shares purchased on or following the Record
Date will not be entitled to receive Rights under the Rights
Offering. The Rights Offering expires at 4:00 p.m. (Calgary time)
(the "Expiry Time") on June 7, 2023. Rights are exercisable until
the Expiry Time, after which time unexercised Rights will be void
and of no value.
Directors and officers of Razor have indicated
their intention to exercise some or all of their Rights, subject to
market conditions.
The Rights Offering includes an additional
subscription privilege under which eligible holders of Rights who
fully exercise their Rights will be entitled to subscribe for
additional Rights Units, if available and subject to proration,
that are not otherwise subscribed for in the Rights Offering.
There are currently 25,275,250 Common Shares
outstanding. An aggregate of 25,275,250 Rights are expected to be
issued to subscribe for up to 12,500,000 Rights Units pursuant to
the Rights Offering. The final number of Rights to be issued will
depend on the actual number of issued and outstanding Common Shares
on the Record Date. Following completion of the Rights Offering and
assuming the exercise of all Rights, Razor expects that there will
be approximately 37,775,250 Common Shares outstanding.
Standby Commitment
Pursuant to a standby purchase agreement dated
May 1, 2023 between AIMCo and the Corporation (the “Standby
Purchase Agreement), up to $5,825,000 of the Rights Offering has
been guaranteed by AIMCo, assuming the fulfilment of all closing
conditions to the Standby Purchase Agreement (the “Standby
Commitment”), including that a minimum of $1,000,000 of
subscription proceeds (the “Minimum Additional Proceeds”) have been
received from holders of Rights other than AIMCo and its
affiliates.
In the event that the Minimum Additional
Proceeds are not received, the Corporation will not receive any
funds from AIMCo and the Rights Offering will not be completed. In
such circumstances, Alliance Trust Company, as subscription agent,
will return all subscription funds delivered by subscribers without
interest or deduction.
Assuming the Minimum Additional Proceeds are
received and the Standby Commitment is completed in full to the
standby maximum of $4 million in accordance with the terms and
conditions of the Standby Purchase Agreement, the Corporation will
issue a minimum of 8,531,250 Unit Shares and 8,531,250 Unit
Warrants in connection with the Rights Offering and pursuant to the
terms of the Standby Purchase Agreement for aggregate gross
proceeds of $6,825,000.
AIMCo currently holds approximately 18.25% of
Razor’s issued and outstanding Common Shares. If all of
the holders of Rights do not exercise their Rights in full then
AIMCo’s ownership percentage of Common Shares owned will increase.
AIMCo would own or control approximately 35.18% of the outstanding
Common Shares following the completion of the Rights Offering,
assuming the Minimum Additional Proceeds are the only proceeds that
have been received from holders of Rights other than AIMCo and its
affiliates and the Standby Commitment is completed in full to the
standby maximum of $4 million.
Razor does not expect that shareholder approval
will be required if any new control person is created through the
exercise of Rights pursuant to the Rights Offering, given that the
Rights will be listed for trading on the TSXV and the Subscription
Price is at a “significant discount” to the closing price of the
Common Shares on the TSX Venture Exchange on May 5, 2023 of $1.00,
being the last trading day prior to the announcement of the Rights
Offering.
Eligibility
The Rights Offering will be conducted only in
the Eligible Jurisdictions. Accordingly, and subject to the
detailed provisions of Razor’s Rights Offering circular (the
“Circular”), Rights will not be delivered to, nor will they be
exercisable by, persons resident outside of the Eligible
Jurisdictions (“Ineligible Holders”), unless an Ineligible Holder
satisfies Razor that their participation in the Rights Offering is
lawful and in compliance with all applicable securities and other
laws, in which case Razor will direct the depositary and
subscription agent, Alliance Trust Company (“Alliance”), to issue
its Rights. After 5:00 p.m. on May 28, 2023 (10 days prior to the
Expiry Time), such Rights may be sold on their behalf by
Alliance.
