Southern Energy Announces Amended Terms of Previously Announced Financings

2025-03-25

TSXV - TSX Venture Exchange · Natural Gas · Natural Gas Liquids · Oil · Canada

THIS ANNOUNCEMENT (THE "ANNOUNCEMENT"), INCLUDING THE APPENDIX TO THIS ANNOUNCEMENT (THE "APPENDIX"), AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES (ITS TERRITORIES OR POSSESSIONS), AUSTRALIA, JAPAN, NEW ZEALAND, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT, INCLUDING THE APPENDIX, IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE: (A) A PROSPECTUS OR OFFERING MEMORANDUM; (B) AN ADMISSION DOCUMENT PREPARED IN ACCORDANCE WITH THE AIM RULES; OR (C) AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY. THIS ANNOUNCEMENT AND THE APPENDIX DOES NOT CONSTITUTE OR CONTAIN, AND SHOULD NOT BE CONSTRUED AS, ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES OF SOUTHERN ENERGY CORP. IN ANY JURISDICTION IN WHICH ANY SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY THE COMPANY TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION (REGULATION 596/2014/EU) AS IT FORMS PART OF UK DOMESTIC LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED. UPON PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

CALGARY, AB / ACCESS Newswire/ March 25, 2025 / Southern Energy Corp. ("Southern"or the "Company") (TSXV:SOU)(AIM:SOUC) announces that it has agreed to amend the terms of its previously announced equity fundraise to raise aggregate gross proceeds of approximately US$6.0 million (approximately £4.8 million / C$8.5 million) of units of the Company ("Units"), as follows: (i) to reduce the price from 4.3 pence to 3.8 pence (the "Placing Price") or from C$0.08 to C$0.07 per Unit (the "Prospectus Price"); (ii) to increase the amount of Warrants per Unit from one half of one Common Share purchase Warrant to one whole Warrant per Unit; and (iii) to reduce the exercise price of such Warrants from 5.3 pence to 4.8 pence (in the case of the Placing) or from C$0.10 to C$0.09 per Common Share (in the case of the Prospectus Offering).

The remainder of the terms of the fundraising, which consists of a placing of new Units to new and existing institutional investors on AIM (the "Placing") and a concurrent public offering of new Units in Canada (the "Prospectus Offering" and, together with the Placing, the "Fundraising"), will continue without further amendment, other than the revision to the expected timetable for the Fundraising, as further detailed below.

Research Capital Corporation ("RCC") is acting as sole agent and sole bookrunner (the "Agent") in connection with the Prospectus Offering. Tennyson Securities, a trading name of Shard Capital Partners LLP ("Tennyson Securities") and Hannam & Partners, a trading name of H&P Advisory Limited ("H&P") are acting as joint bookrunners (the "Joint Bookrunners") in connection with the Placing.

Overview of the Fundraising

Southern intends to conduct an approximate US$6.0 million equity fundraise to accelerate the completion of its three drilled and uncompleted ("DUC") wells, drilled as part of its Q1 2023 drilling campaign on its Gwinville acreage, as well as fully funding (alongside cashflow) the drilling of two vertical Cotton Valley wells on its Mechanicsburg acreage;

The net proceeds from the Fundraising are expected to fully fund, alongside existing cash, cash flows and undrawn debt facilities, the completion of the Gwinville DUCs at a cost of approximately US$2.5 million per well and the drilling of the Mechanicsburg wells at a cost of approximately US$3.5 million;

The Company is seeking the approval of the holders of its outstanding convertible unsecured subordinated debentures (the "Debentures"), by way of obtaining extraordinary resolutions of greater than 66.67% of the aggregate principal amount of the Debentures, to amend the terms of the indenture governing the Debentures such that, subject to and concurrent with the completion of the Fundraising, an amount equal to 102.5% of the principal amount outstanding under the Debentures plus all accrued and unpaid interest as of the closing date would convert into Units at the revised Prospectus Price (the "Debenture Amendment"). The completion of the Debenture Amendment and the issuance of the Units upon the conversion of the Debentures remain subject to acceptance of the TSXV. The Units to be issued pursuant to the Debenture Amendment will be subject to customary lock up provisions.

