LGX Oil + Gas Inc ROAOF

Oilexco bankers get half if the company is sold

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Oilexco bankers get half if the company is sold

2008-12-19 18:52 ET - News Release

Mr. Brian Ward reports

OILEXCO PROVIDES UPDATE TO DECEMBER 17 FINANCING ANNOUNCEMENT

Oilexco Inc. has received regulatory approval for the equity successfee component of its $47.5-million bridge financing announced inStockwatch on Dec. 17, 2008.

Aspart of the bridge financing, Oilexco and its wholly owned subsidiaryOilexco North Sea Limited (ONSL) agreed to pay the members of itsbanking syndicate an equity success fee effectively upon the occurrenceof any of the following events: (i) an acquisition of more than 50 percent of the voting securities of Oilexco (ii) a sale of all orsubstantially all of the company's assets, or (iii) the payment of anydividend or distribution or return of capital in connection with a saleof all or substantially all of Oilexco's or ONSL's assets. In each casethe specified events require a successful conclusion of the sale orrecapitalization of the company such that the banks can participate insuch a transaction pari passu with all common shareholders of Oilexco.The equity success fee was announced as being payable in the form ofcommon shares of Oilexco provided that certain legal and regulatoryconsiderations could be satisfied; otherwise it will be paid in cash.

Oilexcohas now received conditional listing approval from the Toronto StockExchange for the common shares that may be issued pursuant to theequity success fee. It is anticipated that an exchange rights agreementto evidence the equity success fee will be entered into early next weekbetween ONSL, Oilexco and the Royal Bank of Scotland PLC, on behalf ofthe banks. The maximum number of common shares that may be issued tothe banks is equal to 24.9 per cent of Oilexco's total issued andoutstanding common shares from time to time (presently equal to55,734,374 common shares).

Under TSX rules, the issue of thecommon shares pursuant to the equity success fee would normally requireshareholder approval. Instead, Oilexco will rely on a TSX exemptionfrom the shareholder approval requirement, available due to thecompany's serious financial difficulty. The transaction is designed toimprove Oilexco's financial situation and is considered by Oilexco'sboard of directors to be reasonable for the company in thecircumstances. As a result of Oilexco's reliance on the exemption, theTSX will review the company with respect to meeting the TSX's continuedlisting requirements.

We seek Safe Harbor.