Details of the Rights Offering are set out in
Razor’s Rights Offering notice (the “Notice”) and Circular, which
will be available under Razor’s profile on SEDAR at www.sedar.com.
The Notice and rights certificate (the “Rights Certificate”) will
be mailed to each eligible shareholder, excluding Ineligible
Holders, of Razor as at the Record Date. To subscribe, registered
shareholders must forward the completed Rights Certificate together
with the applicable subscription funds to Alliance prior to the
Expiry Time. Shareholders who hold their Common Shares through an
intermediary, such as a bank, trust company, securities dealer or
broker, will receive materials and instructions from their
intermediary.
The Rights Offering Circular covers the offer
and sale of the Unit Shares and Unit Warrants issuable upon
exercise of the Rights within the United States under the U.S.
Securities Act of 1933, as amended (the "U.S. Securities Act").
Razor has filed with the SEC in the United States a Registration
Statement on Form F-7, available and under Razor’s profile on EDGAR
at www.sec.gov/edgar, under the U.S. Securities Act so that the
Unit Shares and Unit Warrants issuable upon exercise of the Rights
will not be subject to transfer restrictions. Notwithstanding
registration under the U.S. Securities Act, the securities or blue
sky laws of certain states (including Arizona, Arkansas,
California, Minnesota, Ohio, Utah, and Wisconsin) may not permit
the Corporation to offer Rights and/or Units in such states, or to
certain persons in those states, or may otherwise limit the
Corporation's ability to do so, and as a result the Corporation
will treat those states as Ineligible Jurisdictions under the
Rights Offering. In these states, Rights may only be exercised by
shareholders to which solicitations may be addressed without
registration under the relevant state securities laws ("Eligible
U.S. Institutions"). Shareholders resident in, or that hold their
securities for the account or benefit of any person in, any such
jurisdiction that wish to determine if they are Eligible U.S.
Institutions should contact the Corporation. Holders in, or that
hold their securities for the account or benefit of any person in,
such jurisdictions that are not Eligible U.S. Institutions will not
be permitted to exercise their Rights but may transfer the Rights
outside of the United States in accordance with Regulation S under
the U.S. Securities Act.
MI 61-101 Matters
AIMCo is a "related party" of Razor pursuant to
Multilateral Instrument 61-101 - Protection of Minority Security
Holders in Special Transactions ("MI 61-101"). AIMCo owns or
controls (directly or indirectly) 4,612,728 Common Shares
(representing approximately 18.25% of the outstanding Common
Shares) and is a significant shareholder of Razor.
With respect to the FutEra Share Transfer
Transaction and the Standby Commitment, while such transactions are
expected to constitute "related party transactions" for the
purposes of MI 61-101, the FutEra Share Transfer Transaction is
exempt from the formal valuation requirements of MI 61-101 as Razor
is not listed on a specified market that would require compliance
with such formal valuation requirements (as set forth in Section
5.5(b) of MI 61-101) and is further exempt from the minority
shareholder approval requirements of MI 61-101 by virtue of Section
5.7(e) of MI 61-101 which provides that a related party transaction
is exempt from the minority shareholder approval requirements if
the issuer is in serious financial difficulty, the transaction is
designed to improve the financial position of the company (among
other criteria) and there is no other requirement to hold a meeting
of shareholders to approve the transaction.
As part of their deliberations in respect of the
Recapitalization Transaction, a special committee formed by Razor
(each of whom are "independent directors" in respect of the
Recapitalization Transaction for the purposes of MI 61-101) (the
“Special Committee”) considered the financial position of Razor and
the objectives of the Recapitalization Transaction, and the
criteria and conditions with respect to the financial hardship
exemptions described above, including the fact that there is no
requirement, corporate or otherwise, to hold a meeting to obtain
any approval of the holders of Common Shares for the
Recapitalization Transaction, and in this regard unanimously
determined that: (i) Razor is in serious financial difficulty; (ii)
the Recapitalization Transaction (including the FutEra Share
Transfer Transaction) is designed to improve the financial position
of Razor; and (iii) the terms of the Recapitalization Transaction
(including the FutEra Share Transfer Transaction) are reasonable in
the circumstances of Razor.