Summary on Fundraising

A Placing of new Units (the "Placing Units") to new and existing institutional investors at the Placing Price. The Placing will be conducted through an accelerated bookbuild process (the "Bookbuild") which will launch immediately following the release of this Announcement. The Placing is subject to the terms and conditions set out in the Appendix to this Announcement (which forms part of this announcement);

A concurrent Prospectus Offering of new Units (the "Prospectus Units") on a best efforts agency basis at the Prospectus Price. The Prospectus Offering will be conducted pursuant to the terms and conditions of an amended agency agreement to be entered into between the Company and the Agent. The size of the Prospectus Offering will be determined in the context of the market at the time of entering into the amended agency agreement between the Company and the Agent; and

Certain directors and members of senior management of the Company forming part of a president's list are expected to subscribe into the Fundraising alongside investors.

The Prospectus Offering is being conducted pursuant to the Company's Canadian base shelf prospectus dated 28 November 2024 (the "Base Shelf Prospectus"). An amended and restated prospectus supplement amending and restating the prospectus supplement dated 14 March 2025 (as amended, the "Prospectus Supplement") relating to the Prospectus Offering will be filed in each of the provinces of Canada, other than Quebec. Copies of the Prospectus Supplement and accompanying Base Shelf Prospectus, when available, can be obtained free of charge under the Company's profile on SEDAR+ at www.sedarplus.ca. Delivery of the Base Shelf Prospectus and the Prospectus Supplement and any amendments thereto will be satisfied in accordance with the "access equals delivery" provisions of applicable Canadian securities legislation, such that the Company intends to file the Prospectus Supplement within two business days. The Base Shelf Prospectus and the Prospectus Supplement will contain important detailed information about the Company and the Prospectus Financing. Prospective investors should read the Prospectus Supplement and accompanying Base Shelf Prospectus and the other documents the Company has filed on SEDAR+ at www.sedarplus.ca before making an investment decision. The Prospectus Offering is expected to close on or around 31 March 2025, and is conditional on the Company obtaining the extraordinary resolutions in connection with the Debenture Amendment, and subject customary closing conditions, including the approval of the TSX Venture Exchange (the "TSXV"). The Company will use commercially reasonable efforts to obtain the necessary approvals to list the Warrants issuable pursuant to the Prospectus Offering.

The number of Placing Units and Prospectus Units (and the underlying Common Shares and Warrants) to be issued will be determined by the Company following completion of the Bookbuild in consultation with the Joint Bookrunners and RCC.

The Bookbuild is currently expected to close no later than 8.00 a.m. (GMT) on 31 March 2025, but the Joint Bookrunners and the Company reserve the right to close the Bookbuild earlier or later, without further notice, and is conditional on the Company obtaining the extraordinary resolutions in connection with the Debenture Amendment.

Certain directors and officers of the Company will participate in the Prospectus Offering under the president's list, which is considered a "related party transaction" pursuant to Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Company is relying on exemptions from the formal valuation and minority shareholder approval requirements provided under sections 5.5(a) and 5.7(1)(a) of MI 61-101 on the basis that the fair market value of the aggregate participation of the insiders in the Prospectus Offering will not exceed 25% of the market capitalization of the Company, as determined in accordance with MI 61-101.

For further information about Southern, please visit our website at www.southernenergycorp.comor contact:

| Southern Energy Corp. Ian Atkinson (President and CEO) Calvin Yau (CFO) | +1 587 287 5401 +1 587 287 5402 | | Research Capital Corporation - Lead Agent & Sole Bookrunner Kevin Shaw | +1 403 750 1280 kshaw@researchcapital.com | | Tennyson Securities - Joint Bookrunner & Joint Broker Peter Krens / Jason Woollard | +44 (0) 20 7186 9033 | | Strand Hanson Limited - Nominated & Financial Adviser James Spinney / James Bellman / Rob Patrick | +44 (0) 20 7409 3494 | | Hannam & Partners - Joint Bookrunner Samuel Merlin / Leif Powis | +44 (0) 20 7907 8500 | | Camarco Owen Roberts / Sam Morris / Tomisin Ibikunle | +44 (0) 20 3757 4980 |

Additional Details of the Fundraising

The Placing is being conducted through an accelerated bookbuild process to eligible institutional investors and will launch immediately following the release of this Announcement. The Company expects to close the Bookbuild no later than 8.00 a.m. (GMT) on 31 March 2025, but the Joint Bookrunners and the Company reserve the right to close the Bookbuild earlier or later, without further notice.

