The construction of the Project will be funded by Arena Investors, LP (“Arena”) by way of amending the existing term loan agreement between Arena and Razor Royalties Limited Partnership (“RRLP”), a wholly owned subsidiary of Razor, (the “Amended and Restated Term Loan”) for an additional principal amount of US$11,042,403 (the “Term Loan 3”). Term Loan 3 will carry the following terms:
The construction of the Project will be funded by Arena Investors, LP (“Arena”) by way of amending the existing term loan agreement between Arena and Razor Royalties Limited Partnership (“RRLP”), a wholly owned subsidiary of Razor, (the “Amended and Restated Term Loan”) for an additional principal amount of US$11,042,403 (the “Term Loan 3”). Term Loan 3 will carry the following terms:
• 48-month maturity.
• First lien security on the assets held within Swan Hills Power and FutEra’s equity in Swan Hills Power.
Months 1 to 24
• Interest payments only on the prevailing monthly principal balance of Term Loan 3 at an annualized interest rate of 7.7875%;
• Accrued interest on the prevailing monthly principal balance of Term Loan 3 at an annualized interest rate of 3%.
Months 25 to 48
• Principal payments at an amortization rate of 5% on the prevailing monthly principal balance of Term Loan 3;
• Interest payments on the prevailing monthly principal balance of Term Loan 3 at an annualized interest rate of 7.7875%;
• Accrued interest on the prevailing monthly principal balance of Term Loan 3 at an annualized interest rate of 3%;
• The principal balance of Term Loan 3 at maturity is expected to be US$3.6 million.
The funded principal amount, after the original issuer discount, is US$10 million, less related fees and expenses. Upon closing the Term Loan 3, the principal balance of the Amended and Restated Term Loan will be US$25.7 million. Other terms of the Amended and Restated Term Loan are materially unchanged from the initial term loan as further described in the Company’s press release dated February 18, 2021. The security is provided by a first lien on all assets within Razor Royalties Limited Partnership, Razor Holdings GP Corp, and FutEra’s equity in Swan Hills Power. The Amended and Restated Term Loan is also secured by a second lien on the assets of Razor, excluding Razor’s subsidiaries Blade Energy Services Corp. (“Blade”), FutEra, and Razor Resources Corp. Arena is a New York-based institutional asset manager that has funded approximately 40 privately negotiated transactions within the energy and resources sector over the last five years, providing innovative capital solutions for middle market companies in cases where others cannot. AMENDMENTS TO ROYALTY SECURITY In conjunction with closing of the Amended and Restated Term Loan, Razor has increased the royalty from 9% to 10% on all corporate production (the “GORR”). The purpose of the GORR is to provide collateral to Arena. The repayment of the Amended and Restated Term Loan follows the agreed upon amortization payment schedule. The GORR is owned by RRLP, which has two partners within the partnership. The general partner is Razor Holdings GP Corp., a wholly owned subsidiary of Razor, and the limited partner is Razor. Once the Amended and Restated Term Loan is repaid by RRLP, the security associated with the Amended and Restated Term Loan will terminate. THE PROJECT The total construction and commissioning budget for the Project is $37 million for aggregate nameplate electricity output of 21 MW. Electricity sales revenue is anticipated to commence by September 30, 2022. Forecasted earnings before interest, taxes depreciation and amortization (“EBITDA”) is between $4 million and $5 million annually, using current forward pricing for electricity and natural gas. FutEra’s next phase of the Project will be the design and implementation of a Carbon Capture with Usage and/or Sequestration solution, with the objective to create a net negative carbon emitting power generation facility. For further investor information please contact the undersigned at info@futerapower.com or refer to our website at www.futerapower.com. FUTURE PROJECTS FutEra’s development efforts will focus on larger scale, lower emissions natural gas and renewable electricity generation projects with similar themes – leveraging Razor and other oil and gas producer’s operations to create financial and tactically advantaged development scenarios, and prospective competitive returns to investors. BACKGROUND Legacy oil and gas fields face economic challenges with lower production levels and high fixed costs. However, these fields also have practical advantages when considering the existing infrastructure, pipelines, wells, and operational footprints. To meet the objectives of creating lower carbon electricity and leveraging oil and gas operations, FutEra and Razor have successfully designed and are in the construction phase of a geothermal/natural gas hybrid power plant in Swan Hills, Alberta. Razor produces and injects large volumes of hot water, a renewable form of geothermal energy, daily as part of its ongoing conventional oil and gas operations and waterflood activities. This hot water provides FutEra with the opportunity to capture geothermal heat energy to generate power with zero Greenhouse Gas (GHG) emissions. Co-production means no new surface land footprint is required as the Project utilizes existing assets such as processing infrastructure, producing wells, produced water reinjection system and an operating gathering and distribution system. In addition, our co-production approach aligns Alberta’s fledgling geothermal industry to develop alongside Alberta’s well-respected, world-class oil and gas operations, safety standards and regulatory best practices. Geothermal power is baseload and solves for the intermittent challenge of other renewable energy sources. FutEra’s Project stands out as a demonstration of creative and practical co-produced geothermal energy production. Razor and FutEra continue to demonstrate the synergies and cooperation needed to define a type of transition energy and sets the standard of how traditional oil and gas companies can evolve into ‘energy and technology’ companies necessary for the future of the Alberta energy complex
About Razor Razor is a publicly traded junior oil and gas development and production company headquartered in Calgary, Alberta, concentrated on acquiring, and subsequently enhancing, producing oil and gas properties primarily in Alberta. The Company is led by experienced management and a strong, committed Board of Directors, with a long-term vision of growth, focused on efficiency and cost control in all areas of the business. Razor currently trades on TSXV under the ticker "RZE". www.razor-energy.com Razor has two active subsidiaries, FutEra and Blade Energy Services Corp. (“Blade”). About Arena Arena is an institutional asset manager founded in partnership with The Westaim Corporation (TSXV: WED). With $2.8 billion of committed assets under management as of January 1, 2022, and a team of over 100 employees in offices globally, Arena provides creative solutions for those seeking capital in special situations. The firm brings individuals with decades of experience, a track record of comfort with complexity, the ability to deliver within time constraints, and the flexibility to engage in transactions that cannot be addressed by banks and other conventional financial institutions. See www.arenaco.com for more information. About Blade Blade Energy Services is a subsidiary of Razor. Operating in west central Alberta, Blade’s primary services include fluid hauling, road maintenance, earth works including well site reclamation and other oilfield services. www.blade-es.com