CALGARY, ALBERTA--(Marketwired - July 28, 2016) - Lightstream Resources Ltd. (the "Company" or
"Lightstream") (TSX:LTS) is pleased to announce that, further to our previously announced proposed recapitalization transaction
aimed at significantly reducing the Company's debt and annual interest expense, the Company has entered into a definitive
arrangement agreement (the "Arrangement Agreement") with our wholly owned subsidiary to implement a plan of arrangement (the
"Arrangement") under the Canada Business Corporations Act (the "CBCA").
The Arrangement will involve a number of steps to implement a revised capital structure for the Company that will
generally result in the following:
- the existing Common Shares of the Company will be consolidated and exchanged such that the existing holders of Common
Shares (the "Shareholders") will hold an aggregate of approximately 2,250,000 new Common Shares of the Company (representing
approximately 2.25% of the post-Arrangement issued and outstanding new Common Shares or a consolidation of approximately 88
existing Common Shares for one new Common Share) plus a total of approximately 7,750,000 Series 2 warrants to purchase new
Common Shares, each distributed pro rata among the Shareholders. The Series 2 warrants will be exercisable for a period of five
years following the effective date of the Arrangement and have a sliding scale exercise price between $12.88 and $14.96 per new
Common Share
- the Company's 9.875% second lien secured notes due June 15, 2019 (the "Secured Notes") will be converted or exchanged into
an aggregate of approximately 95,000,000 new Common Shares (representing approximately 95% of the post-Arrangement issued and
outstanding Common Shares), distributed pro rata among the holders of Secured Notes (the "Secured Noteholders")
- the Company's 8.625% unsecured notes due February 1, 2020 (the "Unsecured Notes" and, together with the Secured Notes, the
"Notes") will be exchanged into an aggregate of approximately 2,750,000 new Common Shares of the Company (representing
approximately 2.75% of the post-Arrangement issued and outstanding new Common Shares) plus a total of approximately 5,000,000
Series 1 warrants to purchase new Common Shares, each distributed pro rata among the holders of Unsecured Notes (the "Unsecured
Noteholders"). The Series 1 warrants will be exercisable for a period of five years following the effective date of the
Arrangement and have a sliding scale exercise price between $10.25 and $11.77 per new Common Share
- the Company will receive additional cash proceeds of approximately US$38.5 million from an offering of US$39.3 million
aggregate principal amount (issued with an original cash issue discount of 2%) of new 12% second lien secured notes of
Lightstream due 2020 (the "New Secured Notes Offering"). All eligible Secured Noteholders as at a record date to be announced
will be entitled to participate in the New Secured Notes Offering and subscribe for their pro rata share of the new second lien
secured notes. The New Secured Notes Offering will be fully backstopped by certain existing Secured Noteholders
In connection with the completion of the Arrangement, Lightstream continues to work towards entering into a new $400 million
revolving credit facility concurrently with the completion of the Arrangement, which will be used to repay the indebtedness under
Lightstream's existing credit facility and to provide working capital and finance permitted acquisitions after completion of the
Arrangement. Lightstream is currently in advanced discussions with proposed lenders to obtain a commitment letter in respect
of the new credit facility. It is a condition to the completion of the Arrangement that a new credit facility be obtained to
replace the existing revolving credit facility.
The terms of the Arrangement Agreement and Arrangement have been unanimously approved by the Board of Directors of
Lightstream ("Board"). The Board unanimously recommends that all Shareholders, Secured Noteholders and Unsecured Noteholders
support and vote in favour of the Arrangement.
Further to the preliminary interim order received from the Court of Queen's Bench of Alberta (the "Court")
initiating proceedings under the CBCA and announced by the Company on July 13, 2016, we will be seeking a further interim order
(the "Interim Order") from the Court on August 5, 2016 authorizing the Company to call, hold and conduct the required special
meetings of the Secured Noteholders, the Unsecured Noteholders and the Shareholders to consider and vote on the
Arrangement. Subject to the Interim Order, to be effective, the Arrangement must be approved by, among other things, 66 2/3%
of the votes cast by Shareholders, Secured Noteholders and Unsecured Noteholders, voting as separate classes, who vote in respect
of the Arrangement at separate meetings of such securityholders anticipated to be held on September 13, 2016. An information
circular regarding the Arrangement is expected to be mailed to the Shareholders, Secured Noteholders and Unsecured Noteholders in
mid-August. Closing of the transaction is anticipated to occur on or about September 30, 2016, and will be subject to
receipt of the above-described securityholder approvals plus all required Court and regulatory approvals and subject to obtaining
the new revolving credit facility to replace our existing credit facility, as described above, among other conditions.
As a preliminary step to the Arrangement, Lightstream will continue our jurisdiction of incorporation from Alberta
to Canada under the CBCA, which will require the approval of 66 2/3% of the votes cast by Shareholders who vote in respect of the
continuance at the Shareholder meeting.
