Surge Energy Inc. is issuing a notice of redemption to holders of its currently outstanding $44,500,000 5.75% Convertible Unsecured Subordinated Debentures due December 31, 2022 (the "Debentures"). The Debentures are not subject to a pre-payment penalty.
As set out in the notice of redemption, Surge will redeem, as of October 28, 2022 ("Redemption Date"), all of the aggregate principal amount of the Debentures for cash. On the Redemption Date, Surge will pay the aggregate principal amount of the Debentures (being $1,000 for each Debenture) plus all accrued and unpaid interest thereon to but excluding the Redemption Date (less any tax required to be deducted) (collectively, the "Redemption Price"). The Debentures are listed on the Toronto Stock Exchange (the "TSX") under the symbol "SGY.DB" (CUSIP 86880YAA7).
In accordance with the terms of the indenture governing the Debentures, holders of the Debentures have the right to convert their Debentures, at their option, into common shares of Surge ("Surge Shares") at a conversion price of approximately $23.23 per Surge Share at any time prior to 5:00 p.m. Calgary time on October 27, 2022. A holder electing to convert the principal amount of their Debentures will receive approximately 43 Surge Shares per $1,000 principal amount of Debentures converted plus a cash payment for accrued unpaid interest up to, but excluding, the date of conversion (less any tax required to be deducted). No fractional shares will be issued on conversion but, in lieu thereof, the Company will pay the cash equivalent thereof determined on the basis of the Current Market Price (as defined in the indenture governing the Debentures) of the Surge Shares on the date of conversion.
All holders of Debentures who fail to deliver a notice of conversion on or prior to 5:00 p.m. Calgary time on October 27, 2022 (or such other earlier time as may be indicated by their broker, dealer, bank, trust company or other nominee) will have their Debentures redeemed on the Redemption Date for a cash payment equal to the Redemption Price.
As all of the Debentures were issued in "book-entry only" form and are held by CDS Clearing and Depository Services Inc., beneficial holders of Debentures must contact their broker, dealer, bank, trust company or other nominee to exercise their right to convert their Debentures.