08:11 AM EDT, 09/17/2024 (MT Newswires) -- Rubellite Energy (RBY.TO) and Perpetual Energy ( PMGYF ) agreed to merge in an all-share transaction to create a company with heavy oil assets in the Clearwater and Mannville Stack plays.

Rubellite shareholders will receive one share of the merged company for each share held while Perpetual shareholders will receive one share for every five shares held.

Perpetual's $26.2 million in outstanding senior notes will be converted into 11.6 million shares of the merged company.

Following the conclusion of the deal, Rubellite shareholders will own 73% of the new entity with 15% held by Perpetual shareholders and 12% by holders of Perpetual's senior notes.

"The transaction will provide shareholders of both Rubellite and Perpetual with valuable synergies, both quantitative and qualitative" said Sue Riddell Rose, president and CEO of both Rubellite and Perpetual. "Shareholders will benefit from owning a larger, financially stronger company with increased free funds flow, enhanced liquidity and a well-defined organic growth profile."

Rubellite's syndicate of four banks confirmed that the credit facility for the recombined company will have a borrowing limit of $140 million which, along with Rubellite's outstanding five-year, $20 million term loan, will provide enhanced liquidity.