Arcan Resources Ltd.

Arcan Resources Ltd.

September 19, 2011 15:39 ET

Arcan Resources Ltd. Announces $135,140,000 Bought Deal Offering of Common Shares and Convertible Unsecured Subordinated Debentures

CALGARY, ALBERTA--(Marketwire - Sept. 19, 2011) -


Arcan Resources Ltd. (TSX VENTURE:ARN) ("Arcan" or the "Company") announced today that it has reached an agreement with a syndicate of underwriters (the "Underwriters") pursuant to which Arcan has agreed to issue, on a "bought deal" basis, subject to regulatory approval, (i) 9,200,000 Arcan common shares (the "Common Shares") at $5.45 per Common Share for gross proceeds of $50,140,000 and (ii) $85,000,000 aggregate principal amount of convertible unsecured subordinated debentures (the "Debentures") at a price of $1,000 per Debenture, for aggregate gross proceeds of $135,140,000 (the "Offering").

The agreement entered into with the Underwriters provides that: (i) the Debentures will bear interest from the date of issue at 6.5% per annum, with interest payable semi-annually in arrears on April 30 and October 31 each year (each an "Interest Payment Date") commencing April 30, 2012; (ii) the Debentures will mature and be repayable on October 31, 2018 (the "Maturity Date"); and (iii) Arcan may, in certain circumstances, pay accrued interest on the Debentures with the proceeds of common shares sold by a trustee on behalf of Arcan.

Arcan has granted to the Underwriters an over-allotment option to purchase up to an additional 1,380,000 Common Shares and up to $12,750,000 aggregate principal amount of Debentures at the same price (but subject to adjustment for accrued interest), exercisable in whole or in part at any time for a period of up to 30 days following closing of the Offering, to cover over-allotments.

The syndicate for the offering of Common Shares is being led by RBC Capital Markets as sole bookrunner and co-led by Haywood Securities, and the syndicate for the offering of Debentures is being led by RBC Capital Markets as sole bookrunner and co-led by Scotia Capital Inc.

Net proceeds of the Offering will be used to repay debt, fund the Company's capital expenditures and for general corporate purposes.

Each $1,000 principal amount of the Debentures will be convertible at the option of the holder at any time prior to the close of business on the earlier of the Maturity Date and the last business day immediately preceding the date fixed for redemption, into 114.2857 common shares of Arcan, representing a conversion price of $8.75 per share (the "Conversion Price"), subject to certain anti-dilution provisions. Holders who convert their Debentures will receive accrued and unpaid interest for the period from the date of the latest Interest Payment Date to the date of conversion.

The Debentures will not be redeemable by the Company before October 31, 2015. On and after October 31, 2015 and prior to October 31, 2017, the Debentures may be redeemed in whole or in part from time to time at the option of the Company on not more than 60 days and not less than 40 days prior notice, at a price equal to their principal amount plus accrued and unpaid interest, provided that the weighted average trading price of the common shares on the TSX Venture Exchange (the "TSXV") for the 20 consecutive trading days ending five trading days preceding the date on which the notice of redemption is given is at least 125% of the Conversion Price. On or after October 31, 2017 and prior to the Maturity Date, the Debentures may be redeemed in whole or in part at the option of the Company on not more than 60 days and not less than 40 days prior notice at a price equal to their principal amount plus accrued and unpaid interest.

The agreement entered into with the Underwriters contemplates that the Common Shares and Debentures will be offered by Arcan under a short form prospectus to be filed in each of the provinces of Canada, other than Québec. Closing of the Offering is expected to occur on or about October 7, 2011. Completion of the Offering is subject to the satisfaction or waiver of various conditions, such as the receipt of normal regulatory approvals, including approval of the TSXV.

This news release does not constitute an offer to sell or the solicitation of an offer to buy any securities of Arcan in the United States. The Common Shares and Debentures described in this news release (and any common shares of Arcan issued upon the conversion, redemption or maturity of the Debentures) have not been and will not be registered under the United States Securities Act of 1933, as amended, or the securities laws of any state and may not be offered, sold or delivered in the United States absent an exemption from registration.

About Arcan

Arcan Resources Ltd. is an Alberta, Canada corporation that is principally engaged in the exploration, development and acquisition of petroleum and natural gas located in Canada's Western Sedimentary Basin.

Forward-Looking Information Advisory

The information and statements in this news release contains certain forward-looking information. This forward-looking information relates to future events or Arcan's future performance. In particular, this document contains forward-looking information and statements regarding: (i) the completion of the Offering and the issuance of the Common Shares and Debentures, (ii) the expected closing date of the Offering; (iii) the use of proceeds of the Offering; and (iv) future capital expenditures and projects. All statements other than statements of historical fact may be forward-looking information. This forward-looking information is subject to certain risks and uncertainties and may be based on assumptions that could cause actual results to differ materially from those anticipated or implied in the forward-looking information. The outcome and timing of the proposed Offering, as well as the Company's actual results, performance or achievement could differ materially from those expressed in, or implied by, such forward-looking information and, accordingly, no assurances can be given that any of the events anticipated by the forward looking information will transpire or occur or, if any of them do, what benefits that the Company will derive from them. The Company's forward-looking information is expressly qualified in its entirety by this cautionary statement. Except as required by law, the Company undertakes no obligation to publicly update or revise any forward-looking information.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Arcan Resources Ltd.
    Ed Gilmet
    Chief Executive Officer and President

    Arcan Resources Ltd.
    Douglas Penner
    Executive Vice President and Chief Financial Officer

    Arcan Resources Ltd.
    2500, 308 - 4th Avenue S.W.
    Calgary, AB T2P 0H7
    (403) 262-0321