Party Approached Just Energy With Asset Acquisition Proposal In Late June; Just Energy Found Proposal Provided Little To No Value To Shareholders, Said To Be Inferior To Recapitalization Plan
July 22, 2020 Email This Story Copyright 2010-20 EnergyChoiceMatters.com
Reporting by Paul Ring • email@example.com
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In a management proxy circular, Just Energy disclosed that, on June 23, 2020, a party that had previously entered into an exclusivity agreement with Just Energy concerning a potential transaction submitted
another non-binding proposal to acquire certain of Just Energy’s assets.
According to the circular, the company's Special Committee overseeing the strategic review process, "carefully considered
the proposal with the assistance of representatives of BMO and concluded that: it would not be acceptable to the
Corporation’s senior lenders or senior unsecured lenders; the enterprise value offered in such proposal provided little
to no value to holders of Convertible Debentures, Preferred Shares and Common Shares; and it was financially
inferior to the Recapitalization Transaction."
The circular noted that the previously reported sale process for Just Energy, conducted prior to this recent June offer, had lasted for nearly a year and had not resulted in any executable
Specifically, Just Energy stated in the circular that, "Between September 2019 and April 2020, Just Energy engaged with two parties that expressed an interest in a
potential acquisition transaction. One of these parties delivered a non-binding proposal, subsequent to which Just
Energy and this party entered into an exclusivity agreement. Over the next few months, this bidder engaged in
extensive due diligence and the parties exchanged a number of non-binding proposals and counterproposals,
including proposals for transactions to be effected through a plan of arrangement or other court process. Ultimately,
Just Energy concluded that the proposals did not offer sufficient return for stakeholders to be viable or acceptable."
In the circular, the company stated that Just Energy determined to proceed with the previously reported Recapitalization Transaction, "as it was the only viable option that
provides a long-term solution to its current financial challenges."
• Just Energy had inadequate liquidity for over a year and has been obtaining ongoing waivers for
its lenders under the senior secured credit facility and the Term Loan Agreement since June 2018;
• Just Energy was facing looming maturity dates for significant debt obligations, including a $370
million [all $ Canadian] secured credit facility that currently matures on September 1, 2020;
• Just Energy’s Financial Statements contain a going concern note stating that Just Energy’s ability
to continue as a going concern is dependent on the continued availability of its credit facilities,
Just Energy’s ability to obtain waivers from its lenders for potential instances of non-compliance
with covenants if necessary, Just Energy’s ability to refinance or secure additional sources of
financing if necessary or the completion of the Recapitalization Transaction, the liquidation of
available investments, and the continued support of Just Energy’s lenders and suppliers. The
Financial Statements state that these conditions indicate the existence of material uncertainties that
raise substantial doubt about Just Energy’s ability to continue as a going concern
• the Corporation’s extensive review of potential alternatives