Surge Energy Inc. announced that, as a result of excess demand, it has agreed with the syndicate of underwriters, led by Cormark Securities Inc. and National Bank Financial Inc. (collectively, the “Underwriters“), to increase the size of its previously announced bought deal public offering of flow-through common shares. The Company will now issue 33,900,000 common shares (the “Flow-Through Shares“) of Surge, to be issued as “flow-through shares” with respect to “Canadian development expenses” within the meaning of the Income Tax Act (Canada) and the regulations thereunder in force as of the date hereof (the “Tax Act“) at a price (the “Offering Price“) of $0.59 per Flow-Through Share, for gross proceeds to the Company of approximately $20,001,000 (the “Offering“).
Surge has granted to the Underwriters an option to purchase additional Flow-Through Shares, equal to 15% of the number of Flow-Through Shares sold pursuant to the Offering at the Offering Price, for market stabilization purposes and to cover over-allotments for a period expiring 30 days after the date of closing.
Surge will use proceeds from the Offering to incur eligible “Canadian development expenditures” within the meaning of the Tax Act in an aggregate amount of not less than the gross proceeds raised from the Offering and will renounce qualifying expenditures to purchasers of the Flow-Through Shares on or before December 31, 2021. The proceeds from the Offering will fund an expanded 2H/21 capital program, focused in the Company’s Sparky core area.
The Flow-Through Shares will be offered by way of short form prospectus in each of the provinces of Canada, other than for Québec, pursuant to National Instrument 44-101 – Short Form Prospectus Distributions and some may be resold in the United States pursuant to an exemption from the registration requirements of the United States Securities Act of 1933, as amended (the “U.S. Securities Act“) and in such other jurisdictions outside of Canada and the United States as agreed to by the Company, in each case in accordance with all applicable laws and provided that no prospectus, registration statement or similar document is required to be filed in such jurisdiction.
