Horizon Petroleum Proposes Equity-Based Settlement for Outstanding Debts

Horizon Petroleum's Proposed Debt Settlement

Horizon Petroleum Ltd., a Calgary-based company focused on natural gas reserve development, has announced a significant proposal to settle certain outstanding financial obligations amounting to CAD$524,000. This move aims to align the interests of management and shareholders while addressing accrued liabilities that include both management remuneration and third-party invoices.

Understanding the Debt Settlement Plan

Horizon proposes to resolve outstanding debts through the issuance of approximately 2,994,286 Common Shares priced at CAD$0.175 each, a figure that reflects the company’s closing share price as of July 15. The debts in question predominantly involve deferred salaries totaling CAD$365,000 accumulated since September 2024, as well as directors' fees amounting to CAD$100,000 collectively for the four independent directors.

This strategic decision has been motivated by the need to conserve capital and focus resources on the development of the Lachowice gas field in Poland. The management team, comprised of experienced oil and gas professionals, has chosen to receive their compensation in shares rather than cash to exhibit their commitment and belief in the long-term potential of the company.

Implications for Shareholders

The proposed settlement is referred to as the “Insider Debt Transaction.” Before it can take effect, Horizon Petroleum must acquire disinterested shareholder approval at an upcoming meeting projected for July 28, 2026. Additionally, the shares issued will be subject to a holding period of four months and one day following their issuance to comply with applicable securities laws.

The necessity for shareholder approval is underscored by the defined rules within Multilateral Instrument 61-101, which seeks to protect minority security holders during related party transactions. However, Horizon is relying on specific exemptions since the transaction's fair market value is anticipated to remain under 25% of the company's market capitalization.

Next Steps for Horizon

Horizon Petroleum is proceeding with the necessary preparations to present this plan to shareholders. The company has had initial discussions with the TSX Venture Exchange, confirming that further evaluations are warranted before moving forward. The outcome of this proposal is crucial for Horizon's plans, especially with the ongoing development efforts in Poland, where pursuing energy independence is a key goal.

Management's decision to settle financially through shares is seen as a strategic alignment that not only alleviates financial pressures but also retains liquidity for essential operational activities.

In conclusion, while Horizon Petroleum takes significant steps toward settling its outstanding debts, the path remains contingent on shareholder backing. The company's focus on capital preservation and long-term development strategy suggests a diligent approach to managing its financial landscape effectively. The envisaged shareholder meeting will be pivotal in determining the success of this debt settlement initiative.