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Second Wave Petroleum receives offer from Brookfield to take company private

05/06/2013 09:40 EDT | Updated 07/06/2013 05:12 EDT
CALGARY - Second Wave Petroleum Inc. (TSX:SCS) has received a proposal from its controlling shareholder, Brookfield Bridge Lending Fund Inc., to take the Western Canada-focused oil and gas producer private.

Brookfield has offered 30 cents per share, a significant premium over the 13 cents per share closing trading price Friday on the Toronto Stock Exchange, the company said Monday.

A special committee of independent Second Wave directors has retained a financial adviser to help evaluate the going private proposal.

Second Wave also said it has entered into an agreement with Brookfield to issue $17.5-million secured convertible debentures to meet immediate capital requirements.

The proceeds will be used to repay $5 million to its senior lender, about $10.4 million of overdue payables and provide $2.2 million for near-term working capital.

A $15-million secured loan from Brookfield is due June 14, but the company has agreed to give Second Wave more time to pay, with no fees payable.

The debenture will have a three-year term to maturity and carry an interest rate of 7.5 per cent annually, calculated daily.

The principal amount will be convertible at Brookfield's option into common shares at a conversion price of 25 cents per share.

Brookfield has nearly 40 million shares, or 47.5 per cent stake in the company. It can acquire an additional 70 million shares and control 71.3 per cent if the debenture is converted to Second Wave newly issued shares.

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