New Issue: BIR 7.00% 7-Year Retractible

Birchcliff Energy has announced:

that in connection with its previously announced marketed offering of cumulative redeemable preferred shares, Series C (“Preferred Shares, Series C”), it has entered into an underwriting agreement with a syndicate of underwriters and has filed an amended and restated preliminary short form prospectus (the “Amended Preliminary Prospectus”), which amends and restates the Corporation’s preliminary short form prospectus dated May 28, 2013 (the “Preliminary Prospectus”).

The underwriting agreement provides for the sale of 2,000,000 Preferred Shares, Series C, with a 7% yield, at a price of $25.00 per Preferred Share, Series C, for gross proceeds of $50,000,000 (the “Offering”). Holders of the Preferred Shares, Series C will be entitled to receive, as and when declared by the Board of Directors, cumulative annual dividends of $1.75 per Preferred Share, Series C, payable quarterly. The Preferred Shares, Series C will not be redeemable by the Corporation prior to June 30, 2018 and will not be redeemable by the holders of the Preferred Shares, Series C prior to June 30, 2020, in accordance with their terms.

The Amended Preliminary Prospectus reflects the updated terms of the Offering and was filed by the Corporation on May 30, 2013 in all provinces of Canada, except Quebec. The Amended Preliminary Prospectus will be available on Birchcliff’s website at www.birchcliffenergy.com and on SEDAR at www.sedar.com.

The Offering is being conducted through a syndicate of underwriters co-led by National Bank Financial Inc., Cormark Securities Inc. and GMP Securities L.P., on their own behalf and on behalf of CIBC World Markets Inc., RBC Dominion Securities Inc., Scotia Capital Inc., HSBC Securities (Canada) Inc., Macquarie Capital Markets Canada Ltd., Peters & Co. Limited, Stifel Nicolaus Canada Inc. and Integral Wealth Securities Limited (collectively, the “Underwriters”).

Net proceeds of the Offering will be used to initially reduce indebtedness under the Corporation’s revolving credit facilities, which will be subsequently redrawn and applied as needed to fund the Corporation’s ongoing exploration and development programs and for general working capital purposes.

The Offering is scheduled to close on or about June 14, 2013 and is subject to certain conditions including, but not limited to, completion of a satisfactory due diligence investigation by the Underwriters and the receipt of all necessary third party and regulatory approvals, including the approval of the Toronto Stock Exchange.

According to the prospectus:

The Preferred Shares, Series C will not be redeemable by the Corporation prior to June 30, 2018. On and after June 30, 2018, the Corporation may, at its option, upon not less than 30 days and not more than 60 days prior written notice, redeem for cash, all or any number of the outstanding Preferred Shares, Series C at $25.75 per share if redeemed before June 30, 2019, at $25.50 per share if redeemed on or after June 30, 2019 but before June 30, 2020 and at $25.00 per share if redeemed on or after June 30, 2020 (each, a “Redemption Price”), in each case together with all accrued and unpaid dividends (less any tax required to be deducted or withheld by Birchcliff) to but excluding the date fixed for redemption. See “Details of the Offering”.

The Preferred Shares, Series C will not be redeemable by the holders thereof prior to June 30, 2020. On and after June 30, 2020, a holder of Preferred Shares, Series C may, at its option, upon not less than 30 days prior written notice to the Corporation (the “Notice of Redemption”), redeem for cash, all or any number of Preferred Shares, Series C held by such holder on the last day of March, June, September and December of each year at $25.00 per share (being the then applicable Redemption Price), together with all accrued and unpaid dividends (less any tax required to be deducted or withheld by Birchcliff) to but excluding the date fixed for redemption. Upon receipt of the Notice of Redemption, the Corporation may, at its option (subject, if required, to stock exchange approval), upon not less than 20 days prior written notice, elect to convert such Preferred Shares, Series C into common shares (“Common Shares”) of the Corporation. The number of Common Shares into which each Preferred Share, Series C may be so converted will be determined by dividing the amount of $25.00 (being the then applicable Redemption Price) together with all accrued and unpaid dividends to but excluding the date fixed for conversion, by the greater of $2.00 and 95% of the weighted average trading price of the Common Shares on the Toronto Stock Exchange (the “TSX”) for a period of 20 consecutive trading days ending on the fourth day prior to the date specified for conversion, or, if that fourth day is not a trading day, on the immediately preceding trading day (the “Current Market Price”). See “Details of the Offering”.

On and after June 30, 2018, the Corporation may, at its option (subject, if required, to stock exchange approval), upon not less than 30 and not more than 60 days prior written notice, convert all or any number of the outstanding Preferred Shares, Series C into Common Shares. The number of Common Shares into which each Preferred Share, Series C may be so converted will be determined by dividing the then applicable Redemption Price, together with all accrued and unpaid dividends to but excluding the date fixed for conversion, by the greater of $2.00 and 95% of the Current Market Price. See “Details of the Offering”.

Also in the prospectus is:

The Preferred Shares, Series C and the Common Shares are not rated by any credit rating agency.

As there is no rating, the issue will not be tracked by HIMIPref™. As has been previously explained, this is not because I worship the rating agencies, but because a credit rating is a newsworthy item; downgrades will attract public attention which may serve to focus the directors’ attention on improving the situation in bad times.

Update, 2014-4-19: Trades as BIR.PR.C

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