Xebec Adsorption Inc.

Xebec Adsorption Inc.

November 17, 2009 17:11 ET

Xebec Announces Upsizing of its Previously Announced Private Placement

MONTREAL, QUEBEC--(Marketwire - Nov. 17, 2009) - Xebec Adsorption Inc. (TSX:XBC) ("Xebec"), a provider of biogas upgrading, natural gas and hydrogen purification solutions is pleased to announce that as a result of strong investor demand for its previously announced private placement of units ("Offering") on November 4, 2009, it has agreed to increase the size of the Offering to $6,000,000. Xebec intends to issue 8,000,000 units ("Units") at a price of $0.75 per Unit. Each Unit will consist of one common share of Xebec ("Common Share") and one half of one common share purchase warrant ("Warrant").

Each whole Warrant will entitle the holder to purchase one additional Common Share from treasury at an exercise price of $1.10 for a period of 18 months from closing. The Warrants are subject to an accelerated expiry if, at any time after December 31, 2009, the published closing trade price of the Common Shares on the Toronto Stock Exchange ("TSX") is equal or superior to $1.60 for any 20 consecutive trading days, in which event Xebec may give the holder a written notice that the warrants will expire at 5:00 p.m. (Toronto Time) on the 30th day from the receipt of such notice. The Offering is being made on a best effort basis by Canaccord Adams ("Canaccord"), acting as sole agent for Xebec. Closing of the Offering is expected to take place on November 25, 2009 ("Closing").

Canaccord shall receive brokers warrants (the "Brokers Warrants") equal to 6.0% of the Common Shares underlying the Units issued in connection with the Offering. Each Broker Warrant will entitle Canaccord to purchase one Common Share at $0.77 for a period of 18 months following the closing date.

In addition, Canaccord has been granted an option ("Over-allotment Option") to sell up to an additional number of Units equal to the lesser of the over-allocation position and 15% of the size of the Units offering representing a maximum of 1,200,000 Units, at the same offering price, for market stabilization and over-allotment purposes. The Over-allotment Option may be exercised at any time, in whole or in part, until that date which is 30 days following the closing date.

The Units to be issued under the Offering are being offered at a price of $0.75 per Unit, which represents a discount of approximately 9.6% to the weighted average trading price of the Common Shares on the TSX for the five trading days immediately preceding the initial announcement of the Offering. The Offering is conditional upon the approval of the TSX.

Xebec is also pleased to advise that it has received the written consent of a majority of its disinterested shareholders (representing approximately 54.9% of its common shares, excluding the Common Shares held by insiders participating in the Offering) to approve certain aspects of the announced Offering.

Special Situations Fund (the "Funds"), a group of funds and currently direct and indirect holders of 5,110,500 Common Shares representing 19.3% of the issued and outstanding Common Shares prior to the Offering, has indicated an intention to purchase 3,333,400 Units pursuant to the Offering, which together with the Warrants underlying the Units represent 18.9% of the current issued and outstanding Common Shares. Following completion of the Offering, the Funds will exercise control or direction, directly or indirectly, over 8,443,900 Common Shares representing approximately 23.6% of the issued and outstanding Common Shares (on a non-diluted basis) and 10,110,600 Common Shares, representing 24.7% of the current issued and outstanding Common Shares assuming the exercise of the Warrants. For the purposes of the TSX rules, the Funds shareholdings following completion of the Offering materially affect control of Xebec and may influence the outcome of a vote of security holders, including the ability to block significant transactions.

The number of Common Shares to be issued pursuant to the Offering, including the exercise of the Over-allotment Option, will be in excess of 54.1% of the 26,511,294 Common Shares currently issued and outstanding prior to the closing of the Offering. Details of the same are set forth below:

Common Shares Issuable Pursuant to the Offering 8,000,000
Common Shares Issuable Pursuant to the Exercise of Warrants 4,000,000
- Common Shares Issuable Pursuant to the Exercise of
the Over-allotment Option 1,200,000
- Common Shares Issuable Pursuant to the Exercise of
Warrants underlying the Units 600,000
Agents' warrants (including the exercise of
the Over-allotment Option) 552,000
Total 14,352,000
Percentage of the Offering over the current issued
and outstanding Common Shares 54.1%

In accordance with Subsection 604(d) of the TSX Company Manual: (a) as the Offering will result in the issuance of a number of Common Shares greater than 25% of the issued and outstanding Common Shares (on a non-diluted basis) and the Common Shares are being issued at a discount to market price; and (b) as the issuance of the Common Shares in connection with the Offering will result in the Funds holding more than 20% of the issued and outstanding Common Shares and materially affecting control of Xebec, written consent to the Offering by holders of more than 50% of the Common Shares, excluding Common Shares held by insiders participating in the Offering, is required.

About Xebec Adsorption Inc.

Xebec Adsorption Inc. is a global provider of clean energy solutions to corporations and governments looking to reduce their carbon footprints. With more than 1,300 customers worldwide, Xebec designs, engineers and manufactures innovative products that transform raw gases into marketable sources of clean energy. Xebec's strategy is focused on establishing leadership positions in markets where demand for biogas upgrading, natural gas dehydration and hydrogen purification is growing. Headquartered in Montreal (QC), Xebec is a global company with two state-of-the-art manufacturing facilities in Montreal and Shanghai, a R&D facility in Vancouver (BC) as well as a sales and distribution network in North America, Asia and Europe. Xebec (www.xebecinc.com) trades on the TSX under the symbol XBC.

Caution Concerning Forward-Looking Statements

This press release contains forward looking statements. More particularly, this press release contains statements concerning the anticipated closing date of the Offering and the effects of the Offering. The closing of the Offering could be delayed if Xebec is not able to obtain the necessary regulatory and stock exchange approvals on the timelines it has planned. The Offering will not be completed at all if these approvals are not obtained or some other condition to the closing is not satisfied. Forward looking information contained in this press release involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Xebec or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

The forward looking statements contained in this document are made as of the date hereof and Xebec undertakes no obligations to update publicly or revise any forward looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

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