RE:When to add hedgesMoon2 nice to see someone else gets it. Blah, blah, blah being unhedged, buybacks etc. the ride up has been spectacular as it has for most oil and gas mid-size plus companies, but in BIR's case there's some cleaning up to do and that decision may have to come sooner than some here believe.
Here's the original BIR preferred C offering, really not pretty once someone digests it fully it is what will hold BIR back in value appreciation long term once the commodity ride is over if not dealt with.
It's not pretty once the gravity is realized never mind addressing the preferred B shares problem in addition, same conversion I believe as the C share offering below.
7-8% strip coupons may be optimistically generous now closer to 10% I believe may be the reality. (Should have bought some of these puppies instead of investing in common shares, but who knew lol)
IMO many analysts secretly believe until these preferred shares get cleaned up (potentially 50 million common shares added upon potential conversion in play), Birchcliff may soon no longer be viewed as a desired long term hold rather once the current commodity ride is over, buying and selling (my preferred action on opportunites now that the stock is north of $9 hopefully on its way to $13) may end up the better way to go. In any case for now its all hugs and kisses, knowing when the love-in is over if nothing changes will be the profit realization challenge, cheers.
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Deadline for Client Instructions: May 28, 2020 11:59 AM Toronto time Issue Expiry Date: May 29, 2020 05:00 PM Eastern Standard time
Instructions: Should be given to your account representative by telephone.
Holders are advised to read the “Important Information” section of this notice prior to selecting an option(s).
TERMS:
The cumulative redeemable preferred shares, Series C (the “Series C Preferred Shares”) of Birchcliff Energy Ltd.
(the “Corporation”) are redeemable by the holders (each, a “Holder”) on and after June 30, 2020.
The corporation currently has no intention to exercise its option to redeem the Series C Preferred Shares, but rather,
to leave such shares outstanding and continue paying a quarterly cash dividend of $0.4375 CAD per share. The
corporation has been paying a quarterly cash dividend on the Series C Preferred Shares since 2013.
The Series C Preferred Shares do not have a fixed maturity date. Any Series C Preferred Shares that are not
submitted by Holders for redemption as described herein will continue to remain outstanding unless and until such
shares are either redeemed (by the Corporation or the Holder) or converted into common shares of the Corporation
(“Common Shares”) at the option of the Corporation, in each case, in accordance with the provisions attached to the
Series C Preferred Shares, as contained in the Corporation’s articles (the “Provisions”).
Holders have the option of:
Option 1: Redemption – Submit a Notice of Redemption to the Corporation. The Corporation has the
option to:
(a) redeem the Series C Preferred Shares and pay to the Holder the Holder’s Redemption Price. See
“Redemption by the Holders”, or
(b) elect to convert any Series C Preferred Shares into Common Shares (090697103) (BIR (TSX) / BIREF
(OTC)) using a conversion price equal to the greater of $2.00 CAD and 95% percent of the “Current Market
Price” of the Common Shares. This means that a Holder’s Series C Preferred Shares may be converted into
Common Shares based on a conversion price of $2.00 CAD, even though the Common Shares may trade
below this price from time to time. For example, if 95% percent of the Current Market Price is less than
$2.00 CAD, a Holder of 1,000 Series C Preferred Shares would receive 12,500 Common Shares on the
applicable conversion date. As at May 1, 2020, the closing price of the Common Shares on the Toronto
Stock Exchange was $1.49 CAD. See “Conversion Election of the Corporation”.
Whether the Corporation elects to convert any Series C Preferred Shares into Common Shares on receipt of a
Notice of Redemption is dependent on the trading price of the Common Shares, the amount of Series C
Preferred Shares to be redeemed, the Corporation’s available funds and liquidity, and other factors
considered relevant by the Corporation."