/NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICE/

CALGARY, May 7, 2019 /CNW/ - (TSX:PMT) – Perpetual Energy Inc. ("Perpetual" or the "Company") is pleased to announce the early redemption of all of the $14.6 million aggregate principal amount of 8.75% senior notes maturing July 23, 2019 (the "2019 Senior Notes") effective June 11, 2019 (the "Redemption Date").

The redemption amount will be either: CDN $1,000 for each $1,000 principal amount of 2019 Senior Notes (the "Cash Consideration"); or, at the election of an eligible holder and subject to the limitations described in the notice, $1,075 principal amount of 8.75% senior notes due January 23, 2022 (the "2022 Senior Notes") for each $1,000 principal amount of 2019 Senior Notes (the "2022 Senior Notes Consideration"). In each case, cash in the amount of $33.32 per $1,000 principal amount of 2019 Senior Notes, representing all accrued and unpaid interest, will be paid to 2019 Senior Notes holders at the Redemption Date. All interest on the principal amount of 2019 Senior Notes shall cease to accrue and be payable from and after the Redemption Date.

Holders of 2019 Senior Notes who make an irrevocable election to receive the 2022 Senior Notes Consideration in lieu of receiving the Cash Consideration on the Redemption Date, will exchange all or a portion of their 2019 Senior Notes for 2022 Senior Notes at a 7.5% redemption premium to face value. The election in respect of all or a portion of the redemption must be made two business days prior to the Redemption Date, on or prior to June 6, 2019.  All interest on the principal amount of 2022 Senior Notes issued pursuant to the 2022 Senior Notes Consideration will be at a rate of 8.75% per annum, calculated and payable semi-annually in arrears after giving effect to the 7.5% redemption premium and accrues from the Redemption Date. The 2022 Senior Notes will contain the same terms as the existing 8.75% senior notes due January 23, 2022.

The Company's President and Chief Executive Officer (the "Backstopper") has unconditionally committed to fully fund all of the Cash Consideration by advancing all, or a portion of any, of the Cash Consideration as determined by the Corporation to holders electing to receive the Cash Consideration in consideration for the deemed transfer by such holders to the Backstopper of an aggregate principal amount of 2019 Senior Notes that is equal to the aggregate Cash Consideration advanced by the Backstopper. Furthermore, the Backstopper will irrevocably elect to receive the 2022 Senior Notes Consideration in exchange for the 2019 Senior Notes obtained by funding any Cash Consideration and all other 2019 Senior Notes that may be beneficially owned, or controlled or directed, directly or indirectly, by the Backstopper as of the Redemption Date. As a result, the early redemption of $14.6 million 2019 Senior Notes will be funded by Perpetual through the issuance of $15.7 million 2022 Senior Notes. There are presently $17.9 million aggregate principal amount of 2022 Senior Notes outstanding. There will be $33.6 million aggregate principal amount of 2022 Senior Notes after giving effect to this early redemption.

No backstop fee or any other fee will be payable to the Backstopper by Perpetual in connection with this early redemption and, for greater certainty, other than as described above, the Backstopper will be treated identically to, and have the same rights and benefits as, the other holders of 2019 Senior Notes on a per security basis. In considering and approving this early redemption and the effective backstop of the Cash Consideration, the Board of Directors of the Corporation noted that, under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101"), this early redemption and, in particular, the ability of the Backstopper to receive the 7.5% redemption premium in connection with the 2022 Senior Notes Consideration, may be considered "related party transactions" insofar as the Backstopper is, by reasons of either position or shareholdings in the Corporation, a related party of the Corporation. Under MI 61-101, related party transactions are, with certain limited exceptions, subject to formal valuation and minority approval requirements unless exemptions from those requirements are available. In any event, the Board of Directors concluded that the ability of the Backstopper to receive the 7.5% redemption premium in connection with this early redemption is exempt from the formal valuation and minority approval requirements of MI 61-101, based on a good faith determination by the Board of Directors that this entitlement will not exceed 25% of the Corporation's market capitalization as of the date hereof.

The 2022 Senior Notes have not been and will not be registered under the United States Securities Act of 1933, as amended, or the securities laws of any state of the United States, and may not be offered or sold in the United States of America or any of its territories or possessions or to U.S. Persons (as defined in Regulation S under the United States Securities Act of 1933, as amended). The redemption of 2019 Senior Notes does not constitute an offer to sell or a solicitation of an offer to buy any of these securities within the United States of America or any of its territories or possessions.

ADDITIONAL INFORMATION

About Perpetual

Perpetual is an oil and natural gas exploration, production and marketing company headquartered in Calgary, Alberta. Perpetual operates a diversified asset portfolio, including liquids-rich natural gas assets in the deep basin of west central Alberta, heavy oil and shallow natural gas in eastern Alberta, with longer term opportunities through undeveloped oil sands leases in northern Alberta. Additional information on Perpetual can be accessed at www.sedar.com or from the Corporation's website at www.perpetualenergyinc.com.

The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.

Forward-Looking Information

Certain information regarding Perpetual in this news release including management's assessment of future plans and operations may constitute forward-looking information or statements under applicable securities laws. The forward looking information includes, without limitation, the timing, terms, structure, related party nature and benefits of the early redemption and refinancing of the 2019 Senior Notes. Various assumptions were used in drawing the conclusions or making the forecasts and projections contained in the forward-looking information contained in this news release, which assumptions are based on management's analysis of historical trends, experience, current conditions and expected future developments pertaining to Perpetual and the industry in which it operates as well as certain assumptions regarding the matters outlined above including the ability of the Backstopper to fund all of the Cash Consideration and the potential related party impact of the redemption. Forward-looking information is based on current expectations, estimates and projections that involve a number of risks, which could cause actual results to vary and in some instances to differ materially from those anticipated by Perpetual and described in the forward-looking information contained in this news release. Undue reliance should not be placed on forward-looking information, which is not a guarantee of performance and is subject to a number of risks or uncertainties, including without limitation those described under "Risk Factors" in Perpetual's Annual Information Form and MD&A for the year ended December 31, 2018 and those included in other reports on file with Canadian securities regulatory authorities which may be accessed through the SEDAR website (www.sedar.com) and at Perpetual's website (www.perpetualenergyinc.com). Readers are cautioned that the foregoing list of risk factors is not exhaustive. Forward-looking information is based on the estimates and opinions of Perpetual's management at the time the information is released, and Perpetual disclaims any intent or obligation to update publicly any such forward-looking information, whether as a result of new information, future events or otherwise, other than as expressly required by applicable securities law.

SOURCE Perpetual Energy Inc.

View original content: http://www.newswire.ca/en/releases/archive/May2019/07/c5125.html