Argosy arranges $7-million private placementArgosy arranges $7-million private placement
2009-12-10 19:50 ET - News Release
Mr. Peter Salamon reports
ARGOSY ENERGY INC. ANNOUNCES $7,000,000 PRIVATE PLACEMENT
Argosy Energy Inc. has agreed to the terms for a non-brokered private placement financing of common shares and common share purchase warrants. The financing is subject to Toronto Stock Exchange approval.
The financing comprises:
- 1,944,367 units of the corporation at a price $1.80 per unit, each unit consisting of one Argosy share and 0.5 of an Argosy warrant;
- 1.75 million units at a price of $2 per unit, each flow-through unit consisting of one Argosy share issued on a flow-through basis and 0.5 of an Argosy warrant.
Each whole Argosy warrant shall entitle the holder thereof to receive one Argosy share at an exercise price of $2.25 per share for a period of 18 months. The exercise period of the Argosy warrants may be accelerated in the event that the 20-day trading volume weighted average price of the Argosy shares meets or exceeds $3 during the period such warrants remaining remain outstanding. In addition, the Argosy warrants will be subject to a warrant indenture which will provide for anti-dilution provisions.
The gross proceeds from the financing will be escrowed with counsel for Argosy to be released to Argosy upon receipt of TSX approval except for the amount of $2.7-million which is being used to close the previously announced transaction with Radius Resources Corp. pursuant to which Argosy will acquire all of the issued and outstanding shares of Radius, on a fully diluted basis, resulting in the settlement of all claims (both secured and unsecured) for total consideration of 1.2 million Argosy shares, 600,000 Argosy warrants and $2.5-million in cash, subject to adjustments. This amount will be released upon the earlier of the closing of the transaction or Feb. 28, 2010, unless Argosy is in material breach of its obligations to Radius and the transaction does not close in which event the $2.7-million will be returned to the subscribers therefor. Please refer to the joint press release of Radius and the Argosy in Stockwatch on Dec. 9, 2009; to view this information, readers are directed to Argosy's SEDAR profile.
The TSX requires shareholder approval where: (i) under a private placement the number of listed securities (common shares) issuable is greater than 25 per cent of the number of listed securities outstanding on a non-diluted basis if the price per security is less than the market price; (ii) on an acquisition where the number of securities issuable in payment of the purchase price exceeds 25 per cent of the number of securities of the issuer outstanding on a non-diluted basis; and (iii) where the transaction materially affects control of the issuer.
The securities issued pursuant to the financing and the transaction will cause the corporation to exceed the 25 per cent threshold (at the date hereof, there were 10,658,834 common shares of the corporation outstanding). Pursuant to the financing, up to 3,694,367 Argosy shares (34.7 per cent of the current issued and outstanding Argosy shares) and up to 1,847,183 Argosy warrants (17.3 per cent of the current issued and outstanding Argosy shares) may be issued. In addition, the securities issued pursuant to the financing and the transaction may result in the creation of a new control person, as described below.
The TSX normally requires shareholder approval to be obtained from a majority of holders of voting securities at a duly called meeting of shareholders. However, the corporation is seeking exemption from the requirement to hold a meeting of the shareholders pursuant to Section 604(d) of the TSX company manual by providing the TSX with written evidence that holders of more than 50 per cent of the voting securities of the corporation are familiar with the terms of the financing and the transaction and are in favour of it.
Assuming exercise of all of the Argosy warrants issued in connection with the financing, a total of 5,541,550 Argosy shares may be issued pursuant to the financing, which represents 52.0 per cent of the current issued and outstanding Argosy shares (or 34.2 per cent of the issued and outstanding Argosy shares on a fully diluted basis prior to the issuance of securities pursuant to the transaction and 30.8 per cent of the issued and outstanding Argosy shares on a fully diluted basis assuming issuance of the Argosy shares and exercise of the Argosy warrants issuable pursuant to the transaction).
Up to 4,894,367 Argosy shares (45.9 per cent of the current issued and outstanding Argosy shares) and up to 2,447,183 Argosy warrants (23.0 per cent of the current issued and outstanding Argosy shares) may be issued pursuant to both the transaction and the financing.
Assuming exercise of all of the Argosy warrants issued in connection with the transaction and the financing, a total of 7,341,550 Argosy shares may be issued which represents 68.9 per cent of the current issued and outstanding Argosy shares (or 40.8 per cent of the issued and outstanding Argosy shares on a fully diluted basis).
No current insider of the corporation will be participating in the financing. However, under the policies of the TSX, the financing may result in the creation of insiders and a new "control person" (as such term is defined in the TSX company manual) of the corporation, as described below.
UTA Asset Management Corp. manages certain funds that will be subscribing for 1,111,000 units and one million flow-through units. Including the Argosy shares it currently controls, upon closing of the financing, UTA will hold 2,331,000 Argosy shares (representing 16.2 per cent of the issued and outstanding Argosy shares) and 1,055,500 Argosy warrants. Upon closing of the financing and assuming exercise of only the Argosy warrants held by UTA, UTA will hold 3,386,500 Argosy shares, representing 22.0 per cent of the issued and outstanding Argosy shares. Upon closing of the financing and the transaction, UTA will hold 20.4 per cent of the issued and outstanding Argosy shares assuming exercise of only the Argosy warrants held by UTA and 18.8 per cent of the issued and outstanding Argosy shares on a fully diluted basis. UTA will become an insider of the corporation as a result of the financing, and may become a control person upon exercise of the Argosy warrants issued to UTA under the financing.
Qwest Investment Fund Management Ltd. manages funds that will be subscribing for 416,700 units and 500,000 flow-through units. Including the Argosy shares it currently controls, upon closing of the financing, Qwest will hold 1,251,700 Argosy shares (representing 8.7 per cent of the Argosy shares of the issued and outstanding) and 458,350 Argosy warrants. Upon closing of the financing and assuming exercise of only the Argosy warrants held by Qwest, Qwest will hold 1,710,050 Argosy shares, representing 11.5 per cent of the issued and outstanding Argosy shares. Upon closing of the financing and the transaction, Qwest will hold 10.7 per cent of the issued and outstanding Argosy shares, assuming exercise of only the Argosy warrants held by Qwest, and 9.5 per cent of the issued and outstanding Argosy shares, on a fully diluted basis. Qwest may become an insider of the corporation as a result of the financing upon exercise of the Argosy warrants issued to Qwest under the financing.
GMP Securities LP is acting as financial adviser to Argosy in connection with the transaction and the financing.
We seek Safe Harbor.