AIMCo Increases Ownership of Western Energy Services Corp. following completion of Debt Conversion
Edmonton, Alberta – Alberta Investment Management Corporation (“AIMCo”) announces today that it has acquired an additional 2,000,000,000 common shares (“Common Shares”) of Western Energy Services Corp. (“Western”), representing approximately 49.25% of the issued and outstanding Common Shares, pursuant to the terms of a debt restructuring agreement dated March 21, 2022 with Western (the “Debt Restructuring Agreement”).
Pursuant to the Debt Restructuring Agreement, AIMCo has converted $100,000,000 of principal amount of indebtedness outstanding under the second lien credit agreement dated October 17, 2017, as amended, between AIMCo and Western into 2,000,000,000 Common Shares at a conversion price of $0.05 per share (the “Debt Conversion”). The Common Shares acquired pursuant to the Debt Conversion are held by Seibu Investments Ltd., a private holding company wholly owned and controlled by AIMCo and a joint actor of AIMCo in connection with the Debt Conversion.
The Debt Conversion was one element of a comprehensive recapitalization by Western to restructure a portion of its outstanding debt and raise new capital, which also included the issuance of 1,968,867,475 Common Shares pursuant to a rights offering conducted by Western (the “Rights Offering”) which closed concurrently with the Debt Conversion. AIMCo did not acquire any Common Shares pursuant to the Rights Offering. Reference is made to the full text of Western’s news releases issued on March 22, 2022, April 12, 2022 and May 18, 2022 for further information on the Debt Conversion, Rights Offering and related transactions.
Prior to the completion of the Debt Conversion and the Rights Offering, AIMCo and its joint actor had ownership, control and direction over 17,600,000 Common Shares, representing approximately 19.17% of the outstanding Common Shares. Following the completion of the Debt Conversion and the Rights Offering, AIMCo and its joint actor have ownership, control and direction over an aggregate of 2,017,600,000 Common Shares, representing approximately 49.69% of the outstanding Common Shares.
As a condition precedent to the Debt Conversion, AIMCo entered into an investor rights agreement (the “Investor Rights Agreement”) with Western, G2S2 Capital Inc. (“G2S2”), Armco Alberta Inc. (“Armco”), Matco Investments Ltd. (“Matco”) and Ronald P. Mathison (“Mathison”). Pursuant to the Investor Rights Agreement, Western has granted AIMCo the right to nominate two directors for election to the board of Western as long as AIMCo, together with any entities controlled, directly or indirectly by AIMCo, holds 30% or more of the outstanding Common Shares, and under which G2S2, Armco, Matco and Mathison (or any affiliate holding Common Shares) have agreed not to vote against the election of an AIMCo nominee to serve as a director, or in favour of any proposal or resolution to remove any AIMCo nominee as a director, while AIMCo holds such nomination rights. Pursuant to the Investor Rights Agreement, two persons designated by AIMCo will be joining the board of directors of Western on May 24, 2022.
Also as a condition to the completion of the Debt Conversion, AIMCo entered into a registration rights agreement with Western pursuant to which AIMCo has been provided with rights to cause Western to file a prospectus to facilitate the sale of its Common Shares in a public offering, or to allow AIMCo to participate in a public offering of Common Shares by Western, in each case subject to certain customary restrictions and limitations. Other than as disclosed herein, AIMCo does not have any current plans or intentions in respect of the actions listed in paragraphs (a) through (k) of Item 5 of AIMCo’s early warning report filed under Western’s profile on SEDAR (www.sedar.com) on May 17, 2022 in connection with the Debt Conversion (the “AIMCo EWR”). However, depending on market conditions, general economic conditions and industry conditions, the trading prices of Western’s securities, Western’s business and financial condition and prospects and/or other relevant factors, AIMCo may increase its investment in the securities of Western, decrease its investment in the securities of Western (including by exercising its rights under the Registration Rights Agreement) or pursue any of such actions set forth in Item 5 of the AIMCo EWR.
This press release is being issued pursuant to National Instrument 62-103 – The Early Warning System and Related Take-Over Bid and Insider Reporting Issues.
About Alberta Investment Management Corporation
AIMCo is one of Canada’s largest and most diversified institutional investment managers with more than $160 billion of assets under management. AIMCo was established on January 1, 2008 with a mandate to provide superior long-term investment results for its clients. AIMCo operates at arms-length from the Government of Alberta and invests globally on behalf of 32 pension, endowment and government funds in the Province of Alberta.