News: Closing of PP CALGARY, March 23, 2012 /CNW/ - Contact Exploration Inc. ("Contact" or the "Company") (TSXV: CEX) is pleased to announce that it has closed its previously announced non-brokered private placement (the "Private Placement") of $1 million of convertible, redeemable, 8% preferred shares ("Preferred Shares") of the Company. Pursuant to the Private Placement, Contact has issued an aggregate of 1,000 Preferred Shares to an exempt buyer on a private placement basis at a stated value (the "Stated Value") of $1,000 per Preferred Share, for aggregate gross proceeds of $1,000,000.
Holders of the Preferred Shares are entitled to a preferred 8% cumulative dividend payable on the last business day of March, June, September and December in each year, commencing on June 29, 2012. Each Preferred Share is convertible at any time at the option of the holder into common shares ("Common Shares") of the Company at a conversion price of
.20 per Common Share, such that each Preferred Share is convertible, based on the $1,000 Stated Value thereof, into 5,000 Common Shares. Additionally, the Preferred Shares are redeemable by the Company at any time for the Stated Value thereof plus all declared but unpaid dividends and are retractable by the holder after one year from the date of issue for the Stated Value thereof plus all declared but unpaid dividends.
The Preferred Shares issued in the private placement, and any Common Shares issued on conversion thereof, are subject to a four month hold period under applicable securities laws, which hold period expires on July 23, 2012.
Contact expects to use the proceeds of the Private Placement to fund ongoing operations and capital programs, including a portion of its capital obligations associated with the drilling of the Corporation's previously announced Montney exploratory well in the Kakwa area of Alberta.