As previously announced, the members of the Ad Hoc Committee of Secured Noteholders holding approximately 91.5% of
the Secured Notes have entered into a support agreement in respect of the recapitalization and have agreed to vote their Secured
Notes in favour of the Arrangement. In addition, each of the directors and officers of the Company, holding on a combined basis,
approximately 5.1% of the Common Shares, have executed a support agreement and agreed to vote their Common Shares and Unsecured
Notes in favour of the Arrangement.
RBC Dominion Securities Inc. ("RBC"), a member company of RBC Capital Markets, the financial advisor to the Board,
has provided an opinion to the Board that, as of July 27, 2016 and subject to the scope of review, assumptions and limitations
set forth in its opinion, the recapitalization is fair, from a financial point of view, to the Company. RBC has also
provided an opinion to the Board that as of July 27, 2016 and subject to the scope of review, assumptions and limitations set
forth in its opinion, the Secured Noteholders, Unsecured Noteholders and Shareholders would each be in a better position, from a
financial point of view, under the recapitalization than if the Company were liquidated.
As previously announced, the Company has entered into a forbearance agreement with The Toronto-Dominion Bank, as
Administrative Agent, and other lenders under the Company's revolving credit facility. Under the terms of the forbearance
agreement, among other things, the lenders agreed, subject to customary conditions, to forbear from exercising their enforcement
rights and remedies arising on account of existing defaults under the revolving credit facility until July 28, 2016, including in
respect of the Company's hedging liabilities. On July 27, 2016, the lenders agreed to extend their forbearance from
exercising their rights and remedies described above until 2:00 p.m. (Calgary time) on August 5, 2016. Subject to its
obtaining satisfactory commitments to provide the new revolving credit facility, the Company anticipates entering into a second
forbearance agreement with the lenders prior to August 5, 2016 to extend the forbearance through the anticipated completion of
the Arrangement and implementation of the new revolving credit facility.
As previously announced, in the event that the requisite approvals in respect of the Arrangement are not obtained
or the Company is otherwise unable to complete the Arrangement, the Company has agreed to undertake a sale transaction that will
be implemented through proceedings commenced under the Companies' Creditors Arrangement Act, further details of which
are set forth in our July 12, 2016 press release.
This press release provides only summary information in respect of the proposed Arrangement, including
only summary information relating to the terms of the Arrangement Agreement. Readers are urged to consult the full text of
the Arrangement Agreement for further important information. A copy of this document will be filed under the Company's profile on
SEDAR at www.sedar.com and posted on the Company's website at www.lightstreamresources.com.
Lightstream Resources Ltd. is an oil and gas exploration and production company focused
on light oil in the Bakken and Cardium resource plays. We are committed to delivering industry leading operating netbacks,
strong cash flows and consistent operating results through leading edge technology applied to a multi-year inventory of existing
and emerging resource play opportunities. Our long-term strategy is to efficiently develop our assets and deliver an
attractive dividend yield.
Forward Looking Information. Certain information provided in this press release
constitutes forward-looking information (within the meaning of applicable Canadian securities laws). Specifically, this press
release contains forward-looking information in respect of the Company's proposed recapitalization including the Arrangement and
the matters related thereto, including the anticipated timing of certain events, the Company being able to receive all required
Court and regulatory approvals to consummate the Arrangement, the ability of the Company to obtain the required level of
Shareholder, Secured Noteholder and Unsecured Noteholder approval for the Arrangement, the ability of the parties to satisfy the
other conditions to the Arrangement, the execution of a second forbearance agreement with its lenders, and the ability to enter
into binding commitment letters for the new credit facility of the Company, and the size thereof. The forward-looking statements
are based on information currently available as well as certain expectations and assumptions. Although Lightstream believes that
the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be
placed on the forward-looking statements because Lightstream can give no assurance that they will prove to be correct. Since
forward-looking statements address future events and conditions, by their very nature they involve inherent risks and
uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks,
which risks include, without limitation that the Company may not be able to complete the recapitalization, including the
Arrangement, on the timeline or on the terms currently contemplated or at all, the recapitalization may have an effect on the
Company other than what is currently anticipated, the pursuit of the recapitalization, Arrangement and related activities may
divert management time and attention away from other business matters, and that the Company's business is exposed to commodity
price and exchange rate fluctuations and changes in the general conditions in the oil and gas industry and in general economic
conditions. In addition, the Company is exposed to each of the risks set forth in the AIF which has been filed on SEDAR and can
be accessed at www.sedar.com. Except as may be required by applicable
securities laws, Lightstream assumes no obligation to publicly update or revise any forward-looking information provided herein
or otherwise, whether as a result of new information, future events or otherwise.