Chamaelo Exploration Ltd.
TSX : CXN

Chamaelo Exploration Ltd.

November 18, 2005 11:48 ET

Chamaelo Announces Financings In Conjunction With Plan Of Arrangement

CALGARY, ALBERTA--(CCNMatthews - Nov. 18, 2005) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW.

Chamaelo Exploration Ltd. (TSX:CXN)("Chamaelo") today announces that, in conjunction with the previously announced proposed plan of arrangement (the "Arrangement") involving a private technology company ("TechCo") and Tournament Energy Ltd. ("Tournament"), TechCo and Tournament have each entered into equity financing agreements, on a "bought deal" private placement basis as more fully described below. The securities will be issued through a syndicate of underwriters co-led by Orion Securities Inc. and Sprott Securities Inc. and includes GMP Securities Ltd., Tristone Capital Inc., Haywood Securities Inc. and National Bank Financial Inc. (collectively, the "Underwriters").

TechCo will issue 10,400,000 subscription receipts ("Subscription Receipts") at a price of $6.75 CDN per Subscription Receipt for gross proceeds of $70,200,000. The Underwriters also have an option to issue an additional 2,600,000 Subscription Receipts ("Underwriters' Option") at the same price for additional gross proceeds of $17,550,000, exercisable until 48 hours prior to closing. Total gross proceeds from the offering of Subscription Receipts, assuming full exercise of the Underwriters' Option, will be $87,750,000. Each Subscription Receipt will be exchanged for one voting common share of TechCo ("Common Share") pursuant to the Arrangement. If the Arrangement is not completed, holders of Subscription Receipts will be entitled to a return of the subscription price plus their pro rata share of any interest earned thereon.

Tournament will issue 800,000 flow-through special warrants ("Special Warrants") for gross proceeds of $6,000,000. The Special Warrants will be converted into Common Shares following the Arrangement at a ratio of 0.8928 of a Common Share per Special Warrant. Conversion of the Special Warrants will result in 714,240 Common shares at an implied issue price of $8.40 per Common Share.

The offering of Subscription Receipts and Special Warrants is expected to close on or about December 7, 2005. The Arrangement is expected to close on or about January 5, 2006.

Brookfield Bridge Fund, who will provide up to $120 million in support of the transaction, has agreed to purchase up to $17,550,000 of voting cumulative convertible preference shares (the "Preferred Shares") of TechCo, at the option of the TechCo. The Preferred Shares will have a first year coupon of 8% and are convertible into Common Shares at an amount equal to approximately $7.76 per Chamaelo share. TechCo can also force conversion in the event that the Common Shares trade at a 35% premium to the conversion price. This subscription will be reduced to the extent that the Underwriters exercise their option to sell additional Subscription Receipts.

The proceeds of the Subscription Receipt offering and the Preferred Share offering will be used to fund a portion of TechCo's payment of the Tournament Cash Consideration (as defined in the Arrangement Agreement) in connection with the acquisition of Tournament pursuant to the Arrangement.

TechCo shareholders, Chamaelo securityholders and Tournament securityholders, together with subscribers to the above private placements will, upon the completion of the Arrangement, all own the securities of an oil and gas exploration and development company carrying on business under the name "Chamaelo Exploration" with expected initial production of approximately 5,000 boe per day.

The Subscription Receipts, the Special Warrants and the Common Shares issuable in exchange for them pursuant to or after the Arrangement and the Preferred Shares and the Common Shares issuable on their conversion have not been registered under the United States Securities Act and may not be offered or sold in the United States except in transactions exempt from registration.

Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf to 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

FORWARD LOOKING STATEMENTS

This news release may contain forward-looking information that involve a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. For this purpose, any statements herein that are not statements of historical fact may be deemed to be forward-looking statements. Such risks and uncertainties include, but are not limited to risks associated with the oil and gas industry.


Contact Information

  • Chamaelo Exploration Ltd.
    Robert Zakresky
    President and Chief Executive Officer
    (403) 705-3006
    or
    Chamaelo Exploration Ltd.
    Nolan Chicoine
    Vice President, Finance and Chief Financial Officer
    (403) 705-3022
    or
    Chamaelo Exploration Ltd.
    700, 639 -5th Ave SW
    Calgary, Alberta T2P 0M9