Pengrowth/WEF -- summary under Canadian Buyco

Overview

Pengrowth owes over $0.7B to secured debtholders. A private purchaser (the “Purchaser”) has agreed, under an Alberta Plan of Arrangement, to pay off the secured debt and to acquire all the Pengrowth common shares for $0.05 per share ($28 million in aggregate).

The Circular discloses an agreement of Pengrowth with the purchaser that, in the event that the Plan of Arrangement does not proceed, they would seek to finalize an alternative proceeding (likely under the CCAA) which would proceed on similar terms, but under which “Shareholders may receive the nominal value of $0.001 per Share.”

Initial steps in the proposed Plan of Arrangement entail first the settling by Pengrowth of a litigation trust by assigning its claim in an action in the Court of Queen’s Bench of Alberta together with a contribution of funds (and a commitment to potentially provide further funds) for the costs of the action, and then a dividend in kind by it of the interests in that litigation trust to its shareholders. The Circular does not disclose how that dividend will be valued regarding T3 information reporting. Although unclear, withholding tax on the dividend may be funded out of sale proceeds otherwise payable to a non-resident shareholder for their shares.