Exall Energy Corporation

Exall Energy Corporation

March 20, 2007 09:58 ET

Exall Energy Announces Closing of Convertible Debenture Financing

TORONTO, ONTARIO--(CCNMatthews - March 20, 2007) - Exall Energy Corporation (the "Corporation") is pleased to announce that it has closed a brokered private placement of 5% convertible debentures ("Debentures") for total gross proceeds of $1,626,500 (the "Private Placement").

The Debentures are convertible into units (each a "Unit"), each Unit being comprised of one (1) common share (each a "Common Share") in the capital of the Corporation and one-half (1/2) of a Common Share purchase warrant, with each whole Common Share purchase warrant entitling the holder thereof to acquire a further Common Share of the Corporation for a period of 12 months at an exercise price equal to 125% of the Conversion or Forced Conversion price. Interest on the Debentures will be payable at the rate of 5% per annum calculated semi-annually in arrears, with interest payable at the time of Conversion, Forced Conversion or if not subject to Conversion or Forced Conversion, at the end of the term. Interest may be payable in cash or in Common Shares, subject to receipt of required regulatory approvals in the case of Common Shares. The Common Shares and Warrants issued upon conversion of the Debentures will be subject to a four-month hold period.

Each $1,000 of principal amount of Debentures will be convertible at the holder's option (the "Conversion") into Units at a conversion price ("Conversion Price") equal to the greater of: (a) the weighted average trading price of the Common Shares on the Toronto Stock Exchange (the "TSX") for the first ten consecutive days of trading less the maximum allowable discount under TSX rules; or (b) $0.30 per Unit. Notwithstanding the foregoing, the Debentures may be converted by the Corporation at any time prior to the end of the one year term thereof and after the Common Shares of the Corporation have traded on the TSX for 10 consecutive trading days at a conversion rate equal to the weighted average trading price for the Common Shares for the 10 day period immediately preceding the date on which notice of such conversion is provided by the Corporation to the Purchaser ("Forced Conversion").

Pursuant to an agency agreement with D&D Securities Company and Canaccord Capital Corporation (collectively, the "Agents") providing for the financing by way of Private Placement, the Agents were paid a cash fee equal to 6% of the gross proceeds and will receive brokers' warrants (the "Broker Warrants"), exercisable into Units, equal to 6% of the maximum number of Units issuable on the Conversion of the Debentures. The Broker Warrants are exercisable for a period of 12 months from the date of issue by the holders thereof to acquire Units at an exercise price equal to the Conversion Price.

The proceeds from the Debentures sold under Financing will be used for the Corporation's development drilling projects, to reduce debt and general working capital purposes.

There are currently 28,026,022 issued and outstanding shares of the Corporation, prior to any conversion of the Debentures.

Contact Information

  • Exall Energy Corporation
    Frank S. Rebeyka
    President and CEO
    (403) 237-7820
    Website: www.exall.com