Hammerhead Energy Inc. (HHRS) Announces Results for Warrant Redemption Offer
by Marlena Haddad on 2023-06-05 at 9:42am

Hammerhead Energy Inc. (NASDAQ: HHRS), which combined with Decarbonization Plus IV, has announced the results of its substantial issuer bid that expired at 5:00 p.m. ET on June 2.

Under the bid, HEI offered to purchase for cancellation up to 20 million of its warrants, representing approximately 70% of its total number of issued and outstanding warrants, to purchase Class A common shares at a purchase price of $1.00 per warrant.

The final results showed a total of 12,852,235 warrants were properly tendered. Hammerhead has directed the depositary to take up all of the warrants at the purchase price for $12,852,235 and approximately 45% of the total number of its issued and outstanding warrants when the offer commenced on April 27.

Immediately following the purchase and cancellation of these warrants, Hammerhead anticipates that 15,697,756 warrants, 91,049,197 common shares, 5,080,060 legacy restricted share units, 650,495 legacy options, and 1,945,115 restricted share awards will be issued and outstanding.

As for the remaining warrants, they may be redeemed at a price of $0.10 per warrant, upon at least 30 days prior written notice, if, among other things, the last reported sales price of the common shares equals or exceeds $10 on the trading day prior to the date on which the notice of redemption is given.  In this case, warrantholders will be able to exercise their warrants prior to the date of redemption for the number of common shares determined in accordance with the agreement.

But, at this time, the warrants are not redeemable and Hammerhead has not issued a notice of redemption.

R5, an affiliate of Hammerhead’s principal shareholder, Riverstone Global Energy and Power Fund V, and certain of its direct and indirect wholly-owned subsidiaries tendered 12,737,500 Warrants pursuant to the offer, generating total gross proceeds of $12,737,500.  Prior to the commencement of the offer, R5 owned 12,737,500 warrants, which represented 44.6% of the warrants that were issued and outstanding. Immediately following the take-up and payment of the warrants, R5 will not own any warrants.

Immediately before the commencement of the offer, R5 owned 17,085,937 common shares, representing approximately 16.5% of the common shares issued and outstanding on a partially-diluted basis. But, following the offer, R5 will own just 4,348,437 common shares, which represents approximately 4.8% of the common shares issued and outstanding.

In regards to the Riverstone Fund V Entities, they will collectively own or control 78,197,457 common shares following the offer, representing 86% of the common shares issued and outstanding.

Decarbonization Plus IV initially announced its $1 billion deal with Hammerhead Resources in September 2022 and completed it in February 2023. The Calgary, Canada-based company produces natural gas and oil from the Montney basin.

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