ProSep Inc.

ProSep Inc.

July 14, 2009 23:59 ET

PROSEP Announces Filing of Final Prospectus for Rights Offering

MONTREAL, July 14 - ProSep Inc. (TSX: PRP) ("ProSep" or the
"Company"), dedicated to providing process solutions to the oil and gas
industry, today announced the filing of a final short form prospectus with
securities regulators for the provinces of Québec, Ontario, Alberta and
British Columbia in connection with the previously announced rights offering.

ProSep intends to raise a maximum of $10,000,000 in gross proceeds by
issuing to shareholders (that are residents of Canada and eligible
shareholders in other jurisdictions (the "Eligible Holders")) of record on
July 24, 2009 (the "Record Date"), one right ("Right") for each common share
of ProSep (the "Common Share") held. The Rights will entitle Eligible Holders
to subscribe for and purchase from the Company an aggregate of approximately
76,923,077 Common Shares (assuming full subscription). 1.6223 Rights entitle
the holder to subscribe for one Common Share at the subscription price of
$0.13 on or before 4:00 p.m. (local time at place of exercise in Canada) on
August 20, 2009, (the "Expiration Date"). Assuming full subscription, the
approximate net proceeds are estimated to be $9,694,000 and will be used for
(i) funding lines of credit necessary to ensure proper investment in working
capital; (ii) for issuing performance bonds to customers; and (iii) a small
portion (less than $500,000) will be used for capital expenditures mainly in
small equipment for the Houston plant and some demonstration pilot units of
our proprietary products within the next two years. Moreover, the lower debt
to equity ratio and the cash available will enable ProSep to have greater
access to Export Development Canada guarantee programs and negotiate better
lines of credit and lines for issuing guarantees with the Company's bank.

The previously announced agreement with holders of the Company's existing
debentures (the "Debentures") to convert $7,845,620 of indebtedness into
Common Shares by amending the terms of the Company's existing Debentures is
expected to close on or about July 17, 2009 (the "Amendments"). The Debenture
holders have agreed to participate in the rights offering so as to ensure that
ProSep realizes gross proceeds of at least $4,840,000. As a result of the
Amendments, the Company will issue 60,350,923 Common Shares and will reserve
and keep available 13,178,333 unissued Common Shares (the "Underlying Common
Shares") to permit the conversion of the remaining $3,953,500 debenture at a
conversion price of $0.30 representing 20.45% of all the issued and
outstanding Common Shares and together with the Common Shares issued further
to the Amendments, representing 114% of the 64,443,451 issued and outstanding
Common Shares as at the date hereof. FondAction, Le Fonds de développement de
la confédération des syndicats nationaux pour la coopération et l'emploi
("FondAction") will hold $2,816,000 of the remaining debenture. Assuming the
full conversion of the remaining debenture, FondAction will exercise control
over 33,852,274 Common Shares, excluding shares issuable upon exercise of the
rights, representing 27.13% of all the issued and outstanding Common Shares
further to the Amendments.

"This rights offering, the conversion of almost $8,000,000 of debt into
equity, and the commitment of our debenture holders, directors, and executive
officers to reinvest $4,840,000 will significantly improve ProSep's balance
sheet" said Jacques L. Drouin, President & Chief Executive Officer. "Our
revitalized balance sheet will enable us to invest appropriate working capital
into our projects and operations. Our suppliers and customers will be able to
rely on a more financially solid commercial partner. This should be beneficial
for ProSep as we project a recovery of the upstream oil and gas capital
spending market in 2010 associated with higher and more stable energy prices
and an improved demand for oil and gas."

The Company has relied on the financial hardship exemption included in
Sections 5.5(g) and 5.7(e) of Multilateral Instrument 61-101 - "Protection of
Minority Security Holders in Special Transactions" to be exempted from the
requirement for a formal valuation and a minority shareholder approval. The
Toronto Stock Exchange ("TSX") has also granted the Company an exemption from
the requirement to obtain shareholders' approval for the Amendments and the
issuance of the Underlying Common Shares, in accordance with Section 604(e) of
the TSX Company Manual in consideration of the serious financial circumstances
of the Company. The closing of the rights offering is subject to customary
closing conditions. Following the closing of the Amendments and the rights
offering (assuming full subscription), ProSep will have 201,717,451 Common
Shares issued and outstanding.

ProSep received approval from the TSX for the listing of the Rights and
the Common Shares issuable upon the exercise of the Rights. This approval is
subject to the Company fulfilling all of the listing requirements on the TSX.
The securities offered have not been and will not be registered under the
United States Securities Act 1933 (the "1933 Act"), as amended and, subject to
certain exceptions, may not be offered or sold in the United States.

This news release does not constitute an offer to sell or the
solicitation of an offer to buy these securities. Securities may not be
offered or sold in the United States absent registration or an exemption from
registration under the 1933 Act. The Company does not intend to register any
portion of the rights offering in the United States.

About ProSep Inc.

ProSep Inc. is dedicated to providing process solutions to the oil and
gas industry. ProSep designs, develops, manufactures and commercializes
technologies to separate oil, water and gas generated by oil and gas
production. For more information, please visit

Caution concerning forward-looking statements

This press release may contain forward-looking statements, including
statements regarding the business and anticipated financial performance of
ProSep. These statements are based, among others, on the Company's current
assumptions, expectations, estimates, objectives, plans and intentions
regarding projected revenues and expenses, the economic and industry
environments in which the Company operates or which could affect its
activities, the Company's ability to attract new clients and consumers as well
as its operating costs, raw materials and energy supplies which are subject to
a number of risks and uncertainties. Forward-looking statements can generally
be identified by the use of the conditional tense, the words "may", "should",
"would", "believe", "plan", "expect", "intend", "anticipate", "estimate",
"foresee", "objective" or "continue" or the negative of these terms or
variations of them or words and expressions of similar nature. Actual results
could differ materially from the conclusion, forecast or projection stated in
such forward-looking information. These statements are subject to a number of
risks and uncertainties that may cause actual results to differ materially
from those contemplated by the forward-looking statements. Some of the factors
that could cause such differences include but are not limited to the Company's
ability to develop, manufacture, and successfully commercialize value added
equipments and services, the availability of funds and resources to continue
its operations and pursue its projects, legislative or regulatory
developments, competition, technological change, changes in government and
economic policy, inflation and general economic conditions in geographic areas
where ProSep operates. These and other factors should be considered carefully
and undue reliance should not be placed on the forward-looking statements.

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