Shenul Capital Inc.

July 05, 2011 09:05 ET

Shenul Capital Inc. and Underground Energy, Inc. Announce Closing of Underground's Previously Announced Brokered Financing and Signing of Definitive Agreement

VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 5, 2011) -


Shenul Capital Inc. ("Shenul") (TSX VENTURE:SHE) announces that Underground Energy, Inc. ("Underground") has closed its previously announced brokered private placement financing ("Brokered Financing") of subscription receipts ("Subscription Receipts") at a price of US$1.00 per Subscription Receipt for total gross proceeds of US$25,499,300. Each Subscription Receipt will be convertible into one (1) common share of Underground ("Underground Share") and one-half of one Underground Share purchase warrant ("Warrant") following closing of the Transaction (as defined herein) and subject to the terms and conditions of the subscription receipt agreement entered into among Underground, a subscription receipt trustee and the Agents (as defined herein). Each whole Warrant entitles the holder thereof to acquire one Underground Share at a price of US$1.40 per Underground Share for a period of two years from the closing date of the merger involving Shenul, Underground and Shenul Delaware Inc. (the "Transaction"). The Brokered Financing was led by Raymond James Ltd. ("Raymond James") and included Haywood Securities Inc. and Stifel Nicolaus Canada Inc. (collectively the "Agents"). The Agents received a fee of 6% of the total gross proceeds raised pursuant to the Brokered Financing. The net proceeds from the Brokered Financing together with Underground's current cash balance are expected to fund Underground's exploration and development program through to the middle of 2012, with the majority of the funds directed towards further evaluating, delineating and de-risking Underground's Asphaltea Monterey shale oil prospects in California as well as acquiring additional Monterey shale oil acreage. The remaining funds are expected to be used to complete a seismic program on Underground's prospective shale oil acreage in Nevada, acquire additional prospective shale oil acreage as well as for G&A and working capital over the next 12 months.

Shenul also announces that Shenul and Underground have entered into a definitive agreement in respect of the Transaction. An information circular is anticipated to be mailed to shareholder of Shenul in early July 2011 in connection with a meeting of such shareholders to be held in early August 2011, with closing of the Transaction anticipated to take place shortly thereafter. Additionally, Underground intends to seek shareholder approval by written consent from the holders of 50% + 1 of the Underground shares prior to the end of July 2011.

Cautionary Statements

Certain information included in this press release constitutes forward-looking information under applicable securities legislation. Such forward-looking information is provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes, such as making investment decisions. Forward-looking information typically contains statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project" or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information in this press release may include, but is not limited to, information with respect to: use of proceeds from the Brokered Financing, timing of the mailing of an information circular to Shenul shareholders, timing for obtaining written consent for the Transaction from Underground Shareholders and timing for completion of the Transaction. Forward-looking information is based on a number of factors and assumptions which have been used to develop such information but which may prove to be incorrect. Although Shenul and Underground believe that the expectations reflected in such forward-looking information are reasonable, undue reliance should not be placed on forward-looking information because Shenul and Underground can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this press release, assumptions have been made regarding and are implicit in, among other things: the ability of Shenul and Underground to complete the Transaction and the other transactions described in this press release and the timely receipt of any required regulatory and shareholder approvals. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used. Shenul and Underground undertake no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change, unless required by law. The reader is cautioned not to place undue reliance on this forward-looking information.

The securities of Shenul have not been and will not be registered 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 the registration requirement. 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.

Completion of the Transaction is subject to a number of conditions, including but not limited to, TSX-V acceptance and if applicable pursuant to TSX-V Requirements (as such term is defined under the TSX-V policies), disinterested shareholder approval. Where applicable, 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 or filing statement 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 Shenul should be considered highly speculative.

The TSX-V has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

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 press release.

Contact Information

  • Shenul Capital Inc.
    Steve Vanry

    Underground Energy, Inc.
    Peter Ballachey
    Chief Financial Officer
    805-845-4700 x17