/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED
STATES/
CALGARY,
AB, Dec. 31, 2024 /CNW/ - Ensign Energy
Services Inc. ("Ensign" or the "Corporation") (TSX:
ESI) is pleased to announce the closing of a non-brokered private
placement (the "Offering") of unsecured, subordinated
convertible debentures of the Corporation (the
"Debentures"), for gross proceeds of CAD $25 million. The Debentures bear interest from
the date of closing at 7.50% per annum, payable semi-annually in
arrears, on April 1 and October 1 of each year, with the first payment of
interest due on April 1, 2025. The
Debentures will mature on January 31,
2029 (the "Maturity Date").
The Debentures are convertible at the option of the holder into
common shares of the Corporation ("Common Shares") at any
time prior to the close of business on the Maturity Date upon at
least 14 days prior notice, at a conversion price of CAD
$3.50 per Common Share, subject to
customary anti-dilution adjustments (the "Conversion
Price"). If all Debentures are converted, 7,142,857 Common
Shares of the Corporation would be issued or 3.72% of all issued
and outstanding Common Shares. Holders converting their Debentures
will receive accrued and unpaid interest thereon (if any), up to,
but excluding, the date of conversion.
If, on and after March 31, 2028,
the closing price of the Common Shares on the Toronto Stock
Exchange exceeds 125% of the Conversion Price for at least 30
consecutive trading days, the Debentures may be redeemed by the
Corporation for cash on a pro rata basis, in whole or in
part from time to time, on not more than 90 days and not less than
60 days prior notice, at a redemption price equal to the
outstanding principal amount of the Debentures plus accrued and
unpaid interest thereon (if any), up to, but excluding, the date of
redemption.
The net proceeds of the Offering will be used by the Corporation
for general corporate and working capital purposes.
Related Party Matters
N. Murray Edwards, Barth Whitham,
Darlene Haslam, Robert Geddes, Michael
Gray and Trevor Russell, each
a director and/or officer of the Corporation and certain
subsidiaries of Fairfax Financial Holdings Limited
("Fairfax" and collectively with the other foregoing
parties, the "Holders"), purchased $18,650,000, $1,500,000, $25,000, $262,500,
$262,500, $100,000 and $4,200,000 of the Debentures, respectively. Mr.
Edwards holds approximately 23.31% of the outstanding Common Shares
on a non-diluted basis. The Holders collectively own 45.22% of the
outstanding Common Shares on a non-diluted basis. Accordingly, the
participation of the Holders in the Offering are considered each to
be a "related party transaction" as defined under Multilateral
Instrument 61-101 ("MI 61-101"). Pursuant to MI 61-101,
Ensign has filed a material change report providing disclosure in
relation to the related party transactions on SEDAR+ under Ensign's
issuer profile at www.sedarplus.ca. The Corporation did not file
the material change report more than 21 days before the expected
closing date of the Offering as the definitive documentation for
the Offering and the participation by the related parties was not
settled until shortly before the closing of the Offering, and the
Corporation wished to close the Offering on an expedited basis for
sound business reasons.
The transaction is exempt from the formal valuation and minority
shareholder approval requirements of MI 61-101 as at the time the
Offering was agreed to, neither the fair market value of the
subject matter of, nor the fair market value of the consideration
for, the Offering exceeds 25% of the Corporation's market
capitalization.
Early Warning Requirements
Immediately prior to the acquisition of the Debentures pursuant
to the Offering, N. Murray Edwards, Chairman of the board of
directors of Ensign, owned or controlled (directly or indirectly)
43,060,656 (23.31%) of the outstanding Common Shares and 600,000
options to acquire 600,000 Common Shares ("Options") on a
non-diluted basis. N. Murray Edwards acquired Debentures in the
principal amount of $18,650,000
pursuant to the Offering. As a result of the acquisition on a
partially diluted basis, assuming conversion of the Debentures and
Options, N. Murray Edwards now
beneficially owns or controls 48,989,227 Common Shares,
representing 25.46% of the issued and outstanding Common
Shares.
This press release and Mr. Edwards' corresponding early warning
report (the "Early Warning Report") which is expected to be
filed on SEDAR+ in the near term, constitutes the required
disclosure pursuant to section 5.2 of National Instrument 62-104 -
Take-Over Bids and Issuer Bids ("NI 62-104"). The
Debentures acquired under the offering by Mr. Edwards are being
acquired for investment purposes. Mr. Edwards has no current
intention to enter into any of the transactions listed in item 5
of Form F1 of National Instrument 62-103, but in the future he may
acquire or dispose of securities of Ensign depending on market
conditions, reformulation of plans and/or other relevant factors,
in each case in accordance with applicable securities laws.
