Just Energy Announces Conclusion Of Sales & Investment Solicitation Process -- EnergyChoiceMatters.com

Just Energy Announces Conclusion Of Sales & Investment Solicitation Process

October 17, 2022

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Reporting by Paul Ring • ring@energychoicematters.com

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Just Energy Group Inc. ('Just Energy' or the 'Company') announced that its previously reported sales and investment solicitation process (the 'SISP') has concluded and the previously announced transaction (the 'Stalking Horse Transaction') contemplated by the stalking horse transaction agreement entered into on August 4, 2022 (as amended from time to time, the 'Stalking Horse Transaction Agreement') among Just Energy and the lenders under the Company’s debtor-in-possession financing facility, one of their affiliates, and the holder of certain assigned secured claims (collectively, the 'Stalking Horse Purchaser') was the successful bid pursuant to the SISP.

No bids meeting the criteria prescribed by the SISP were submitted by the deadline of October 13, 2022.

The Stalking Horse Purchaser generally includes certain funds managed by Pacific Investment Management Company LLC and specifically include LVS III SPE XV LP; TOCU XVII LLC; HVS XVI LLC; OC II LVS XIV LP; OC III LFE I LP; and CBHT Energy I LLC

See more details on the stalking horse agreement and bid process in our prior story here

Just Energy and certain of its affiliates (collectively, the 'Just Energy Entities') intend to file a motion in their proceedings under the Companies’ Creditors Arrangement Act (the 'CCAA') before the Ontario Superior Court of Justice (Commercial List) (the 'Court') for an Order (the 'Vesting Order') that, among other things, approves the transactions provided for under the Stalking Horse Transaction Agreement, which is described further below. The Just Energy Entities also intend to seek recognition in the U.S. of the Vesting Order in their Chapter 15 case in the Bankruptcy Court of the Southern District of Texas, Houston Division (the 'U.S. Court') on December 1, 2022.

Subject to the granting of the Vesting Order at the motion scheduled for November 2, 2022 and the satisfaction or waiver of the other conditions to closing, upon the closing of the Stalking Horse Transaction, the Stalking Horse Purchaser will own all of the outstanding equity of Just Energy (U.S.) Corp., which will be the new parent company of all of the Just Energy Entities (other than those excluded pursuant to the terms of the Stalking Horse Transaction Agreement), including the Company, and the Just Energy Entities will continue their business and operations as a going concern. All currently outstanding shares, options and other equity of Just Energy will be cancelled or redeemed for no consideration and without any vote or other action of the existing shareholders.

Key terms of the Stalking Horse Transaction include:

• the purchase price payable pursuant to the Stalking Horse Transaction is (i) cash in the amount of approximately US$184.9 million, plus up to an additional C$10 million solely in the event that additional amounts are required to make applicable payments pursuant to the Stalking Horse Transaction Agreement; plus (ii) a credit bid of approximately US$230 million plus accrued interest of secured claims assigned to the Stalking Horse Purchaser; plus (iii) the assumption of Assumed Liabilities (as defined below), including up to CAD$10 million owing under the Company’s first lien credit facility (the 'Credit Facility Remaining Debt') that may remain outstanding under an amended and restated credit agreement.
• applicable post-filing claims, the Credit Facility Remaining Debt, claims by energy regulators, and certain other liabilities enumerated in the Stalking Horse Transaction Agreement ('Assumed Liabilities') will continue to be liabilities of the Just Energy Entities following consummation of the Stalking Horse Transaction.
• excluded liabilities and excluded assets of the Just Energy Entities will be discharged from the Just Energy Entities pursuant to the Vesting Order.

The consummation of the Stalking Horse Transaction is subject to satisfaction or waiver of a number of conditions precedent set forth in the Stalking Horse Transaction Agreement including, among other things, receipt of all required regulatory approvals, the Court granting the Vesting Order and the recognition of such Vesting Order by the U.S. Court. The outside date for completion of the Stalking Horse Transaction is December 14, 2022, subject to extension in certain circumstances set forth in the Stalking Horse Transaction Agreement.

Under the Stalking Horse Transaction, no amounts will be available for distribution to the Just Energy Entities’ general unsecured creditors, including the holders of Just Energy’s USD $205.9 million term loan ('Term Loan') and the holders of Just Energy’s 7.0% subordinated notes ('Notes') due September 15, 2026, unless expressly classified as 'Assumed Liabilities' pursuant to the Stalking Horse Transaction Agreement. Liabilities that will not be retained, including the Term Loan and the Notes, will be transferred to newly formed corporations (the 'ResidualCos'), along with excluded assets, under the Stalking Horse Transaction Agreement. The Company expects that there will not be any recoveries available from the ResidualCos.

Just Energy will be requesting that the Court order that no meeting of the shareholders or other holders of equity claims in the Just Energy Entities is required in respect of the transactions and accordingly, there is no requirement to send any disclosure document related to the transaction to such holders.

Implementation of the Stalking Horse Transaction is subject to a condition that Just Energy and the other Just Energy Entities will have ceased to be a reporting issuer under any Canadian or U.S. securities laws, and that no Just Energy Entity will become a reporting issuer under any Canadian or U.S. securities laws as a result of completion of the transaction. In connection with the completion of the Stalking Horse Transaction, the Company intends to: (i) apply for an order from Canadian securities administrators that it will cease to be a reporting issuer under Canadian securities laws immediately prior to the effective date of the transaction; and (ii) file to suspend its reporting obligations under U.S. securities laws. Additionally, the Company intends to submit an application to de-list its common shares from trading on the NEX on or before the closing of the Stalking Horse Transaction. The Company’s common shares are also quoted on the OTC Pink Sheets. Concurrent with the delisting from the NEX, the Company expects that the common shares will be delisted from OTC Pink Sheets.

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