NEWSNot sure how to take this one...debt reduction is good though.
CALGARY, June 28 /CNW/ - Canacol Energy Ltd. ("Canacol" or the
"Corporation") (TSX VENTURE: CNE) announced today a public short form
prospectus offering, on a bought deal basis, of $41.5 million principal amount
of convertible unsecured debentures with an interest rate of 8.00% per annum,
payable semi-annually on the last day of June and December commencing on
December 31, 2010. The debentures will be convertible at the holder's option
into common shares of the Corporation at any time prior to the maturity date
and the business day immediately preceding the date fixed by the Corporation
for redemption at a conversion price of $1.0526 per common share, being the
ratio of 950 common shares per $1,000 principal amount of debentures. The
debentures will mature on June 30, 2015. The Corporation has entered into an
agreement with a syndicate of underwriters (the "Underwriters") led by
Canaccord Genuity Corp. and including FirstEnergy Capital Corp., Cormark
Securities Inc., Citigroup Global Markets Canada Inc. and Mackie Research
Capital Corp.
Canacol plans to use the net proceeds of the offering to spend US$9.6
million to repay in entirety its reserves based credit facility with Standard
Bank and spend US$18 million to terminate the investment agreements on its
Rancho Hermoso, Entrerrios, and Capella oil fields in Colombia from Gemini Oil
and Gas Fund II, L.P. Both of these transactions are effective on June 30,
2010. These transactions will save the Corporation approximately US$800,000 in
cash flow monthly, and up to US$15 million over the life of the Gemini
investment agreements. The remainder of the net proceeds and the additional
cash flow will be used to fund continued field development and exploration
operations.
In connection with the satisfaction of the termination of the Gemini
investment agreements, upon completion the Corporation will issue US$3.5
million in Common Shares to Gemini which at the Friday, June 25, 2010 closing
price of
.82 per Common Share equaled a total of 4,421,260 Common Shares.
The completion of the Gemini transaction is subject to a number of conditions
including qualification of the Common Shares and TSX Venture Exchange
acceptance. Completion is expected to occur in mid to late July, 2010.
Upon closing of the bought deal the Corporation shall have approximately
US$ 80 million in cash and equivalents with which to fund its development and
exploration programs on its 25 exploration and production contracts through
2010 and 2011.
The offering is subject to normal regulatory approvals including the
approval of the TSX Venture Exchange.