SG Spirit Gold Inc.

TSX VENTURE : SG


June 21, 2013 06:30 ET

Pangea Energy Corp. Announces Convertible Debenture Financing Up to US$15,000,000

VANCOUVER, BRITISH COLUMBIA--(Marketwired - June 21, 2013) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR RELEASE TO U.S. NEWSWIRE SERVICES

SG Spirit Gold Inc. (TSX VENTURE:SG) ("SG" or the "Company") is pleased to announce that Pangea Energy Corp. ("Pangea") had engaged Salman Partners Inc. to act as its lead agent (the "Lead Agent") to place on a "best efforts" basis by way of private placement, subscription receipts ("Subscription Receipts") exchangeable for convertible debentures (the "Debentures") of Pangea at a price of US$1,000 per Subscription Receipt, subject to acceptance by the TSX Venture Exchange (the "Exchange"). Aggregate gross proceeds from the sale of the Subscription Receipts will be up to a maximum of US$10,000,000 (the "Offering"). The Offering may, at the election of the Lead Agent, be increased up to US$15,000,000, in the event that subscriptions for Subscription Receipts received are greater than US$10,000,000 in aggregate. The Offering is scheduled to close on or about June 30, 2013 or such other date as Pangea and the Agents may agree (the "Closing Date"). The Offering is being conducted in addition to, and in conjunction with, the previously announced private placement of subscription receipts exchangeable for Pangea common shares, which is now expected to close on or about June 30, 2013 (see SG press release of May 22, 2013).

Offering Details

Upon satisfaction of certain conditions, subscribers will have the right to convert each Subscription Receipt, without the payment of any additional consideration and subject to adjustment, into one Debenture upon closing of the business combination (the "Transaction"), announced on April 8, 2013, between Pangea and SG. The common shares of SG will ultimately be the securities receivable upon conversion of the Debentures (if applicable) following the completion of the Transaction. The Debentures can be converted, at the option of the subscriber, at any time from the Escrow Release Time (as defined below) until the Maturity Date which is 2 years from the Escrow Release Time, subject to acceleration in the event of default (the "Maturity Date"), at the conversion price of US$0.50 per Common Share, being 2,000 common shares per each US$1,000 Debenture amount. Subject to adjustment, consolidation or payment of dividends other than in the ordinary course.

The Debentures, which will be direct unsecured obligations for borrowed money and will rank pari passu with all unsecured indebtedness of Pangea, will be transferrable (subject to applicable securities laws), and will bear interest at 8% per annum, payable quarterly on March 31, June 30, September 30 and December 31 of each year. The first payment shall be made on December 31, 2013.

The gross proceeds of the Offering (the "Escrowed Funds") will be held in escrow on behalf of the subscribers with a trustee (the "Escrow Agent") acceptable to the Lead Agent. The Escrowed Funds, less any commission payable to the Agents, will be released from escrow to Pangea contemporaneously with the closing of the Transaction (the "Escrow Release Time"), provided that the following conditions (the "Escrow Release Conditions") have been satisfied before the Escrow Release Time:

  1. All conditions precedent to the closing of the Transaction shall have been satisfied or waived to the satisfaction of the Lead Agent, acting reasonably;

  2. To the extent required in accordance with the rules of the Exchange, the Transaction and the issuance of the common shares issuable on the conversion of the Debentures, shall have been approved by the shareholders of SG and Pangea, if required; and

  3. The Exchange having granted conditional approval allowing SG to become at least a Tier 2 Oil and Gas Issuer.

In the event the Escrow Release Time does not occur within 90 days after the Closing Date of the Offering, the Escrowed Funds, plus any accrued interest earned thereon, shall be returned pro rata to each holder of the Subscription Receipts in exchange for that number of Subscription Receipts held by such holder.

The Debentures will be redeemable at any time prior to the Maturity Date (with no less than 30 and more than 60 days' notice delivered to the Debenture holder) at par plus accrued and unpaid interest provided the Current Market Price (as defined below) exceeds USD$0.75 per common share. "Current Market Price" means the weighted average trading price per common shares on the Exchange for twenty (20) consecutive trading days ending five days prior to the date on which notice of redemption is given to the Debenture holder.

Pangea will pay the Agents an aggregate fee of 6.0% of the gross proceeds from the Offering payable in cash.

The gross proceeds of the Offering, less the expenses of the Agents and the commission payable to the Agents, will be used to effect the Transaction and to fund continuing exploration and developmental activities on Pangea's oil and gas properties.

The securities described herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws, and accordingly, may not be offered or sold within the United States except in compliance with the registration requirements of the U.S. Securities Act and applicable state securities requirements or pursuant to exemptions therefrom. This press release does not constitute an offer to sell or a solicitation of an offer to buy any of Pangea's securities or the Company's securities in the United States.

Completion of the Transaction is subject to a number of conditions, including Exchange acceptance and disinterested shareholder approval. The transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the Management Information Circular to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of SG should be considered highly speculative.

The Exchange has in no way passed upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this press release.

About Pangea

Pangea Energy is a private Canadian-based oil and gas exploration and production company with interests in assets in Romania and is in negotiation to acquire producing and non-producing properties in the United States. Pangea is focused on increasing and optimizing production from oil producing assets, while also undertaking exploration programs on the core oil properties in its portfolio to identify targets and increase reserves.

ON BEHALF OF THE SG BOARD

Adrian Bray, President & CEO

Cautionary Note Regarding Forward-Looking Statements

Information set forth in this news release may involve forward-looking statements under applicable securities laws. Forward-looking statements are statements that relate to future, not past, events. In this context, forward-looking statements often address expected future business and financial performance, and often contain words such as "anticipate", "believe", "plan", "estimate", "expect", and "intend", statements that an action or event "may", "might", "could", "should", or "will" be taken or occur, or other similar expressions. All statements, other than statements of historical fact, included herein including, without limitation; statements about the terms of the Offering, the use of proceeds from the Offering and the terms and completion of the Transaction are forward-looking statements. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following risks: the need for additional financing; operational risks associated with oil & gas exploration; requirement to obtain shareholder approval; failure to execute the definitive agreement for the Transaction, fluctuations in commodity prices; title matters; environmental liability claims and insurance; reliance on key personnel; the potential for conflicts of interest among certain officers, directors or promoters with certain other projects; competition; dilution; the volatility of our common share price and volume and the additional risks identified in the management discussion and analysis section of our interim and most recent annual financial statement or other reports and filings with the Exchange and applicable Canadian securities regulators. Forward-looking statements are made based on management's beliefs, estimates and opinions on the date that statements are made and SG undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change, except as required by applicable securities laws. Investors are cautioned against attributing undue certainty to forward-looking statements.

Neither the 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, and no securities regulatory authority has either approved or disapproved of the contents of this release.

Contact Information

  • SG Spirit Gold Inc.
    Adrian Bray
    President & CEO
    604-681-8030 or 1-866-683-8030
    604-681-8039 (FAX)