Mr. Jeremy Baines reports

TIDEWATER RENEWABLES LTD. ANNOUNCES COMPLETION OF ITS PREVIOUSLY ANNOUNCED PROPOSED TRANSACTION WITH TIDEWATER MIDSTREAM AND THE REFINANCING OR EXTENSION OF ITS CREDIT FACILITIES

Tidewater Renewables Ltd. has completed its previously announced proposed transaction with Tidewater Midstream and Infrastructure Ltd., and has refinanced its first lien credit facilities and extended its second lien credit facilities.

As part of the transaction, among other things, the corporation and Tidewater Midstream have entered into an assets sale agreement, pursuant to which the corporation has sold its canola co-processing infrastructure, and the fluid catalytic cracking co-processing infrastructure, working interests in various other Prince George refinery units, and a natural gas storage facility co-located at Tidewater Midstream's Brazeau River complex (collectively the divested assets) to Tidewater Midstream for cash proceeds of $122-million, plus the assumption of certain liabilities relating to the divested assets. In addition, as part of the consideration, Tidewater Midstream assigned the right to receive certain British Columbia Low Carbon Fuel Standard (B.C. LCFS) credits to the corporation with a minimum value of $7.7-million. The cash proceeds for the divested assets were used to repay amounts outstanding on the corporation's first lien senior credit facility.

The divested assets historically generated annual adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $40.0-million to $50.0-million through previously contracted take-or-pay or operating agreements with Tidewater Midstream. As part of the transaction, the contracted take-or-pay and operating agreements were terminated.

In connection with the transaction, Tidewater Renewables and Tidewater Midstream also entered into an agreement for the purchase and sale of credits, pursuant to which, among other things, (i) the corporation sold to Tidewater Midstream certain B.C. LCFS credits for an aggregate purchase price of approximately $7.2-million, and (ii) the corporation will sell, and Tidewater Midstream will purchase, B.C. LCFS credits (subject to certain monthly average limits) until March 31, 2025, for cash proceeds of approximately $77.5-million (assuming the corporation's Renewable Diesel & Renewable Hydrogen complex (the HDRD complex) continues to operate at over 90-per-cent utilization). A portion of such B.C. LCFS credits are being subject to the exercise of a put option in favour of the corporation and/or a call option in favour of Tidewater Midstream. The cash proceeds will be received monthly by the corporation as the B.C. LCFS credits are sold to Tidewater Midstream.

"The completion of this transaction significantly strengthens Tidewater Renewables' balance sheet by reducing debt and lowering our financing costs," said Jeremy Baines, chief executive officer of Tidewater Renewables. "Additionally, the forward sale of B.C. LCFS credits to Tidewater Midstream until March, 2025, provides Tidewater Renewables with a reliable source of cash flow, allowing us to continue to focus on our renewable fuels business, which consists of the HDRD complex and the proposed sustainable aviation fuel project. We also appreciate the ongoing support from AIMCo, which has been instrumental in helping us achieve these milestones."

Concurrent with closing of the transaction, the corporation has refinanced its first lien credit facilities. The aggregate principal amount of the first lien senior credit facilities was reduced from $175-million to $30-million, and the maturity date was extended from Sept. 18, 2024, to Feb. 28, 2026. Also concurrent with the closing of the transaction, the maturity of the $25-million tranche B second lien term debt facility has been extended from Sept. 18, 2024, to Feb. 28, 2026 (with the $150-million tranche A second lien term debt facility maturity remaining unchanged at Oct. 24, 2027). A new $33-million tranche C second lien term debt facility was also added, for the purpose of refinancing the first lien credit facilities in certain circumstances. In addition, compliance by the corporation with the quarterly financial covenants applicable to both the first and second lien credit facilities has been waived until Sept. 30, 2025. Certain fees were paid or agreed to be paid to the first and second lien lenders as part of the refinancing and extension of the credit facilities.

In conjunction with the extension of the corporation's second lien credit facilities, which are provided by an affiliate of the Alberta Investment Management Corp. (AIMCo), the corporation issued to an affiliate of AIMCo warrants (the 2024 AIMCo warrants) to acquire one million common shares of the corporation at an exercise price of $3.99 per share (representing a 50-per-cent premium to the five-day volume-weighted average trading price (VWAP) of the common shares on the TSX prior to this announcement) with such warrants to have an expiry date of Sept. 12, 2029. If the five-day VWAP of the common shares on the TSX following this announcement is higher than the exercise price of the 2024 AIMCo warrants, the exercise price will be increased to such five-day VWAP. In addition, certain of the fees payable to AIMCo by the corporation as part of the second lien refinancing (the convertible fees) are convertible into common shares by either the corporation or AIMCo at the then prevailing 10-day VWAP. As part of the initial closing of the second lien credit facility in October, 2022, an affiliate of AIMCo was issued warrants to acquire 3,375,000 common shares at an exercise price of $14.84, subject to certain reductions thereto, which warrants expire on Oct. 24, 2027 (the 2022 AIMCo warrants). The terms and conditions of the 2022 AIMCo warrants have not been amended.

Immediately before the transaction, AIMCo had indirect ownership and control of nil common shares and, if all of the 2022 warrants were to be exercised at such time, it would have had indirect ownership and control of 3,375,000 common shares, representing approximately 8.8 per cent of the then outstanding common shares after giving effect to such exercise. Immediately after the transaction, AIMCo has indirect ownership and control of nil common shares, and if all of the 2022 warrants, 2024 warrants and convertible fees were to be exercised and converted at such time, it would have indirect ownership and control of approximately 8,015,000 common shares, representing approximately 18.7 per cent of the then outstanding common shares after giving effect to such exercises and conversion.

The terms of the 2024 warrants and the convertible fees prohibit AIMCo and its affiliates and associates exercising the 2024 warrants and/or converting the convertible fees in circumstances where it would result in them collectively owning more than 19.9 per cent of the then outstanding common shares.

The TSX has conditionally approved the listing of the common shares issuable on exercise of the 2024 warrants and convertible fees, subject to certain limitations and the filing of customary postclosing documents. The TSX previously approved for listing the common shares issuable on exercise of the 2022 warrants.

Tidewater Midstream, as a substantial shareholder of the corporation, is a related party of the corporation and, as such, the transaction constitutes a related party transaction for Tidewater Renewables under Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions. The board of directors of the corporation, on the recommendation of the special committee of the board solely comprised the independent directors of the corporation (the special committee), has approved the transaction and, in light of the board's and special committee's determinations, acting in good faith, that (i) the corporation is in serious financial difficulty, (ii) the transaction is designed to improve the financial position of the corporation, and (iii) the terms of the transaction are reasonable in the circumstances of the corporation, the transaction is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101, as the corporation is relying on the financial hardship exemptions provided in Section 5.5(g) and 5.7(1)(e) of MI 61-101 and there is no other requirement, corporate or otherwise, to hold a meeting to obtain any approval of the corporation's shareholders.

About Tidewater Renewables Ltd.

Tidewater Renewables is a multifaceted energy transition company. The corporation is focused on the production of low-carbon fuels, including renewable diesel. The corporation was created in response to the growing demand for renewable fuels in North America and to capitalize on its potential to efficiently turn a wide variety of renewable feedstocks (such as tallow, used cooking oil, distillers corn oil, soybean oil, canola oil and other biomasses) into low-carbon fuels. Tidewater Renewables' objective is to become one of the leading Canadian renewable fuel producers. Additional information relating to Tidewater Renewables is available on SEDAR+ and the company's website.

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