Magnum Energy Inc.
TSX VENTURE : MEN

Magnum Energy Inc.

April 02, 2012 09:30 ET

Magnum Energy Inc. Announces Financing Engagement

CALGARY, ALBERTA--(Marketwire - April 2, 2012) - MAGNUM ENERGY INC. (TSX VENTURE:MEN) -

THIS PRESS RELEASE DOES NOT CONSTITUTE AN OFFER TO SELL SECURITIES OR A SOLICITATION FOR PURCHASERS TO BUY SECURITIES. THIS PRESS RELEASE IS NOT TO BE CONSTRUED AS A PUBLIC OFFERING IN ANY PROVINCE IN CANADA UNLESS A PROSPECTUS RELATING THERETO HAS BEEN ACCEPTED FOR FILING BY A SECURITIES COMMISSION OR SIMILAR AUTHORITY IN SUCH PROVINCE.

NOT FOR DISSEMINATION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

MAGNUM ENERGY INC. (the "Corporation") is pleased to announce that it has engaged a Canadian investment dealer (the "Agent") to sell, on a commercially reasonable efforts agency basis, up to a maximum of $2,500,000 aggregate principal amount of 11% subordinated secured convertible debentures (the "Debentures") at a price (the "Issue Price") of $1,000 per Debenture (the "Offering").

The Debentures will mature three years after the Closing Date (the "Maturity Date") and will bear interest at an annual rate of 11%, payable semi-annually commencing six months after the Closing date. Each Debenture will be convertible into Class A common shares of the Corporation (the "Common Shares") at the option of the holder at any time prior to the Maturity Date at a conversion price of $0.25 per Common Share, being a conversion rate of 4,000 Common Shares per $1,000 principal amount of Debentures. Holders converting their Debentures will receive accrued and unpaid interest thereon from the period of the last interest payment date on their Debentures prior to the date of conversion to the date that is one day prior to the date of conversion.

The Debentures will be redeemable by the Corporation at any time after two years from issuance for a cash payment consisting of the outstanding principal amount of the Debentures, the outstanding accrued and unpaid interest to the date of redemption and a premium of 2% of the principal amount of the Debentures.

The Debentures will be secured against all of the assets of the Corporation and will rank second after the Corporation's secured lenders. The net proceeds of the Offering will be used for expansion of the Corporation's oil production and reserves in its Provost Viking Oil Project, where it has recently added oil production from its first horizontal well.

The Agent will be paid a cash commission (the "Agent's Commission") equal to 10% of the gross proceeds of the Offering. The Agent will also receive warrants to purchase 10% of the number of Common Shares issuable pursuant to conversion of the debentures at an exercise price of $0.25 per share (1,000,000 Common Shares if the Offering is fully subscribed).

Pursuant to the terms of the engagement, Magnum is required to qualify the Debentures pursuant to a Short Form Prospectus to be filed in Ontario, Saskatchewan, Alberta and British Columbia and to make application to have the Debentures listed and posted for trading on the TSX Venture Exchange. The Offering is subject to completion of due diligence by the Agent, formal documentation and regulatory approval.

About Magnum Energy Inc.

Magnum is a junior oil and gas producer with operations located in the Western Canadian Sedimentary Basin. The Corporation produces from Viking oil operations in Alberta, gas operations in Alberta and maintains a 100% ownership of the Sedalia gas facility in East-Central Alberta.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state in the United States in which such offer, solicitation or sale would be unlawful. The securities referred to herein have not been and will not be registered or sold under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

Forward looking statements:

The information and statements in this news release contain certain forward-looking information relating to: (i) the proposed issuance of the Debentures; and (ii) the use of proceeds of the Offering. All statements other than statements of historical fact may be forward-looking information. This forward-looking information is subject to certain risks and uncertainties and may be based on assumptions that could cause actual results to differ materially from those anticipated or implied in the forward-looking information. These assumptions include market acceptance of the terms of the Offering, the proposed use of proceeds, and that historical costs and expenses will be representative of future costs and expenses. The outcome and timing of the proposed Offering, as well as the Corporation's actual results, performance or achievement could differ materially from those expressed in, or implied by, such forward looking information, and accordingly, no assurances can be given that any of the events anticipated by the forward-looking information will transpire or occur or, if any of them do, what benefits the Corporation will derive from them. The Corporation's forward-looking information is expressly qualified in its entirety by this cautionary statement. Except as required by law, the Corporation undertakes no obligation to publicly update or revise any forward looking information.

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 release.

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