Details of the results of the Placing will be announced as soon as practicable after the close of the Bookbuild. The Placing is not being underwritten. The Placing is conditional on Minimum Gross Proceeds of US$6.0 million being raised pursuant to the Fundraising. The Common Shares and Warrants underlying the Placing Units, when issued, will be fully paid and such Common Shares will rank _pari passu_in all respects with the Company's existing Common Shares.

The Company has granted to the Agent an option (the "Over-Allotment Option"), exercisable, in whole or in part, in the sole discretion of the Agent, to purchase up to an additional number of Units, and/or the components thereof, that in aggregate would be equal to 15% of the total number of Units to be issued under the Prospectus Offering, to cover over-allotments, if any, and for market stabilization purposes, exercisable at any time and from time to time up to 30 days following the closing of the Prospectus Offering.

This Announcement should be read in its entirety. Investors' attention is drawn to the detailed Terms and Conditions of the Placing. By choosing to participate in the Placing and by making an oral and legally binding offer to acquire Placing Units, investors will be deemed to have read and understood this announcement in its entirety (including the Appendix) and to be making such offer on the terms and subject to the conditions of the Placing contained here, and to be providing the representations, warranties and acknowledgements contained in the Terms and Conditions.

The Company intends that the Placing will be conducted in conjunction with the Prospectus Offering.

Certain of the Directors and members of the Company's senior management team have indicated their intention to participate in the Fundraising.

Application will be made to: (a) the London Stock Exchange plc for admission of the Common Shares (including the Common Shares issuable upon the exercise of the Warrants) underlying the Placing Units and the Prospectus Units to trading on AIM; and (b) the TSXV for listing of the Common Shares (including the Common Shares issuable upon the exercise of the Warrants) underlying the Placing Units and the Prospectus Units for trading on the facilities of the TSXV. Expected timing for admission of the Common Shares underlying the Placing Units to trading on AIM and the Common Shares underlying the Prospectus Units to trading on the TSXV is as set out in the ‘Expected Timetable of Principal Events' below. Final confirmation of the expected timing for admission of such Common Shares will be confirmed in due course and is subject to a number of conditions, including, without limitation, the entering into of a definitive agency agreement and receipt of all regulatory approvals, including the approval of the TSXV.

The relevant clearances have not been, nor will they be, obtained from the securities commission of any province or territory of Canada; no prospectus has been lodged with or registered by, the Australian Securities and Investments Commission or the Japanese Ministry of Finance or the South African Reserve Bank; and the Placing Units have not been, nor will they be, registered or qualified for distribution, as applicable under or offered in compliance with the securities laws of any state, province or territory of United States, Australia, New Zealand, Canada, Japan or South Africa. Accordingly, the Common Shares and Warrants underlying the Placing Units may not (unless an exemption under the relevant securities laws is applicable) be offered, sold, resold or delivered, directly or indirectly, in or into the United States, Australia, New Zealand, Canada, Japan or South Africa or any other jurisdiction in which such offer, sale, resale or delivery would be unlawful.

The securities described herein have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act") or with any securities regulatory authority of any state or other jurisdiction of the United States, and accordingly, may not be offered or sold within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and applicable state or local securities laws. The securities described herein are being offered and sold outside the United States in "offshore transactions" as defined in and in reliance on Regulation S under the U.S. Securities Act. This Announcement shall not constitute or form part of, and should not be construed as, an offer or invitation to sell or issue, or any solicitation to purchase or subscribe for, or otherwise invest in, any of the Company's securities in any jurisdiction, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. There has been and will be no public offer of the Company's securities in Australia, New Zealand, Japan, South Africa, the United States or elsewhere, other than the Prospectus Offering in each of the provinces of Canada, except Québec.

Expected Timetable of Principal Events

| Bookbuild | Following publication of this Announcement on 25 March 2025 | | Completion of Bookbuild | No later than 4.00 p.m. (GMT) on 31 March 2025 | | Admission effective and dealings in the Common Shares underlying the Placing Units and the Prospectus Units on AIM | 8.00 a.m. (GMT) on 2 April 2025 | | Admission effective and dealings in the Common Shares underlying the Placing Units and the Prospectus Units on TSX-V | 9:30 a.m. (ET) on 2 April 2025 | | | |

Qualified Person's Statement

Gary McMurren, COO, who has over 24 years of relevant experience in the oil industry and has reviewed and approved the technical information contained in this Announcement. Mr. McMurren is registered as a Professional Engineer with the Association of Professional Engineers and Geoscientists of Alberta and received a Bachelor of Science degree in Chemical Engineering (with distinction) from the University of Alberta.

