NewsCanada NewsWire
CALGARY, April 28
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LONGFORD ENERGY INC. (TSX VENTURE: LFD)
CALGARY, April 28 /CNW/ - Longford Energy Inc. ("Longford" or the "Company") (TSX-V: LFD) is pleased to announce that it has entered into an agreement with a syndicate of underwriters led by Canaccord Genuity Corp. and including GMP Securities L.P., Fraser Mackenzie Ltd., Scotia Capital Inc. and Wellington West Capital Markets (the "Underwriters"), pursuant to which the Underwriters have agreed to purchase 60,000,000 Units of the Company (the "Units") at a price of C
.25 per Unit (the "Offering Price") for aggregate gross proceeds to Longford of C$15,000,000 (the "Offering"). Each Unit will consist of one common share of the Company (a "Common Share") and one-half of a common share purchase warrant (each whole common share purchase warrant a "Warrant"). Each Warrant will entitle the holder thereof to acquire one Common Share of the Company at an exercise price of C
.50 per Warrant for a period of two years from the Closing Date.
The Company has granted the Underwriters an option to purchase an additional 9,000,000 Units at the Offering Price, exercisable at any time, in whole or in part, prior to the Closing Date. The Company will file a preliminary short form prospectus in certain provinces of Canadafor the purpose of qualifying the Common Shares for distribution to the public and the Offering is scheduled to close on or about May 19, 2011(the "Closing Date").
The Company intends to use the net proceeds of the Offering to fund the Corporation's 2011 exploration and development program on the Chia Surkh Block in the Kurdistan Region of Iraq and for general corporate purposes. The Offering is subject to the receipt of all necessary regulatory approvals, including the approval of the TSX Venture Exchange. The Underwriters are entitled to receive a cash commission equal to 6% of the gross proceeds raised from the Offering and will be issued broker warrants that will entitle them to acquire that number of Common Shares equal to 6% of the Units sold under the Offering for a period of 24 months from the Closing Date.
In addition, the Company announces that it has entered into a bridge loan agreement with Aberdeen International Inc. ("Aberdeen"), pursuant to which Aberdeen has agreed to lend Longford $500,000. The loan shall bear interest at an annual rate of 5% and shall mature upon the earlier of: (i) the Closing Date; and (ii) 60 days from the date hereof. Longford and Aberdeen have common directors, being Stan Bharti and the Honourable Pierre Pettigrew, p.c. Accordingly, the loan will be considered a non-arm's length transaction for the purposes of the TSX Venture Exchange.
The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration or an applicable exemption from registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful.