Divestco Inc.
TSX VENTURE : DVT

Divestco Inc.

June 11, 2012 13:53 ET

Divestco Announces Offering of 2012 8% Secured Subordinated Debentures With Royalty Interest

CALGARY, ALBERTA--(Marketwire - June 11, 2012) -

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DIVESTCO INC. (TSX VENTURE:DVT) ("Divestco" or the "Corporation"), is pleased to announce the offering of a minimum of $3,000,000 up to a maximum of $5,000,000 in secured subordinated debentures (the "Debentures) with a royalty interest (the "Royalty Interest"). The issue price has been set at $150,000 per unit and a minimum subscription amount of $150,000 has been set for each subscriber unless the Corporation agrees to a lesser amount. The Debenture is RRSP eligible; however the Royalty Interest is not. The Debentures do not have a maturity date except upon demand after an Event of Default, as defined in the Indenture Agreement. The Debentures will bear interest at 8.00% per annum, payable quarterly on the outstanding principal. Principal payments will equal 50% of the net revenues generated by the Seismic Data on or after July 1, 2012 (the "Principal Payments") with the balance of the revenue to be retained by the Company. Net revenues will equal 90% of the gross revenues generated by the Seismic Data as the Corporation will retain 10% of the gross revenues as a management fee. The Seismic Data is comprised of the seismic surveys acquired by Corporation to date. Principal Payments may be postponed if the Corporation is in breach of any of its senior debt covenants. The Corporation intends to use the proceeds from the Debentures to repay its existing subordinated debt.

Upon full repayment of the principal amount of the Debentures and all accrued interest, the Royalty Interest will become effective whereby 25% of the net revenues generated by the Seismic Data, commencing after the last Principal Payment has been made, will be paid as a royalty indefinitely (the "Royalty Payments") with the balance of the revenue to be retained by the Company. Net revenues will equal 90% of the gross revenues generated by the Seismic Data as the Corporation will retain 10% of the gross revenues as a management fee. Royalty Payments may be postponed if the Corporation is in breach of any of its senior debt covenants.

The principal amount of the Debentures and accrued interest, but not the Royalty Interest, shall be secured against the Seismic Data by way of a registered security interest pursuant to the Personal Property Security Act (Alberta) but shall be subordinated to the Corporation's existing and future senior debt.

Finalization of the offering is subject to approval by the Corporation's senior lender. Senior management and the Board of Directors have indicated that they will subscribe for a minimum of $1,000,000 of the offering and up to a maximum of $5,000,000. If the offering is oversubscribed, subscriptions from insiders will be reduced.

A first closing will be held on or before June 30, 2012 or such other date that the Corporation decides upon (the "Initial Closing"). Additional closings may be held up to 30 days after the Initial Closing at the option of the Corporation.

About Divestco Inc.

Divestco is an exploration services company that provides a comprehensive and integrated portfolio of data, software, and services to the oil and gas industry. Through continued commitment to align and bundle products and services to generate value for customers, Divestco is creating an unparalleled set of integrated solutions and unique benefits for the marketplace. Divestco's breadth of data, software and services offers customers the ability to access and analyze the information required to make business decisions and to optimize their success in the upstream oil and gas industry. Divestco is headquartered in Calgary, Alberta, Canada and trades on the TSX Venture Exchange under the symbol "DVT"

This press release contains forward-looking information related to the Company's capital expenditures, projected growth, view and outlook towards future oil and gas prices and market conditions, and demand for its products and services. Statements that contain words such as "could', "should", "can", "anticipate", "expect", "believe", "will", "may" and similar expressions and statements relating to matters that are not historical facts constitute "forward-looking information" within the meaning applicable by Canadian securities legislation. Although management of the Company believes that the expectations reflected in such forward-looking information are reasonable, there can be no assurance that such expectations will prove to have been correct because, should one or more of the risks materialize, or should the assumptions underlying forward-looking statements or forward-looking information prove incorrect, actual results may vary materially from those described in this press release as intended, planned, anticipated, believed, estimated or expected. Readers should not place undue reliance on forward-looking statements or forward-looking information. All of the forward-looking statements and forward-looking information of the Company contained in this press release are expressly qualified, in their entirety, by this cautionary statement. Except where required by law, the Company does not assume any obligation to update these forward-looking statements or forward-looking information if conditions or opinions should change.

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 news release.

Contact Information

  • Divestco Inc.
    Mr. Stephen Popadynetz
    CEO, President and CFO
    587-952-8152

    Divestco Inc.
    Mr. Danny Chiarastella
    Vice President, Finance
    587-952-8027
    www.divestco.com