Ontario Hose Specialties Inc.
NEX BOARD : OHS.H

Ontario Hose Specialties Inc.

January 15, 2007 09:23 ET

Ontario Hose Specialties Inc.: Financing Syndicate Selected for up to $35 Million Private Placement Financing

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Jan. 15, 2007) -

NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES

Ontario Hose Specialties Inc. (the "Company") (TSX:OHS.H) announced that it has appointed Orion Securities Inc. as lead agent of a syndicate that includes Salman Partners Inc., Canaccord Capital Corporation and Haywood Securities Inc. to act as the Company's agents in connection with a private placement of subscription receipts on a commercially reasonable best efforts basis. The Company intends to raise approximately $35 million through the issuance of subscription receipts at an issue price of approximately $0.65 per subscription receipt. Each subscription receipt will entitle the holder to receive one unit of the Company without payment of any additional consideration, on satisfaction of certain conditions. Each unit will be comprised one common share of the Company and one share purchase warrant. Each whole warrant will entitle the holder to purchase one common share of the Company for a period of 18 months at a price of $0.90 per share and the Company will use its best efforts to have the warrants listed for trading. The securities will be subject to a four month hold period under applicable securities laws.

The closing of this private placement is expected to occur on or about January 31, 2007 and is subject to all necessary regulatory, shareholder and stock exchange approvals. Upon closing the proceeds from the sale of the subscription receipts will be deposited in escrow and will be released to the Company upon the satisfaction by the Company of certain conditions, including the completion on or before March 28, 2007 of the acquisition by the Company from Signature Capital Corporation ("Signature") of Signature's interest under a farm in agreement (the "Farm In Agreement") between Signature and Vermilion REP SAS, a wholly owned subsidiary of Vermilion Energy Trust (TSX:VET.UN)("Vermilion") and Vermilion Exploration SAS, a wholly owned subsidiary of Verenex Energy Inc. (TSX:VNX). The Farm In Agreement relates to the Aquitaine Maritime Exploration Permit (the "Permit") held by Vermilion which is located approximately 30 km offshore of Bordeaux, France.

The proceeds from the private placement will be used as follows: (a) to finance the US $6 million purchase price for Signature's interest under the Farm In Agreement; (b) to finance obligations under the Farm In Agreement to pay 50% of the costs and expenses to drill and test one exploratory well on the Permit up to a maximum of US$17,000,000 and a further US$500,000 to Verenex upon spudding of the test well to earn an undivided 30% participating interest in the Permit; and (c) for working capital purposes.

The Company also announces that Geoff Carrington has been appointed as President and Chief Executive Officer of the Company replacing Stephen Barley who has been appointed Chairman of the Company. Upon completion of the acquisition of the interest in the Farm In Agreement by the Company from Signature, David Cohen has agreed to become Chairman of the Company.

The completion of the acquisition of Signature's interest under the Farm In Agreement will be a change of business for the Company with a new focus on the international oil and gas industry. Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a NEX company should be considered highly speculative.

This news release may contain forward-looking statements based on assumptions and judgments of management of the Company regarding future events or results. Such statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from those reflected in the forward-looking statements. The Company disclaims any intention or obligation to revise or update such statements except as may be required by law.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction. The securities offered have not and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and many not be offered or sold in the United States except in certain transactions exempt from the registration requirements of the U.S. Securities Act and applicable states securities laws.

Shares Outstanding: 62,566,033

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Contact Information

  • Ontario Hose Specialties Inc.
    Stephen Barley
    Chairman
    (604) 926-4300
    Email: sbarley@shaw.ca