Just Energy Group, a retail energy provider specializing in electricity and natural gas commodities and bringing energy efficient solutions and renewable energy options to customers, entered into a stalking horse transaction agreement and a support agreement in connection with a proposed sale and investment solicitation process (SISP) that is intended to facilitate its exit from the company’s ongoing insolvency proceedings as a going concern. Upon execution of the SISP support agreement, Just Energy and the other parties thereto terminated the previously announced plan support agreement and backstop commitment letter that was entered into in connection with the previously announced proposed plan of compromise and arrangement.
Just Energy and certain of its affiliates filed a motion in its proceedings under the Companies’ Creditors Arrangement Act (CCAA) before the Ontario Superior Court of Justice (Commercial List) on Aug. 4 for an order that, among other things: authorizes the company to conduct the SISP with the assistance of BMO Nesbitt Burns as financial advisor and FTI Consulting Canada, as court-appointed monitor, in accordance with the terms therein, and approves the execution by the applicable Just Energy entities of the stalking horse transaction agreement and the SISP support agreement. The Just Energy entities also intend to seek recognition in the U.S. of the SISP order in its Chapter 15 cases.
Subject to the granting of the SISP order at the motion scheduled for Aug. 17, 2022:
- If one or more qualified bids (other than the transaction contemplated by the stalking horse transaction agreement) are received by Sept. 29, then Just Energy intends to proceed with an auction to determine the successful bid(s), subject to the terms of the SISP procedures. The qualified bid criteria under the terms of the SISP procedures include, among other things, that bids:_x000D_
- Provide the necessary cash consideration value (as defined in the SISP procedures) to be used together with the Just Energy Entities’ cash on hand for the payment of all secured claims and all claims ranking in priority, the break-up fee (as defined below) and a bid increment of no less than $1 million, which cash consideration value is estimated to be approximately $460 million, assuming a closing date of Dec. 31, 2022;
- Do not contain any board or equity holder approval, financing or due diligence conditions
- Are accompanied by a cash deposit equal to 10% of the cash consideration value.
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If the stalking horse purchaser is determined to be the successful bidder at the conclusion of the SISP and the transaction contemplated in the stalking horse transaction agreement is subsequently approved by the court, the stalking horse purchaser will own all of the outstanding equity of Just Energy (U.S.), which will be the new parent company of all of the Just Energy entities, including the company, and the Just Energy entities will continue their business and operations as a going concern. All currently outstanding shares, options and other equity of Just Energy will be cancelled or redeemed for no consideration and without any vote of the existing shareholders.
