Prairie Provident Announces Non-Binding Term Sheets for Preferred Share Investment and Debt Amendments to Strengthen Financial Position and Advance Drilling Program

Executive Summary

• Prairie Provident Resources Inc. announced non‑binding term sheets for a proposed preferred‑share financing of US$18.9 million (≈C$26.5 M) and concurrent amendments to its senior secured credit facility and second‑lien notes, extending maturities by 24 months and deferring cash interest through 2026.
• Proceeds are earmarked for retiring past‑due payables (~C$8 M), drilling/completing four new wells before year‑end (~C$13 M), infrastructure settlements (~C$1 M) and abandonment work (~C$3.5 M), with the balance supporting working capital.
• The financing and debt amendments are cross‑conditional, intended to improve liquidity, address a significant working‑capital deficit, and position the company to become cash‑flow positive under its internal modelling.

Key Details

• Financing Structure – Preferred shares issued by subsidiary Prairie Provident Resources Canada Ltd. at C$100 per share; total issue size US$18.9 M (≈C$26.5 M).
• Preferred Share Terms – 8% annual yield, redeemable/retractable after March 31 2031; payout in cash (USD) or common shares upon redemption, retraction, or a liquidity event.
• Warrants – 379,024,000 warrants (≈23‑27% of diluted/common share base) issued to the purchaser at no additional consideration; exercisable on redemption/retraction of preferred shares or a liquidity event.
• Substitution Right – If the purchaser requests substitution with equivalent company‑level preferred shares, each warrant may adjust to 1.5 common shares per warrant.
• Debt Amendments – Extend First Lien Loan maturity to March 31 2028 and Second Lien Notes to September 30 2028; defer all cash interest on the First Lien Loan through 2026 (interest capitalized).
• Use of Proceeds – C$8 M to retire payables, C$13 M for drilling/completing four new wells, C$1 M for infrastructure obligations, C$3.5 M for winter abandonment work; remainder for working‑capital needs.
• Closing Target – October 29 2025, subject to definitive agreements and TSX approvals (including a “financial hardship” exemption).
• Control Impact – No material change in control; purchaser is affiliate of existing majority shareholder PCEP.
• Regulatory/Shareholder Approvals – Company has applied for TSX exemption under section 604(e) due to serious financial difficulty; transaction would otherwise require disinterested‑shareholder approval because insider consideration exceeds 10% of market cap.

Notable Quotes

“The additional capital and liquidity provided by the Proposed Financing, together with the maturity extensions and interest deferral, will immediately and significantly improve our financial condition and enable us to execute a growth‑oriented drilling program,” – Dale Miller, Executive Chairman.