Following Unprecedented Winter Storm in Texas, Just Energy Files for Relief Under CCAA in Canada and Chapter 15 in U.S. and H...
09 Março 2021 - 12:39PM
Just Energy Group Inc. (“Just Energy” or the “Company”) (TSX:JE;
NYSE:JE), a retail energy provider specializing in electricity and
natural gas commodities and bringing energy efficient solutions and
renewable energy options to customers, today announced that it has
sought and received creditor protection via an Initial Order under
the Companies’ Creditors Arrangement Act (“CCAA”) from the Ontario
Superior Court of Justice (Commercial List) and is seeking similar
protection under Chapter 15 of the Bankruptcy Code in the United
States. Just Energy has also reached an agreement with one of its
Term Loan lenders for a US$125 million DIP financing.
The Company’s largest commodity suppliers have also agreed to
continue to support the Company with commodity supply and ISO
services.
The filings, and associated US$125 million DIP financing
arranged by the Company, enable Just Energy to continue all
operations without interruption throughout the U.S. and Canada and
to continue making payments required by ERCOT and satisfy other
regulatory obligations. Just Energy sought and received a Stay of
Proceedings and other protections provided by the CCAA in order to
provide the Company with breathing room to pursue alternatives that
would allow it to emerge as a strong, stable business. The Stay of
Proceedings in favour of Just Energy has an initial term of 10
days, subject to extension as the Court deems appropriate. The
filings have no impact on customer bills.
Today’s filings are the result of unprecedented cold weather in
Texas in February (the “Weather Event”), and corresponding charges
from ERCOT currently totaling over US$250 million that Just Energy
must pay in the near term. The total financial impact may change
due to ERCOT resettlements, potential orders of the Public Utility
Commission (the “Commission”) with respect to recommendations of
the Independent Market Monitor (“IMM”), the outcome of the dispute
resolution process initiated by the Company with ERCOT and
potential litigation challenges. Since these disputes are still
pending and not resolved, Just Energy is unable to pay the full
amounts when due to ERCOT this week without the arrangement of the
DIP financing received today.
While Just Energy hedges weather risk based on historical
scenarios, the Weather Event in Texas was colder than anything
experienced in decades. A combination of customer usage and the
Real Time Settlement Point Price being artificially set at the high
offer cap of US$9,000 per megawatt hour contributed significantly
to the negative financial impact to the Company. The Weather Event
caused the ERCOT wholesale market to incur charges of approximately
US$55 billion over a seven-day period, an amount equal to what it
ordinarily incurs over four years. The total cost to Just Energy
and other market participants is still subject to adjustment by
ERCOT and may change.
As previously announced, on March 3, 2021, the
Company filed a petition with the Commission requesting an
order that ERCOT deviate from the deadlines and timing in its
Protocols and Market Guides related to settlements, collateral
obligations, and invoice payments and suspend the execution or
issuance of invoices or settlements for intervals during the dates
of February 14, 2021 through February 19, 2021, until issues
related to the catastrophic Weather Event raised by executive and
legislative branches of the Texas authorities are investigated,
addressed, and resolved. Alternatively, Just Energy requested that
the Commission grant a waiver of certain ERCOT Protocols to allow
Just Energy to delay payment of certain invoices related to the
Weather Event while exercising its rights under the ERCOT Protocols
to dispute the invoiced payment amounts. To date, Just Energy has
not received this relief.
BMO Capital Markets has been engaged as financial advisor,
Osler, Hoskin & Harcourt LLP and Fasken Martineau DuMoulin LLP
are legal advisors in Canada, Kirkland & Ellis LLP and Jackson
Walker LLP are legal advisors in the United States and FTI
Consulting Canada Inc. has consented to act as the Monitor under
the CCAA.
Just Energy will provide further updates as developments
warrant. A copy of the CCAA Initial Order and other information
regarding the CCAA proceedings will be available at the Monitor’s
website http://cfcanada.fticonsulting.com/justenergy. Information
regarding CCAA proceedings can also be obtained by calling the
Monitor’s hotline at 416-649-8127 or 1-844-669-6340 or by email at
justenergy@fticonsulting.com.
About Just Energy Group Inc.Just Energy is a
retail energy provider specializing in electricity and natural gas
commodities and bringing energy efficient solutions and renewable
energy options to customers. Currently operating in the United
States and Canada, Just Energy serves residential and commercial
customers. Just Energy is the parent company of Amigo Energy,
Filter Group Inc., Hudson Energy, Interactive Energy Group, Tara
Energy, and terrapass. Visit https://investors.justenergy.com/ to
learn more.
FORWARD-LOOKING STATEMENTSThis press release
may contain forward-looking statements, including statements with
respect to: the Initial Order and the related DIP financing
enabling the Company to continue operations without interruption
and continuing to make payments required by ERCOT; the Company’s
ability to pursue alternatives and emerge from CCAA as a strong,
stable business; the DIP financing providing sufficient liquidity
for the Company to continue to operate the business in the normal
course under CCAA; the Company providing uninterrupted service to
its customers; the Company continuing to make payments required by
ERCOT and other regulatory obligations; and potential changes to
the financial impact of the Weather Event, whether due to ERCOT
resettlements, potential orders of the Commission with respect to
the recommendations of the IMM, the outcome of the dispute
resolution process initiated by the Company and potential
litigation challenges, or otherwise. These statements are based on
current expectations that involve several risks and uncertainties
which could cause actual results to differ from those anticipated.
These risks include, but are not limited to, risks with respect to:
the ability of the Company to continue as a going concern; the
outcome of proceedings under CCAA and similar bankruptcy
legislation in the United States; the outcome of any invoice
dispute with ERCOT; obtaining relief to delay payment of certain
ERCOT settlement invoices; the outcome of potential litigation in
connection with the Weather Event; the quantum of the financial
loss to the Company from the Weather Event and its impact on the
Company’s liquidity; the Company’s discussions with key
stakeholders regarding the Weather Event and the outcome thereof;
the impact of the evolving COVID-19 pandemic on the Company’s
business, operations and sales; reliance on suppliers;
uncertainties relating to the ultimate spread, severity and
duration of COVID-19 and related adverse effects on the economies
and financial markets of countries in which the Company operates;
the ability of the Company to successfully implement its business
continuity plans with respect to the COVID-19 pandemic; the
Company’s ability to access sufficient capital to provide liquidity
to manage its cash flow requirements; general economic, business
and market conditions; the ability of management to execute its
business plan; levels of customer natural gas and electricity
consumption; extreme weather conditions; rates of customer
additions and renewals; customer credit risk; rates of customer
attrition; fluctuations in natural gas and electricity prices;
interest and exchange rates; actions taken by governmental
authorities including energy marketing regulation; increases in
taxes and changes in government regulations and incentive programs;
changes in regulatory regimes; results of litigation and decisions
by regulatory authorities; competition; and dependence on certain
suppliers. Additional information on these and other factors that
could affect Just Energy’s operations or financial results are
included in Just Energy’s annual information form and other reports
on file with Canadian securities regulatory authorities which can
be accessed through the SEDAR website at www.sedar.com, on the U.S.
Securities and Exchange Commission’s website at www.sec.gov or
through Just Energy’s website at www.justenergygroup.com.
FOR FURTHER INFORMATION PLEASE CONTACT:
InvestorsMichael CummingsAlpha IRPhone: (617)
982-0475JE@alpha-ir.com
MonitorFTI Consulting416-649-8127 or
1-844-669-6340
justenergy@fticonsulting.com
MediaBoyd ErmanLongview Communications and
Public AffairsPhone:
416-523-5885 berman@longviewcomms.ca
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