Cancen Oil Canada Inc.
TSX VENTURE : COI

July 04, 2012 08:45 ET

Cancen Announces Financing For Up To $20.0 Million

EDMONTON, ALBERTA--(Marketwire - July 4, 2012) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE U.S.

Cancen Oil Canada Inc. ("Cancen" or the "Corporation") (TSX VENTURE:COI) is pleased to announce that it has entered into a financing arrangement with Stonecap Securities Inc. ("Stonecap") to raise gross proceeds of up to $20.0 million (the "Financing"). It is anticipated that the Financing will be completed via the Corporation securing a mezzanine credit facility (a "Mezzanine Credit Facility"), and the issuance of convertible debentures and units of the Corporation comprised of common equity and purchase warrants (the "Private Placement").

The net proceeds from the Financing will be used to fund; the acquisition of 100% of the Kinsella Crude Oil Terminal and Blending Facility (the "Kinsella Facility") from Astra Energy Canada Inc. as press released on May 24, 2012, the Corporation's 2012 capital expenditure program and for general working capital purposes.

Mezzanine Credit Facility

Cancen has been in discussions with a number of mezzanine lenders and anticipates that it will be successful in securing a Mezzanine Credit Facility on terms consistent with industry standards and having first security against the existing assets of the Corporation, including the Kinsella Facility. The Corporation will provide further details on the terms and conditions of the Mezzanine Credit Facility upon closing of the Financing.

Private Placement

Cancen has entered into an agreement with a syndicate of agents (the "Agents") led by Stonecap, and including Wolverton Securities Ltd., whereby the Agents have agreed to offer, on a best-efforts private placement basis; (i) 12.0% convertible unsecured subordinated debentures maturing July 31, 2017 (the "Debentures"); and (ii) units of the Corporation (the "Units").

Convertible Debentures

The Debentures will have a face value of $1,000 per Debenture, a maturity date of July 31, 2017, and will be convertible into common shares of the Corporation at the option of the holder at a conversion price, subject to certain adjustments, of $0.85 per common share (the "Conversion Price"), being a conversion rate of 1,176.471 Cancen common shares for each $1,000 principal amount of Debentures. The Debentures will accrue interest at a rate of 12.0% per annum payable semi-annually in arrears on January 31 and July 31 in each year commencing January 31, 2013. The January 31, 2013 interest payment will represent accrued interest for the period from the closing date. The Debentures will not be redeemable before July 31, 2015. On or after July 31, 2015 and prior to the maturity date, the Corporation may, at its option, subject to providing not more than 60 and not less than 30 days prior notice, redeem the Debentures, in whole or, from time to time, in part, at par plus accrued and unpaid interest provided that the volume weighted average trading price of the common shares of the Corporation on the TSX Venture Exchange ("TSX Venture") during the 20 consecutive trading days ending five trading days preceding the date on which the notice of redemption is given is not less than 125% of the Conversion Price.

The Debentures will be direct, unsecured obligations of Cancen, subordinated to other indebtedness of the Corporation for borrowed money and ranking equally with all other unsecured subordinated indebtedness.

Subject to specified conditions, Cancen will have the right to repay the outstanding principal amount of the Debentures, on maturity or redemption, through the issuance of common shares of the Corporation. Cancen also has the option to satisfy its obligation to pay interest through the issuance and sale of additional common shares of the Corporation.

Units

The Units will be issued at a price of $0.60 per Unit and are comprised of one (1) common share and one (1) common share purchase warrant of the Corporation. Each warrant entitles the holder thereof to acquire one additional common share of the Corporation at a price of $0.85 for a period of 24 months following closing of the Private Placement.

Additional Details of the Private Placement

The Private Placement will be made to eligible subscribers in all provinces of Canada in reliance upon certain exemptions from the prospectus and registration requirements under applicable Canadian securities law. Closing of the private placement is scheduled to occur on or about July 31, 2012, and is subject to certain conditions including, but not limited to, the Convertible Debentures and Units being subject to a four month hold period from the closing date of the Private Placement, the receipt of all necessary approvals, including the approval of the TSX Venture and the securities regulatory authorities.

The Convertible Debentures and Units have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

About Cancen

Cancen is an energy services company that focuses on providing specialized services to upstream oil and natural gas companies operating in the Western Canadian Sedimentary Basin. The services provided by Cancen assist these companies with the treatment and sale of crude oil and the handling of by-products associated with oil and natural gas development and production. The services provided by Cancen include crude oil emulsion treatment, oilfield waste processing, and disposal of produced and waste water. As at the date hereof, the Corporation's services are provided at five facilities in Alberta and one facility in British Columbia.

Reader Advisory

This press release contains forward-looking statements and information that are based on the beliefs of management and reflect the Corporation's current expectations. When used in this press release, the words "estimate", "project", "belief", "anticipate", "intend", "expect", "plan", "predict", "may" or "should" and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information. The forward-looking statements and information in this press release include information relating to the acquisition of the Kinsella Crude Oil Terminal and Blending Facility and the completion of the Private Placement. Such statements and information reflect the current view of the Corporation with respect to risks and uncertainties that may cause actual results to differ materially from those contemplated in those forward-looking statements and information.

By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Forward-looking statements are made based on management's beliefs, estimates and opinions on the date that statements are made and the Corporation undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change. Investors are cautioned against attributing undue certainty to forward-looking statements.

The Corporation cautions that the foregoing list of material factors is not exhaustive. When relying on Cancen's forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Corporation has also assumed that material factors will not cause any forward-looking statements and information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.

Neither the 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.

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