Hammerhead Energy Inc. ("Hammerhead" or "HEI") (HHRS, HHRS.WT ; NASDAQ: HHRS, HHRSW) announces the results of its substantial issuer bid (the "Offer"), pursuant to which HEI offered to purchase for cancellation up to 20,000,000 of its warrants ("Warrants") to purchase Class A common shares ("Common Shares") of Hammerhead at a purchase price of US$1.00 per Warrant (the "Purchase Price"), and which expired at 5:00 p.m. (Eastern Daylight Time) on June 2, 2023 (the "Expiration Date").
In accordance with the terms and conditions of the Offer and based on the final calculation by Computershare Investor Services Inc., as depositary for the Offer (the "Depositary"), a total of 12,852,235 Warrants were properly tendered to the Offer and not properly withdrawn. Hammerhead has directed the Depositary to take up all such 12,852,235 Warrants at the Purchase Price, representing an aggregate purchase price of US$12,852,235 and approximately 45% of the total number of Hammerhead's issued and outstanding Warrants as at the time the Offer was commenced on April 27, 2023. Immediately following the purchase and cancellation of such Warrants, Hammerhead anticipates that 15,697,756 Warrants, 91,049,197 Common Shares, 5,080,060 legacy restricted share units, 650,495 legacy options, and 1,945,115 restricted share awards will be issued and outstanding.
Payment for the Warrants accepted for purchase will be made in accordance with the terms of the Offer and applicable law. All Warrants not purchased under the Offer (including Warrants not purchased because of invalid tenders), or Warrants properly withdrawn, will be returned to Warrantholders by the Depositary.
At the option of Hammerhead, the remaining Warrants may be redeemed at a price of US$0.10 per Warrant, upon at least 30 days' prior written notice, if, among other things, the last reported sales price of the Common Shares equals or exceeds US$10.00 per Common Share on the trading day prior to the date on which notice of the redemption is given. In such a case, Warrantholders will be able to exercise their Warrants prior to the date of redemption for a number of Common Shares determined in accordance with the Amended and Restated Warrant Agreement among Hammerhead, Computershare Inc. and Computershare Trust Company, N.A. dated February 22, 2023 (the "Warrant Agreement"). At this time, the Warrants are not redeemable and Hammerhead has not issued a notice of redemption. For further information regarding the terms of the remaining Warrants and the Warrant Agreement, see Hammerhead's Tender Offer Statement on Schedule TO, as amended, including the offer to purchase (the "Offer to Purchase") and accompanying issuer bid circular (the "Circular") dated April 27, 2023, filed by Hammerhead with the U.S. Securities and Exchange Commission at www.sec.gov and the separate Offer to Purchase and Circular filed by Hammerhead with the applicable securities regulatory authorities in Canada under Hammerhead's profile on SEDAR at www.sedar.com.
R5 HHR FS Holdings LLC ("R5"), an affiliate of Hammerhead's principal shareholder, Riverstone Global Energy and Power Fund V (Cayman), L.P. and certain of its direct and indirect wholly-owned subsidiaries (the "Riverstone Fund V Entities") tendered 12,737,500 Warrants pursuant to the Offer. The total gross proceeds to be received by R5 in connection with the Offer is US$12,737,500. Prior to the commencement of the Offer, R5 owned 12,737,500 Warrants which represented 44.6% of the Warrants that were issued and outstanding prior to the commencement of the Offer. Immediately following the take-up and payment of the Warrants by Hammerhead under the Offer, R5 will not own any Warrants.
Immediately before the commencement of the Offer, R5 owned 17,085,937 Common Shares (on a partially-diluted basis taking into account the Common Shares held by R5 and assuming the exercise of all Warrants then held by R5). This represented approximately 16.5% of the Common Shares issued and outstanding prior to the commencement of the Offer on a partially-diluted basis. Following the take-up and payment of the Warrants under the Offer, R5 will own 4,348,437 Common Shares. This represents approximately 4.8% of the Common Shares issued and outstanding as of the date hereof.
Following the take-up and payment of the Warrants under the Offer, the Riverstone Fund V Entities will collectively own or control 78,197,457 Common Shares representing approximately 86.0% of the Common Shares issued and outstanding as of the date hereof.
The disposition of the Warrants by R5 was made for investment reasons. Subject to applicable law, R5 may, from time to time, acquire additional Common Shares and/or other equity, debt or other securities or instruments of Hammerhead (collectively, "Securities") in the open market or otherwise, and reserves the right to dispose of any or all of its Securities, including the Common Shares, in the open market or otherwise at any time and from time to time, depending on market conditions, the business and prospects of Hammerhead and other relevant factors.