A discussion and description of the review and
approval process adopted by the Special Committee and other
information required by MI 61-101 in connection with the
Recapitalization Transaction, including further details and the
facts supporting reliance on the financial hardship exemptions
described above, will be set forth in Razor’s material change
report to be filed under Razor’s SEDAR profile at
www.sedar.com.
About Razor
Razor is a publicly traded junior oil and gas
development and production company headquartered in Calgary,
Alberta, concentrated on acquiring, and subsequently enhancing,
producing oil and gas properties primarily in Alberta. Razor’s is
led by experienced management and a strong, committed Board of
Directors, with a long-term vision of growth, focused on efficiency
and cost control in all areas of the business. Razor currently
trades on TSXV under the ticker "RZE".
www.razor-energy.com
About FutEra
FutEra leverages Alberta’s resource industry
innovation and experience to create transitional power and
sustainable infrastructure solutions to commercial markets and
communities, both in Canada and globally. Currently, FutEra
operates a first of its kind co-produced geothermal and natural gas
hybrid power project in Swan Hills, Alberta.
www.futerapower.com
Razor has two active subsidiaries, FutEra and
Blade Energy Services Corp. (“Blade”).
About Blade
Blade Energy Services is as subsidiary of Razor.
Operating in west central Alberta, Blade’s primary services include
fluid hauling, road maintenance, earth works including well site
reclamation and other oilfield services.
www.blade-es.com
For additional information please
contact:
Doug Bailey |
Kevin Braun |
President and Chief Executive Officer |
Chief Financial Officer |
Razor Energy Corp |
FutEra Power Corp |
Executive Director |
|
FutEra Power Corp |
|
|
|
Razor Energy Corp |
|
800, 500-5thAve SW |
|
Calgary, Alberta T2P 3L5 |
|
Telephone: (403) 262-0242 |
|
READER ADVISORIES
FORWARD-LOOKING STATEMENTS:
This press release contains forward-looking statements which
involve risks, uncertainties and other factors which may cause the
actual results, performance or achievements of Razor to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. In addition, the use of any of the words “anticipate”,
“believe”, “intend”, “may”, “is”, “will”, “should”, “expect” and
similar expressions are intended to identify forward-looking
statements.
The forward-looking statements are based on
certain key expectations and assumptions made by Razor, including
but not limited to expectations and assumptions concerning the
Recapitalization Transaction and the Rights Offering (including the
use of proceeds, structure, timing and terms and conditions),
expectations relating to the completion of the Recapitalization
Transaction and the Rights Offering and regulatory approval for
listing of the Rights. Although Razor believes that the
expectations and assumptions on which the forward-looking
statements are based are reasonable, undue reliance should not be
placed on the forward-looking statements because Razor can give no
assurance that they will prove to be correct. Since forward-looking
statements address future events and conditions, by their very
nature they involve inherent risks and uncertainties. Actual
results could differ materially from those currently anticipated
due to several factors and risks. These include, but are not
limited to, risks associated with the completion of the Rights
Offering and the Recapitalization Transaction, the ability of Razor
to obtain regulatory approvals in the manner contemplated, changes
in general market conditions, industry conditions and events,
changes in legislation and regulation, and other factors in the
annual information form and management discussion and analysis of
Razor which are available on SEDAR at www.sedar.com. Razor cautions
that the foregoing list of factors that may affect future results
is not exhaustive, and new, unforeseeable risks may arise from time
to time.
The forward-looking statements contained in this
press release are made as of the date hereof and Razor undertakes
no obligation to update publicly or revise any forward-looking
statements or information, whether as a result of new information,
future events or otherwise, unless so required by applicable
securities laws.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this press release.
Razor Energy (TSXV:RZE)
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