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Delphi Finalizes Restructuring, Eliminating $176MM in Debt; New Execs Take Helm

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   |    Monday,October 19,2020

Delphi Energy Corp. has exited its bankruptcy and restructuring phase, as well as announced executive changes.

As a result of the completion of the restructuring, Delphi was able to erase $176 million in debt and there are 6,088,724 New Shares issued and outstanding.

The Company is also pleased to announce that, concurrently with completion of the Plan, it has entered into a credit agreement with ATB Financial providing for a $30 million senior secured revolving credit facility. The facility is available on a revolving basis until May 31, 2021, at which time it may be extended at the lender’s option.

Timothy Schneider, President and Chief Executive Officer, commented: “We are pleased with the outcome of the CCAA proceedings and grateful for the support of Delphi’s employees who remained dedicated to fulfilling their responsibilities despite the arduous restructuring process and strains of the COVID-19 pandemic. The Company will emerge from CCAA stronger and more sustainable, supported by over $70 million of capital and liquidity secured by the Company from KRC, ATB Financial and the Plan sponsors Luminus Energy, Concise and Stornoway. The last several years have been difficult for the Canadian energy industry but there remains a bright future. The entities that will lead the resurgence of Alberta’s oil and gas sector will be the participants with purposeful, focused mandates committed to capital structures optimized for sustainability through the cycle, disciplined capital allocation, rigorous cost management and a willingness to improve operational efficiency via thoughtful implementation of innovative solutions.”

Management Changes

In connection with the restructuring, Delphi announces that, effective October 16, 2020,

• David J. Reid, having founded the Company in 2003, has elected to retire as President and Chief Executive Officer, and has resigned from the Board of Directors. Mr. Reid will continue to provide advisory services to the Company.
• Timothy Schneider has been appointed President, Chief Executive Officer and Chairman.
• P. Eric Gallie has been appointed Chief Financial Officer.
• Kevin Brown and Pat Carlson, each a nominee of KRC, have joined as directors.

Timothy Schneider - Chairman, President & CEO

• Mr. Schneider has spent 15+ years focused exclusively on the energy sector. During that time he has worked for various financial firms spanning investment banking, private equity, venture capital and several public investing platforms. Most recently as the Head of E&P Investments at Luminus where he manages the firm’s upstream investment team/portfolio. Mr. Schneider grew up in rural Alberta, received a Bachelor of Arts degree from Middlebury College with a major in Economics and has been a director of Delphi since September 2019.

P. Eric Gallie - CFO

• Mr. Gallie works as a Senior Analyst in Luminus’ upstream investment team and has over 10 years’ experience in the energy sector for various financial firms spanning industry, investment banking and public investing platforms. Mr. Gallie holds a Bachelor of Commerce degree from the University of Lethbridge with a major in Finance. Mr. Gallie has been a director of Delphi since September 2019.

Kevin Brown - Director

• Mr. Brown is Co-Chair and Director of ARC Financial Corp. and a board member of KRC. He is also the Chair of ARC’s Investment and Governance Committees and is a member of ARC’s Executive Committee. In addition to KRC, Mr. Brown currently represents ARC on the board of KANATA Energy Group Ltd. Mr. Brown joined ARC when it was founded in 1989 and has accumulated over 30 years of energy related finance, investment research, corporate strategy and direct investment experience. Mr. Brown holds a Master of Economics and a Bachelor of Science in Chemical Engineering from the University of Alberta.

Pat Carlson - Director

• Mr. Carlson is the CEO of KRC. Prior to this role Mr. Carlson was the founding CEO and Director of Seven Generations Energy Ltd. a company that he led through its IPO in 2014. Prior to that Mr. Carlson was the founding CEO and Director of North American Oil Sands Corporation. Mr. Carlson holds a BSc in Chemical Engineering from the University of Calgary (1975). Mr. Carlson is a Professional Engineer and he has recently been appointed to the executive of the Calgary branch of the Institute of Corporate Directors.

Restructure Information / Shares:

• All previously outstanding common shares, warrants and options of the Company were cancelled and extinguished for no consideration and without any return of capital

• In exchange for an approximately $22.9 million investment, the Company issued (i) 1,522,181 Class A Common Shares in the capital of the Company to Kiwetinohk Resources Corp., representing 25% of the issued and outstanding New Shares (on a non-diluted basis), plus (ii) purchase warrants that are exercisable into such number of New Shares as will result in KRC holding 50%+1 of the issued and outstanding New Shares for payment of an aggregate exercise price equal to approximately $37.5 million

• In exchange for an $8.75 million investment, the Company issued an aggregate of 583,332 New Shares, representing approximately 9.6% of the issued and outstanding New Shares, to Luminus Energy IE Designated Activity Company, Concise Capital Management, LP and Stornoway Portfolio Management, Inc. directly and/or through their managed funds

• The Company issued an aggregate of 3,983,211 New Shares to secured creditors in settlement of amounts owing to them

• Second lien beneficial noteholders holding $897,000 face value of second lien notes received an aggregate of $224,250 of cash payments pursuant to valid Second Lien Opt-Out Elections (as such term is defined in the Plan)

• General unsecured creditors of the Company and its subsidiaries with accepted claims less than or equal to $5,000, and other General Unsecured Creditors who validly made elections to be treated as Convenience Class Creditors, were paid in full up to $5,000

• All other General Unsecured Creditors, including second lien beneficial noteholders in respect of a deficiency claim in the aggregate amount of approximately $86.7 million, became entitled to payment in respect of their accepted claims based on their pro rata share of a General Unsecured Creditor cash pool in the amount of $3 million, less amounts required to fund payments to Convenience Class Creditors

• Delphi granted to certain officers of the Company options and restricted share units entitling them to earn in the aggregate 10% of the issued and outstanding New Shares (on a non-diluted basis). Other than Options and restricted share units and the New Warrants discussed above, there are no other convertible securities of the Company pursuant to which New Shares may be issued.