Toscana Energy Income Corporation
TSX VENTURE : TEI

Toscana Energy Income Corporation

May 21, 2013 15:34 ET

Toscana Energy Income Corporation Announces $15.0 Million Bought Deal Financing and $5.0 Million Private Placement Financing

CALGARY, ALBERTA--(Marketwired - May 21, 2013) -

THIS NEWS RELEASE IS NOT FOR DISSEMINATION IN THE UNITED STATES OR TO ANY UNITED STATES NEWS SERVICES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW.

Toscana Energy Income Corporation ("Toscana Energy" or the "Company") (TSX VENTURE:TEI) is pleased to announce that it has entered into an agreement with a syndicate of underwriters (the "Underwriters") led by National Bank Financial Inc. and including GMP Securities LP, Macquarie Capital Markets (Canada) Ltd. and Sprott Private Wealth LP, pursuant to which the Underwriters have agreed to purchase, on a bought deal basis for resale, $15,000,000 of aggregate principal amount of 6.75% Convertible Unsecured Subordinated Debentures (the "Convertible Debentures") due June 30, 2018 (the "Bought-Deal Offering"). The Company has also granted the Underwriters an option (the "Over-Allotment Option"), exercisable in whole or in part for a period of 30 days following the closing of the Bought-Deal Offering, pursuant to which the Underwriters may purchase up to an additional $2,250,000 principal amount of Convertible Debentures, on substantially the same terms as the Bought-Deal Offering.

The Company is also pleased to announce that it has agreed to a concurrent private placement of $5,000,000 of aggregate principal amount of Convertible Debentures to affiliates or designees of Sprott Inc. on the substantially the same terms as the Bought-Deal Offering (the "Private Placement Offering").

If the Over-Allotment Option is exercised in full, the gross proceeds from the Bought-Deal Offering and the Private Placement Offering will be $22,250,000.

The Convertible Debentures will bear interest from the date of issue at a rate of 6.75% per annum, payable semi-annually in arrears on June 30 and December 31 of each year commencing December 31, 2013. The Convertible Debentures will have a maturity date of June 30, 2018 (the "Maturity Date") and will be convertible at the holder's option into common shares ("Common Shares") of the Company at a conversion price of $19.70 per Common Share (the "Conversion Price"), subject to adjustment in certain events. The Convertible Debentures will not be redeemable on or before June 30, 2016. After June 30, 2016 and prior to June 30, 2017, the Convertible Debentures will be redeemable at the Company's option, in whole or in part, at par plus accrued unpaid interest if the weighted average trading price of the Common Shares for the specified period exceeds 125% of the Conversion Price. On and after June 30, 2017, the Convertible Debentures will be redeemable at the Company's option, in whole or in part, at any time at par plus accrued and unpaid interest.

Toscana Energy will file a preliminary short form prospectus relating to the issuance of the Convertible Debentures pursuant to the Bought-Deal Offering with securities commissions in each of the provinces of Canada other than Quebec. Both the Bought-Deal Offering and the Private Placement Offering are scheduled to close on or about June 11, 2013 (the "Closing Date") and such closings are subject to certain conditions including, but not limited to, the receipt of all necessary approvals, including the approval of the TSX Venture Exchange.

Proceeds from the Bought-Deal Offering and the Private Placement Offering will be used for general corporate purposes and to reduce the amounts owing under the Company's credit facility.

About Toscana Energy Income Corporation

Toscana Energy is a conventional oil and gas producer with the mandate to acquire high quality, long life oil and gas assets including royalties, non-operated working interests and unitized production for yield and capital appreciation. Toscana Energy is managed by Sprott Toscana through Toscana Energy Corporation. Sprott Toscana is a member of the Sprott Group of Companies.

About Sprott Toscana

Sprott Toscana (formerly Toscana Merchant Group) is a team of Calgary-based energy specialists that manage three separate businesses: Toscana Energy (through Toscana Energy Corporation), Toscana Financial Income Trust and Maple Leaf Energy Income LPs. In July 2012, Toscana Merchant Group joined the Sprott Group of Companies when it was acquired by Sprott Inc. (TSX:SII), Canada's leading alternative asset manager and a global leader in resource investing.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements. All statements other than statements of historical fact may be forward-looking statements. Such statements are generally identified by the use of words such as "anticipate", "continue", "estimate", "expect", "forecast", "may", "will", "project", "should", "plan", "intend", "believe" and similar expressions (including the negatives thereof). In particular, this press release contains forward-looking statements pertaining to the following: the use of proceeds of the Bought-Deal Offering and the Private Placement Offering and the anticipated closing date of the Bought-Deal Offering and the Private Placement Offering.

By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond Toscana Energy's control, including that the closing of the Bought-Deal Offering or the Private Placement Offering could be delayed or such offerings may not close at all if the required approvals are not obtained on a timely basis or some other condition to such offerings is not satisfied and those risks and uncertainties relating to results of operations and financial condition, general economic conditions, industry conditions, changes in regulatory and taxation regimes, volatility of commodity prices, escalation of operating and capital costs, currency fluctuations, the availability of services, imprecision of reserve estimates, geological, technical, drilling and processing problems, environmental risks, weather, the lack of availability of qualified personnel or management, stock market volatility, the ability to access sufficient capital from internal and external sources and competition from other industry participants for, among other things, capital, services, acquisitions of reserves, undeveloped lands and skilled personnel. Risks are described in more detail in the Company's Annual Information Form, which is available at www.sedar.com.

The reader is cautioned that the assumptions (including among other things, the anticipated receipt of regulatory and other approvals and the satisfaction of other closing conditions to the above-referenced offerings on the timing contemplated, future oil and natural gas prices; future capital expenditure levels; future production levels; future exchange rates; the cost of developing and expanding the Company's assets; the Company's ability to obtain equipment in a timely manner to carry out development activities; the Company's ability to market the Company's oil and natural gas successfully to current and new customers; the impact of increasing competition, the Company's ability to obtain financing on acceptable terms; and the Company's ability to add production and reserves through the Company's development and acquisition activities) used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Actual results, performance, or achievement could differ materially from those expressed in, or implied by, these forward-looking statements. Toscana Energy can give no assurance that any of the events anticipated will transpire or occur, or if any of them do, what benefits will be derived from them. The forward-looking information contained in this document is expressly qualified by this cautionary statement. Toscana Energy disclaims, except as required by law, any intention or obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise.

This news 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 jurisdiction in which such offer, solicitation or sale would be unlawful. The securities issued pursuant to the financings described herein have not been and will not be registered under the United States Securities Act of 1933 and may not be offered or sold in the United States except in transactions exempt from such registration.

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.

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