The Early Warning Report for Mr. Edwards that will be filed on
SEDAR+ in respect of the Offering will satisfy the requirement of
section 5.2 of NI 62-104 to have the Early Warning Report filed by
an acquiror, with the securities regulatory authorities in each of
the jurisdictions in which the Corporation is a reporting issuer
and which contains the information required by section 3.1 of
National Instrument 62-103 – The Early Warning System and Related
Take-Over Bid and Insider Reporting Issues ("NI 62-103"),
which includes the information required by Form 62-103F1.
A copy of the Early Warning Report filed by Mr. Edwards in
connection with the Offering will be available under the
Corporation's profile on the SEDAR+ website at
www.sedarplus.ca.
Immediately prior to the acquisition of the Debentures pursuant
to the Offering, certain controlled subsidiaries of Fairfax
beneficially owned an aggregate of 36,549,316 Common Shares on a
non-diluted basis, representing 19.79% of the issued and
outstanding Common Shares. As a result of the acquisition on a
partially diluted basis, assuming conversion of the Debentures,
Fairfax now beneficially owns 37,749,316 Common Shares,
representing 19.68% of the issued and outstanding Common
Shares.
This press release and Fairfax's corresponding early warning
report (the "Fairfax Early Warning Report") which is
expected to be filed on SEDAR+ in the near term, constitutes the
required disclosure pursuant to section 5.2 of NI 62-104. The
requirement to file an early warning report was triggered because
the acquisition by Fairfax of the Debentures in the Offering
resulted in a change in material fact compared to the early warning
report last filed by Fairfax. The Debentures acquired under the
Offering are being acquired by Fairfax for investment purposes and
it may further purchase, hold, vote, trade, dispose or otherwise
deal in the securities of the Corporation, in such manner as it
deems advisable to benefit from changes in market prices of the
Corporation's securities, publicly disclosed changes in the
operations of the Corporation, its business strategy or prospects,
or from a material transaction of the Corporation. In the future,
Fairfax may discuss with management and/or the board of directors
of the Corporation any of the transactions listed in clauses (a) to
(k) of item 5 of Form 62-103F1 of NI 62-103.
The Fairfax Early Warning Report that will be filed on SEDAR+ in
respect of the Offering will satisfy the requirement of section 5.2
of NI 62-104 to have the Fairfax Early Warning Report filed by an
acquiror, in this case by Fairfax, with the securities regulatory
authorities in each of the jurisdictions in which the Corporation
is a reporting issuer and which contains the information required
by section 3.1 of NI 62-103, which includes the information
required by Form 62-103F1.
A copy of the Fairfax Early Warning Report filed by Fairfax in
connection with the Offering will be available under the
Corporation's profile on the SEDAR+ website at
www.sedarplus.ca.
U.S. Securities Laws
The Debentures and the Common Shares issuable on conversion
thereof have not been, and will not be, registered under the United
States Securities Act of 1933, as amended (the "1933 Act"),
or any state securities laws and may not be offered or sold in
the United States to, or for the
account or benefit of, U.S. persons (as defined in Regulation S
under the 1933 Act), except pursuant to an exemption from the
registration requirements of those laws. This news release shall
not constitute an offer to sell or the solicitation of an offer to
buy securities in the United
States, or for the account or benefit of U.S persons.
Cautionary Statements on Forward-looking Information
Certain statements in this news release constitute
forward-looking statements or information (collectively referred to
herein as "forward-looking statements") within the meaning of
applicable securities legislation. Forward-looking statements
generally can be identified by the words "believe", "anticipate",
"expect", "plan", "estimate", "target", "continue", "could",
"intend", "may", "potential", "predict", "should", "will",
"objective", "project", "forecast", "goal", "guidance", "outlook",
"effort", "seeks", "schedule" or expressions of a similar nature
suggesting future outcome or statements regarding an outlook. In
particular, this news release contains forward-looking statements
pertaining to the use of proceeds from the Offering.
These forward-looking statements are subject to, and may be
affected by, numerous risks and uncertainties, some of which are
beyond Ensign's control. Risks that could cause or contribute to
these differences include the factors described in Ensign's public
reports and filings, which are available under Ensign's profile at
www.sedarplus.ca. The forward-looking information contained herein
is provided as at the date hereof and Ensign does not undertake to
update, correct or revise any forward-looking statements as a
result of any new information, future events or otherwise, except
as may be required by applicable law.
About Ensign
Ensign is a global leader in oilfield services, headquartered
out of Calgary, Alberta, operating
in Canada, the United States and internationally. We are
one of the world's top land-based drilling and well servicing
contractors serving crude oil, natural gas and geothermal
operators. Our premium services include contract drilling,
directional drilling, underbalanced and managed pressure drilling,
rental equipment, well servicing and production services. Please
visit our website at www.ensignenergy.com.
Ensign's Common Shares are publicly traded though the facilities
of the Toronto Stock Exchange under the trading symbol
ESI.
SOURCE Ensign Energy Services Inc.
