Bellatrix expects gross proceeds of $175 million. The company also granted the underwriters an option to purchase up to some 3.3 million additional common shares to cover over-allotments, if any, for additional gross proceeds of up to $26.25 million. The over-allotment option is exercisable in whole or in part at any time up to the date that is 30 days from the closing of the offering.
The common shares will be offered in each of the provinces of Canada other than Quebec by way of a short form prospectus, in the U.S. on a private placement basis to accredited investors pursuant an exemption from the registration requirements of the U.S. Securities Act.
Proceeds will be used to fund the acquisition of Angle Energy Inc. (TO: NGL), fund a portion of the corporation's obligations under the $240 million joint venture with Troika Resources Private Equity Fund, and for general corporate purposes.
Closing is expected to occur on or about Nov. 5 and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals including the approval of the Toronto Stock Exchange and the New York Stock Exchange.
The closing of the offering is not conditional on the closing of the acquisition or the joint venture. If either or both of the acquisition or joint venture do not close, the proceeds are expected to be used to temporarily repay indebtedness, then to fund Bellatrix's capital expenditure program and for general corporate purposes.
The securities offered have not been and will not be registered under the U.S. Securities Act and may not be offered or sold in the U.S. absent registration or an available exemption from the registration requirements thereof.
Angle Energy Business Combination
Angle Energy Inc. (TO: NGL) entered into an arrangement agreement with Bellatrix Exploration Ltd. (NYSE: BXE; TO: BXE) for Bellatrix to acquire all of the issued and outstanding common shares of Angle and all of Angle's issued and outstanding 5.75% convertible unsecured subordinated debentures with a maturity date of Jan. 31, 2016.
The transaction is to be completed by way of a plan of arrangement under the Business Corporations Act (Alberta).
Under the terms of the arrangement, Angle shareholders will receive, at their election, for each Angle common share held, either: (i) $3.85 in cash; or (ii) 0.4734 of a Bellatrix common share, subject to the cash amount payable to Angle shareholders equaling $69.7 million and thus subject to prorating. Pursuant to the arrangement, if approved by holders of the debentures, such holders of the debentures will receive $1,040 in cash per debenture, plus all accrued and unpaid interest to the day immediately prior to the effective date of the arrangement. Pursuant to the arrangement, the consideration offered for the common shares based on the cash offer of $3.85 per share represents a 31% premium over the 10 day volume weighted average trading price ending Oct. 11, and a 20% premium to the last closing price on the Toronto Stock Exchange. Based on Bellatrix's closing price on Oct. 11 of $8.45 and assuming an average cash component of 22% of the total consideration, the arrangement implies a price of $3.97 per common share, which is a 35% premium to Angle's 10 day VWAP and a 24% premium to the last closing price.
Bellatrix will also assume Angle's net debt, estimated at $185 million, that excludes $60 million in debentures and $16 million in estimated transaction and severance costs associated with the arrangement which includes $2.4 million of costs to acquire the Debentures and assuming cashless exercise of in-the-money options based on the cash offer of $3.85, as at Sept. 30. The total value of the arrangement is $576 million, based on the volume weighted average trading price of Bellatrix for the 10 trading days ending Oct. 11 of $8.1324 per Bellatrix share.
"Angle's shareholders will benefit from this business combination with Bellatrix, which is the successful result of a comprehensive review of strategic alternatives available to Angle, announced in July," Gregg Fischbuch, Angle CEO, said in the release. "This complementary transaction creates one of the largest Cardium producers and landholders in Alberta and provides Angle shareholders an attractive price, with significantly enhanced liquidity and the opportunity for ongoing participation in a larger and well capitalized combined company."
"We believe the combined entity will have the size, technical strength, financial resources and extensive inventory of high-quality light oil and liquids-rich gas locations to provide our shareholders with the opportunity for significant capital appreciation," Heather Christie-Burns, Angle president and chief operating officer, said in the release.
FirstEnergy Capital Corp., as lead, and Cormark Securities Inc. are financial advisors to Angle.
AltaCorp Capital Inc. and Macquarie Capital Markets Canada Ltd. are financial advisors to Bellatrix and each has provided the board of directors of Bellatrix with its verbal opinion that, subject to its review of the final form of the documents affecting the transaction, the consideration to be paid to Angle shareholders pursuant to the terms of the arrangement is fair, from a financial point of view, to Bellatrix.
Angle Energy Inc. and Bellatrix Exploration Ltd. are independent energy companies engaged in the acquisition, exploration, development, and production of oil and natural gas properties in Canada. The companies are headquartered in Calgary.