TERMS AND CONDITIONS OF THE PLACING

THIS ANNOUNCEMENT, INCLUDING THE TERMS AND CONDITIONS SET OUT IN THIS APPENDIX (THE "TERMS AND CONDITIONS"), IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THESE TERMS AND CONDITIONS ARE FOR INFORMATION PURPOSES ONLY AND ARE DIRECTED ONLY AT: (A) PERSONS WHO ARE IN A MEMBER STATE OF THE EUROPEAN ECONOMIC AREA AND ARE, UNLESS OTHERWISE AGREED BY THE JOINT BOOKRUNNERS, ("QUALIFIED INVESTORS") AS DEFINED IN ARTICLE 2(E) OF THE EU PROSPECTUS REGULATION (WHICH MEANS REGULATION (EU) 2017/1129 AND INCLUDES ANY RELEVANT IMPLEMENTING MEASURES IN ANY MEMBER STATE) (THE "PROSPECTUS REGULATION"); AND/OR (B) IN THE UNITED KINGDOM, PERSONS WHO ARE (I) QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE 2(E) OF THE PROSPECTUS REGULATION (AS IT FORMS PART OF DOMESTIC UK LAW PURSUANT TO THE EUWA); AND (II) "INVESTMENT PROFESSIONALS" WITHIN THE MEANING OF ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (AS AMENDED) (THE "ORDER"); (II) PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC") OF THE ORDER; OR (III) PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THESE TERMS AND CONDITIONS ARE A FINANCIAL PROMOTION, WHICH IS EXEMPT FROM THE GENERAL RESTRICTION IN SECTION 21 OF FSMA ON THE COMMUNICATION OF INVITATIONS OR INDUCEMENTS TO ENGAGE IN INVESTMENT ACTIVITY, ON THE GROUNDS THAT IT IS ONLY BEING DISTRIBUTED TO RELEVANT PERSONS. ACCORDINGLY, THESE TERMS AND CONDITIONS MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. DISTRIBUTION OF THIS ANNOUNCEMENT IN CERTAIN JURISDICTIONS MAY BE RESTRICTED OR PROHIBITED BY LAW. PERSONS DISTRIBUTING THIS ANNOUNCEMENT MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THESE TERMS AND CONDITIONS RELATE IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS.

THIS ANNOUNCEMENT IS NOT AN OFFER FOR SALE OR SUBSCRIPTION IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL UNDER THE SECURITIES LAWS OF ANY JURISDICTION. THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY. THIS ANNOUNCEMENT IS NOT AN OFFER OF OR SOLICITATION OF AN OFFER TO PURCHASE OR SUBSCRIBE FOR SECURITIES IN THE UNITED STATES. THE SECURITIES REFERRED TO HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT"), AND MAY NOT BE OFFERED OR SOLD DIRECTLY OR INDIRECTLY WITHIN THE UNITED STATES, EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT. NO PUBLIC OFFERING OF SECURITIES IS BEING MADE IN THE UNITED STATES.

EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO THE LEGAL, TAX, BUSINESS AND RELATED IMPLICATIONS OF AN INVESTMENT IN PLACING SHARES AND WARRANTS. THE PRICE OF SHARES AND THE INCOME FROM THEM (IF ANY) MAY GO DOWN AS WELL AS UP AND INVESTORS MAY NOT GET BACK THE FULL AMOUNT INVESTED ON A DISPOSAL OF THEIR SHARES.

The relevant clearances have not been, nor will they be, obtained from the securities commission of any province or territory of Canada in respect of the issuance of the Placing Shares and grant of the Warrants; no prospectus has been lodged with or registered by, the Australian Securities and Investments Commission or the Japanese Ministry of Finance, the South African Reserve Bank or, in respect of the Placing Shares, any securities commission in Canada; and the Placing Shares and Warrants have not been, nor will they be, registered or qualified for distribution, as applicable under or offered in compliance with the securities laws of any state, province or territory of Australia, Canada, Japan or South Africa. Accordingly, the Placing Shares may not (unless an exemption under the relevant securities laws is applicable) be offered, sold, resold or delivered, directly or indirectly, in or into Australia, Canada, Japan or South Africa or any other jurisdiction in which such offer, sale, resale or delivery would be unlawful.