Delphi Energy Corp. Announces Completion of Recapitalization Transaction

CALGARY – Delphi Energy Corp. (“Delphi” or the “Company”) is pleased to announce the completion of its previously announced recapitalization transaction (the “Recapitalization Transaction”). The Recapitalization Transaction was implemented pursuant to a plan of arrangement (the “Plan of Arrangement”) under the Canada Business Corporations Act (the “CBCA”).

The Recapitalization Transaction included the following components:

1. The existing issued and outstanding common shares of the Company (“Common Shares”) were consolidated on a fifteen (15) for one (1) basis.
2. Delphi completed two brokered private placements (together, the “Private Placements”) of subscription receipts raising gross proceeds of $46.5 million. Pursuant to the Private Placements, Delphi issued an aggregate of 18,81,818 equity subscription receipts (“ESRs”) at a price of $1.65 per ESR (the “ESR Price”) for gross proceeds of approximately $30 million and 22,000 note subscription receipts (“NSRs”) at a price of $750 per NSR (the “NSR Price”), plus accrued and unpaid interest from October 15, 2019 to the date of issuance of the NSRs, for gross proceeds of approximately $16.5 million. Each ESR is convertible into one post-consolidation Common Share and each NSR is convertible into $1,000 principal amount of Senior Secured Notes of Delphi due 2023 (“NSR Notes”). Affiliates of a pooled investment vehicle of Luminus Management, LLC subscribed for 16,778,306 ESRs for gross proceeds of approximately $27.7 million and 16,933 NSRs for gross proceeds of approximately $12.7 million under the Private Placements.Under the Plan of Arrangement, one-third of the ESRs and NSRs today converted into Common Shares and NSR Notes and one-third of the proceeds from the Private Placements are now releasable to the Company. The remaining proceeds from the Private Placements will be held in escrow pending the satisfaction of certain escrow release conditions which are described in Delphi’s management information circular dated October 11, 2019 (the “Information Circular”). Delphi will use the proceeds of the Private Placements to further develop its reserves and fund capital expenditures.

3. The trust indenture governing Delphi’s Senior Secured Notes due 2021 (the “Existing Notes”) was amended and restated (the “Amended and Restated Indenture”) to, among other things, extend the maturity of the Existing Notes from July 15, 2021 to April 15, 2023 (the “Amended Notes”). The NSR Notes and Amended Notes have identical terms and will trade under on the TSX under the ticker symbol DEE.NT. The Amended and Restated Indenture governs the NSR Notes and the Amended Notes.
4. Each holder of Existing Notes today received 700 transferable Common Share purchase warrants (the “Consent Warrants”) for each $1,000 principal amount of Existing Notes held by such holder. Each Consent Warrant is exercisable at any time until April 15, 2023 for one fifteenth of a post-consolidation Common Share at an aggregate exercise price of $2.23 per whole post-consolidation Common Share (equal to $0.149 per Common Share on a pre-consolidation basis), representing a 35% premium to the ESR Price. The Consent Warrants will be listed on the TSX under the ticker symbol DEE.WT.A and will commence trading within the next two to three business days.
5. Delphi was continued under the federal jurisdiction of Canada and the CBCA prior to implementation of the Plan of Arrangement.
6. Pursuant to the Plan of Arrangement and the final order of the Court of Queen’s Bench of Alberta granted on November 18, 2019 (the “Final Order”), claims relating to, among other things, the Recapitalization Transaction and the CBCA proceedings have been released as against the Company and the other parties set out in the Plan of Arrangement on the terms set out in the Plan of Arrangement and Final Order.
7. Pursuant to the Final Order, defaults resulting from, among other things, the Recapitalization Transaction and the CBCA proceedings, have been waived on the terms set out in the Final Order.

The Recapitalization Transaction is more fully described in the Information Circular.

The share consolidation completed as part of the Recapitalization Transaction reduced the number of issued and outstanding Common Shares to approximately 12,369,813 (prior to taking into account the issuance of the Common Shares underlying one-third of the ESRs) and 18,430,418 (after taking into account the issuance of the Common Shares underlying one-third of the ESRs).  The Common Shares will continue to trade on the TSX under the symbol DEE and are expected to commence trading on a post-consolidation basis within the next two to three business days.

As a result of the share consolidation, the Company’s warrants that it issued on June 15, 2016 (“Existing Warrants”),which trade on the TSX under the ticker symbols DEE.WT, will be amended such that each Existing Warrant will be exercisable for one-fifteenth of a post-consolidation Common Share at a price of $21.00 per whole post-consolidation Common Share. As of November 26, 2019, there are 14,700,000 Existing Warrants outstanding.

Raymond James Ltd. and AltaCorp Capital Inc. acted as financial co-advisors to Delphi in connection with the Recapitalization Transaction.

About Delphi Energy Corp.

Delphi Energy Corp. is an industry-leading producer of liquids-rich natural gas.  The Company has achieved top decile results through the development of our high quality Montney property, uniquely positioned in the Deep Basin of Bigstone, in northwest Alberta. Delphi continues to outperform key industry players by improving operational efficiencies and growing our dominant Bigstone land position in this world-class play. Delphi is headquartered in Calgary, Alberta and trades on the Toronto Stock Exchange under the symbol DEE.