Update: Large Just Energy Shareholder, DIP Lender Evaluating Strategic Alternatives For Just Energy, Engages Advisors

Earlier: Just Energy Group Provides Update On Creditors Arrangement Act Process

May 26, 2021

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Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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Pacific Investment Management Company LLC (PIMCO), which through various vehicles owns nearly 30% of Common Shares of Just Energy Group Inc., has filed an amended Schedule 13D with the U.S. SEC which reveals that PIMCO has engaged advisors to assist in a review and evaluation of strategic alternatives with respect to Just Energy

The filing of a similar early warning report with Canadian regulators by affiliates of PIMCO had been reported in our story earlier today (below), but neither the 13D/A nor early warning report were available at that time

In the 13D/A, PIMCO states, "on March 9, 2021 the Issuer entered into a term sheet (the 'DIP Agreement') between the Issuer, Just Energy L.P. and Just Energy (U.S.) Corp. (collectively, the 'Borrowers'), Alter Domus (US) LLC, as administrative agent for the lenders, and certain affiliates of PIMCO, including the PIMCO Entities (the 'DIP Lenders'), pursuant to which the DIP Lenders agreed to make a debtor-in-possession facility (the 'DIP Facility') available to the Borrowers, subject to the terms and conditions set out in the DIP Agreement, in the maximum principal amount of $125 million. Interest accrues on the principal amounts outstanding under the DIP Facility at a rate equal to 13% per annum (which will automatically increase by an additional 2% per annum upon the occurrence of any event of default thereunder). The DIP Facility shall be available until the earlier of (i) December 31, 2021; (ii) the consummation of reorganization in the CCAA proceedings; (iii) the expiry of the stay of proceedings; (iv) the termination of the CCAA proceedings; or (v) the acceleration of the DIP Facility in accordance with the terms of the DIP Agreement."

"In connection with the foregoing, the PIMCO Entities have engaged advisors to assist in a review and evaluation of strategic alternatives with respect to the Issuer and has been engaged in and may in the future engage in discussions with advisors to the Issuer, members of management or the board of directors of the Issuer (the 'Board'), and other stakeholders and potential stakeholders of the Issuer, with respect to the PIMCO Entities’ plans with respect to their investment in the Issuer. Such discussions may relate to a potential restructuring of the Issuer and its subsidiaries, including, without limitation, the PIMCO Entities providing additional financing to the Issuer, a conversion of some or all of their existing debt into equity of the Issuer and/or one or more of its subsidiaries, a restructuring, reorganization or recapitalization transaction and/or making an equity investment in the Issuer and/or one or more of its subsidiaries or other transactions involving the Issuer and/or one or more of its subsidiaries. A transaction related to any such matters may result in one or more of the matters specified in subparagraphs (a) through (j) of Item 4 of Schedule 13D. There can be no assurance that the PIMCO Entities will take any specific action in connection with the matters set forth above, and if undertaken, the PIMCO Entities may modify or terminate any activities at any time. There can be no assurance that any such discussions will result in a transaction being entered into or consummated," PIMCO stated in the 13D/A

Among the matters specified in subparagraphs (a) through (j) of Item 4 of Schedule 13D are, among other items, the following:

(b) An extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the issuer or any of its subsidiaries;

(c) A sale or transfer of a material amount of assets of the issuer or any of its subsidiaries;

(d) Any change in the present board of directors or management of the issuer, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board;

(f) Any other material change in the issuer's business or corporate structure, including but not limited to, if the issuer is a registered closed-end investment company, any plans or proposals to make any changes in its investment policy for which a vote is required by section 13 of the Investment Company Act of 1940;

"The PIMCO Entities may acquire additional Common Shares and other securities of the Issuer from time to time or may dispose of any or all of such shares or other securities held by it at any time. The PIMCO Entities intend to evaluate on an ongoing basis its investment in the Issuer and its options with respect to such investment," PIMCO stated in the 13D/A

"Except as described in this Amendment No. 1 to Schedule 13D, or as would occur upon completion of any of the matters discussed herein, the PIMCO Entities do not have any present plans or proposals that relate to or would result in any of the actions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D, although such persons, at any time and from time to time, may review, reconsider and change their position and/or change their purpose and/or develop such plans and may seek to influence management or the Board with respect to the business and affairs of the Issuer, and may from time to time consider pursuing or proposing such matters with advisors, the Issuer or other persons," PIMCO stated in the 13D/A

As noted, a PIMCO vehicle -- specifically OC II LVS XIV LP -- filed an early warning report with Canadian regulators that is substantially similar to the PIMCO 13D/A

Earlier:

Just Energy Group Inc. ('Just Energy' or the 'Company') announced today that the Ontario Superior Court of Justice (Commercial List) (the 'Court') has, among other things, extended the stay period under the Companies’ Creditors Arrangement Act (Canada) ('CCAA') to September 30, 2021.

"The Company is using the extended stay period to focus on growing the business and to continue engaging with key stakeholders, with a view of implementing a value maximizing emergence plan," Just Energy said

"In addition, the Company continues to explore and develop options regarding invoices received from the Energy Reliability Council of Texas ('ERCOT') related to the Texas extreme weather event in February (the 'Weather Event'), including potential legislation, the dispute resolution process initiated by the Company with ERCOT and potential litigation challenges. The total financial impact of the Weather Event to the Company may change due to the enactment of legislation, the outcome of the dispute resolution process and successful litigation challenges," Just Energy said

"The Company has also been advised by the lenders under the US $125 million debtor-in-possession loan (the 'DIP Lenders') comprised of OC II VS XIV LP ('OC II'), a Delaware limited partnership, and certain other funds under common management with OC II (collectively, the 'Funds'), that OC II has filed an amended early warning report pursuant to Canadian securities laws to provide updated disclosure relating to the Funds’ plans with respect to their current investment in Just Energy and potential participation in the Company’s restructuring, which is available at www.sedar.com under Just Energy’s issuer profile," Just Energy said

A copy of the early warning report was not yet posted on SEDAR as of publication time

"In addition, Just Energy previously announced plans to apply to the TSX Venture Exchange (the "TSX-V") to transition the trading of its common shares from the Toronto Stock Exchange to the TSX-V. The Company has received conditional approval to list its common shares on the TSX-V and trading is expected to commence in early June," Just Energy said

"Just Energy remains focused on its commitment to our customers and driving innovation across our business, while continuing to advance its restructuring plans," said Scott Gahn, Just Energy’s President and Chief Executive Officer. Mr. Gahn added, "We believe there are considerable opportunities to grow our business in our key markets," Just Energy said

"Due to the ongoing CCAA process, the Company also announced that the Court approved the postponement of its annual meeting of shareholders until further notice," Just Energy said

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