Exall Energy Corporation
TSX : EE

Exall Energy Corporation

March 07, 2012 15:15 ET

Exall Energy Corporation Announces $10 Million Bought Deal Financing of Convertible Debentures

CALGARY, ALBERTA--(Marketwire - March 7, 2012) -

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

Exall Energy Corporation (TSX:EE) ("Exall", or the "Company") is pleased to announce that it has entered into an agreement with a syndicate of underwriters (the "Underwriters"), co-led by Stonecap Securities Inc. and Emerging Equities Inc. and including Acumen Capital Finance Partners Limited, Dundee Securities Ltd. and Raymond James Ltd., whereby the Underwriters have agreed to purchase, on a bought deal basis, $10 million principal amount of 7.75% convertible unsecured subordinated debentures maturing March 31, 2017 (the "Debentures"). The Company has also granted the Underwriters an over-allotment option to purchase up to an additional $1.5 million principal amount of Debentures on the same terms and conditions, exercisable in whole or in part for a period of 30 days following closing. If the over-allotment option is exercised in full, the total gross proceeds to the Company from the sale of Debentures will be $11.5 million.

The net proceeds from the sale of the Debentures will be used to expand and accelerate the Company's capital program for the development of the Company's Gilwood light oil exploration and development program in Mitsue, Alberta and for additional working capital.

The Debentures will have a face value of $1,000 per Debenture, a maturity date of March 31, 2017, and will be convertible into common shares of the Company at the option of the holder at a conversion price, subject to certain adjustments, of $2.15 per common share (the "Conversion Price"), being the conversion rate of approximately 465.116 Exall common shares for each $1,000 principal amount of Debentures. The Debentures will accrue interest at a rate of 7.75% per annum payable semi-annually in arrears on September 30th and March 31st in each year commencing September 30, 2012. The September 30, 2012 interest payment will represent accrued interest for the period from the closing date. The Debentures will not be redeemable before March 31, 2015. On or after March 31, 2015 and prior to the maturity date, the Company 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 Company on the Toronto Stock Exchange ("TSX") 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 Exall, subordinated to other indebtedness of the Company for borrowed money and ranking equally with all other unsecured subordinated indebtedness.

Subject to specified conditions, Exall 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 Company. Exall also has the option to satisfy its obligation to pay interest through the issuance and sale of additional common shares of the Company.

The offering is scheduled to close on or about March 29, 2012, and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals, including the approval of the TSX and the securities regulatory authorities. The Debentures will be offered by way of a short form prospectus that will be filed with securities regulatory authorities in all provinces of Canada, except Québec.

The Debentures 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 Exall

Exall is a junior oil and gas company active in its business of oil and gas exploration, development and production from its properties in Alberta. Exall Energy is currently developing the new Mitsue area Marten Mountain discovery in north-central Alberta.

Exall Energy currently has 62,328,854 common shares outstanding. The Company's common shares are listed on the Toronto Stock Exchange under the trading symbol EE.

Reader Advisory

This news release contains forward-looking statements, which are subject to certain risks, uncertainties and assumptions, including those relating to results of operations and financial condition, capital spending, financing sources, commodity prices and costs of production. By their nature, forward-looking statements are subject to numerous risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, actual results may differ materially from those predicted. A number of factors could cause actual results to differ materially from the results discussed in such statements, and there is no assurance that actual results will be consistent with them. Such factors include fluctuating commodity prices, capital spending and costs of production, and other factors described in the Company's most recent Annual Information Form under the heading "Risk Factors" which has been filed electronically by means of the System for Electronic Document Analysis and Retrieval ("SEDAR") located at www.sedar.com. Such forward-looking statements are made as at the date of this news release, and the Company assumes no obligation to update or revise them, either publicly or otherwise, to reflect new events, information or circumstances, except as may be required under applicable securities law.

For the purposes of calculating unit costs, natural gas has been converted to a barrel of oil equivalent (boe) using 6,000 cubic feet equal to one barrel (6:1), unless otherwise stated. The boe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method and does not represent a value equivalency; therefore boe may be misleading if used in isolation. This conversion conforms to the Canadian Securities Regulators' National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities.

Please visit Exall Energy's website at: www.exall.com.

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

Contact Information

  • Exall Energy Corporation
    Frank S. Rebeyka
    Vice Chairman
    403-815-6637

    Exall Energy Corporation
    Roger N. Dueck
    President & CEO
    403-237-7820 x 223
    info@exall.com

    Exall Energy Corporation
    Warren F.E. Coles
    VP - Finance & CFO
    403-237-7820 x 224
    www.exall.com