Perpetual Energy and Rubellite Energy Announce Strategic Recombination

Strategic Recombination Announced

Perpetual Energy Inc. and Rubellite Energy Inc. have jointly announced a strategic recombination in an all-stock transaction aimed at unlocking shareholder value 1

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. This move comes as both companies seek to create a consolidated entity with a focus on sustainable energy development and enhanced operational efficiency.

Transaction Details

Under the terms of the agreement, Rubellite shareholders will receive 1.75 Perpetual shares for each Rubellite share held 1

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. This exchange ratio represents a premium of approximately 8.5% based on the 20-day volume-weighted average trading price of both companies' shares on the Toronto Stock Exchange as of September 27, 2023 2

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Strategic Rationale

The recombination is expected to bring several benefits to shareholders of both companies:

1. Enhanced market presence with a larger, more liquid publicly traded entity
2. Improved access to capital markets
3. Operational synergies and cost savings
4. A stronger balance sheet to support future growth initiatives

Sue Riddell Rose, President and CEO of Perpetual, expressed enthusiasm for the transaction, stating that it will create a more robust platform for sustainable energy development 1

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Asset Portfolio

The combined company will boast a diverse asset base, including:

1. Heavy oil assets in Eastern Alberta
2. Mannville heavy oil properties
3. Edson liquids-rich conventional natural gas assets
4. Bitumen resources in Northeast Alberta

This portfolio is expected to provide a balanced mix of production and development opportunities 2

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Governance and Leadership

Following the completion of the transaction, the board of directors of the combined entity will consist of seven members, with five from the current Perpetual board and two from the current Rubellite board 1

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. Sue Riddell Rose will continue to serve as President and CEO of the recombined company 2

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Shareholder and Regulatory Approvals

The transaction is subject to customary closing conditions, including shareholder approvals from both Perpetual and Rubellite shareholders, as well as court and regulatory approvals 1

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. Special meetings of shareholders are expected to be held in late November 2023 to vote on the recombination 2

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Financial Advisors and Fairness Opinions

Peters & Co. Limited is acting as financial advisor to Perpetual, while National Bank Financial Inc. is serving as financial advisor to Rubellite 1

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. Both advisors have provided fairness opinions to their respective boards of directors, stating that the consideration to be received is fair from a financial point of view 2

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Closing Timeline

If all necessary approvals are obtained, the transaction is expected to close in early December 2023 1

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. This timeline allows for a swift integration of the two companies and the realization of potential synergies in the near term.