Leader Energy Services Ltd.

Leader Energy Services Ltd.

January 25, 2011 10:24 ET

Leader Energy Services Announces Repurchase of Convertible Debentures and Financing

CALGARY, ALBERTA--(Marketwire - Jan. 25, 2011) - (TSX VENTURE:LEA) – Leader Energy Services Ltd. ("Leader" or the "Company") today announced it has reached an agreement with holders of its 10% convertible subordinated debentures to repurchase 95.4% of the total amount outstanding. Leader issued $15,000,000 of debentures on February 28, 2007, of which $13,160,000 is outstanding. The debentures are convertible at $0.40 per share and mature on March 31, 2012.

In addition, the Company has entered into a term sheet with a new lender for a three-year secured debt facility agreement in the principal amount of $15,000,000. The facility bears interest at an annual rate of 12% compounded and payable quarterly, and is repayable at any time without penalty. At closing the lender shall be issued 4 million share purchase warrants exercisable at a 15% premium to the five-day volume weighted average share price on the term sheet signature date for three years. Closing is expected to occur on or before February 15, 2011 and is subject to certain customary conditions including the receipt of all necessary approvals, including the approval of the TSX Venture Exchange. In addition to the proceeds of the new facility, Leader will use existing working capital to refinance its existing convertible debt.

Upon closing of the financing, Leader will pay $12,560,000 of debenture principal plus $1,400,000 of deferred interest at 110% of face value, for a total of $15,356,000. Additionally the Company will pay accrued interest owing per the debenture agreement up until the closing date of the transaction totalling approximately $630,000. As of January 24, 2011, a total of $1,840,000 of debentures has been converted to common shares of the Company.

Rod Hauser, President of Leader Energy Services said, "These are two significant developments for our Company. In addition to extending the term of our debt facility by two years we will be able to eliminate the likelihood of significant dilution in the number of shares outstanding had our debentures remained in place. More than 31 million shares could have been issued at a conversion price of $0.40 had these remaining debentures been converted."

Whitehorn Merchant Capital Inc. provided financial advisory services to Leader with regards to the new debt facility.

Further information can be found under the Company's listing at www.sedar.com and on the Company's website at www.leaderenergy.com. The number of common shares issued and outstanding at the date hereof is 17,865,000.

Certain statements contained in this press release, including statements which may contain words such as "could", "should", "expect", "estimate", "believe", "likely", "will", or estimates of business activity, and similar expressions and statements relating to matters that are not historical facts, are forward looking statements. Such statements involve known and unknown risks and uncertainties that may cause the actual results, performance or achievements of Leader to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Factors include commodity prices, demand for oil and gas related products and service, competition, political and economic conditions, demand and acceptance of new products and ways of doing business, changes in laws and regulations to which Leader is subject, and the ability to attract and retain key personnel.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.

Contact Information