Gear Energy calls C$12.7 million 7% convertibles due 2023

By Taylor Fox

New York, March 16 – Gear Energy Ltd. plans to redeem its C$12.7 million outstanding 7% convertible subordinated debentures due Nov. 30, 2023, according to a news release.

The convertibles will be redeemed April 26 at pr plus interest.

The company said it will pay all of the principal amount of the debentures to be redeemed by issuing the holders a number of common shares of the company equal to the principal amount divided by 95% of the current market price of the common shares on the redemption date.

Prior to the redemption, holders will have the right to convert their debentures into common shares at a conversion price of C$0.32 per share at any time on or prior to April 23. A holder electing to convert the debentures will receive 3,125 common shares for each C$1,000 principal amount of debentures converted plus a cash payment for accrued interest up to, but excluding, the conversion date.

The redemption will enhance Gear’s balance sheet, granting the company the option to consider future acquisitions or development capital expansions to take advantage of its inventory of drilling and waterflood opportunities.

The redemption is anticipated to save the company annualized interest costs of roughly C$900,000.

The redemption is anticipated to improve forecasted 2021 exit net debt from C$21 million to C$8 million, giving Gear a 2021 ratio of net debt to funds from operations of 0.2 times.

Calgary, Alta.-based Gear Energy is a heavy oil focused publicly traded exploration and production company.

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