Just Energy Announces Amendments to Recapitalization Plan, Support Agreements with Convertible Debenture Holders, and Updated Timing for Approval Votes
August 26, 2020 Email This Story Copyright 2010-20 EnergyChoiceMatters.com
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Just Energy Group Inc. ('Just Energy' or the 'Company') today announced updated terms for the Company’s proposed recapitalization plan (the 'Recapitalization') and commitments of support for the Recapitalization from holders of approximately C$68 million principal amount of the Company’s outstanding C$100 million 6.75% subordinated convertible debentures due March 31, 2023 and C$160 million 6.75% subordinated convertible debentures due December 31, 2021 (together, the 'Subordinated Convertible Debentures').
As previously reported (see details here), the Recapitalization will be facilitated through a plan of arrangement (the 'Plan of Arrangement') under the Canada Business Corporations Act ('CBCA'), as previously announced July 8, 2020 and more fully described in the Company’s management proxy circular dated July 17, 2020.
Pursuant to the amendments to the previously announced Recapitalization, Just Energy will:
• pay accrued and unpaid interest in cash on the Subordinated Convertible Debentures until closing of the Recapitalization,
• issue C$15 million principal amount of new subordinated notes (the 'New Subordinated Notes') to holders of the Subordinated Convertible Debentures, which New Subordinated Notes will have a six-year maturity and will bear an annual interest rate of 7% (which shall only be payable in kind semi-annually),
• pay certain expenses of the ad hoc group of convertible debenture holders, and
• issue approximately C$3.67 million of common shares by way of an additional private placement to the Company’s term loan lenders at the same subscription price available to all securityholders pursuant to the New Equity Subscription Offering, proceeds of which will partially offset the incremental cash costs noted above.
All other terms of the Recapitalization remain unchanged.
Just Energy said in a news release that, "The Recapitalization has a high degree of stakeholder support, as demonstrated by preliminary voting results together with the votes of the Supporting Debentureholders."
To provide securityholders more time to consider the amendments before voting, the Company has postponed its Special Meeting of Shareholders and meetings of applicable creditor classes (collectively, the 'Meetings') to August 27, 2020, with a new deadline of August 26 for proxies.
The July 23, 2020 record date in respect of each of the Meetings remains unchanged.
The deadline to elect to participate in the New Equity Subscription Offering, and to fund the associated aggregate Subscription Price, remains 5:00 p.m. (Toronto time) on August 28, 2020.
"In addition to receiving an amended support agreement from its senior unsecured term loan lenders, the Company has now entered into support agreements with holders of approximately $68 million principal amount of Subordinated Convertible Debentures (the 'Supporting Debentureholders'). All Supporting Debentureholders have agreed to vote in favour of the Plan of Arrangement pursuant to which the Recapitalization is to be implemented under the CBCA," Just Energy said
Just Energy said that, based on proxies submitted as at the original proxy deadline and together with the votes of the Supporting Debentureholders, securityholders have voted in favor of the Recapitalization as follows:
Security Class Percentage FOR
Senior Unsecured Debtholders’ Meeting 99.35%
Convertible Debentureholders’ Meeting 89.44%
Shareholders’ Meeting 94.97%
"Securityholders who have already cast their votes in respect of the Recapitalization do not need to re-submit their votes, unless they wish to change their votes," the Company said
"Just Energy’s Board of Directors has approved the amended Recapitalization and unanimously recommends all holders of existing senior unsecured term debt, subordinated convertible debentures, preferred shares and common shares support the Recapitalization," the Company said
"The implementation of the Recapitalization is expected in September 2020, pending all approvals, including court, regulatory and senior creditor approval," the Company said
Just Energy said, "Business as usual continues for employees, customers and suppliers enhanced by the relationship with a financially stronger Just Energy."