Oilexco arranges $150-million (U.S.) offering

2008-11-19 20:06 ET - News Release

Mr. Arthur Millholland reports

OILEXCO FILES AMENDED AND RESTATED PRELIMINARY PROSPECTUS FOR OFFERING OF UP TO U.S. $150,000,000 OF SENIOR UNSECURED CONVERTIBLE BONDS AND UP TO 20,000,000 COMMON SHARES

Oilexco Inc. has filed an amended preliminary prospectus with securities regulators in certain provinces of Canada for an offering of convertible senior unsecured bonds and common shares. The offering is being marketed on a commercially reasonable efforts basis by a syndicate led by Canaccord Adams Inc. and including FirstEnergy Capital Corp.

The offering being marketed consists of up to $150-million (U.S.) total principal amount of convertible senior unsecured bonds due 2013 and up to 20 million common shares at an issue price of $2.25 (Canadian). Subject to market conditions, the offering is anticipated to close on or about Dec. 5, 2008.

The bonds are expected to be senior, unsecured obligations of Oilexco bearing interest at an annual rate of 15 per cent, payable quarterly in arrears commencing in March, 2009, and maturing five years and one day following the closing date. Bonds are expected to be convertible at the option of the holder into common shares of Oilexco at a conversion price (using a fixed exchange rate of $1.00 (U.S.) equals $1.2239 (Canadian)) of $2.74 (Canadian) per common share from the 41st day after the closing date to the sixth business day before the maturity date. If a holder converts bonds before the third anniversary of the closing date, then Oilexco would pay to the holder two-thirds of the nominal value of the remaining interest that would otherwise be payable on the bonds up to the third anniversary of the closing date. The make-whole premium would be payable in cash or (subject to regulatory approval) Oilexco common shares at the option of Oilexco, with the number of common shares determined by the volume weighted average trading price of Oilexco's common shares on the Toronto Stock Exchange for the 10 trading days prior to the date of conversion.

Oilexco would have the right to convert all but not some only of the bonds into common shares at the same conversion price from the date which is three years and 21 days after the closing date if the value of a common share issuable on conversion exceeds 200 per cent of the conversion price over a certain trading period.

The net proceeds from the offering will be used to repay 30 million pounds of bank indebtedness, which allows the deferral of the remaining 70 million pounds until November, 2009, to finance the corporation's 2009 capital spending program at its development properties and for general corporate purposes.

An amended and restated preliminary prospectus qualifying the distribution of the bonds and common shares has been filed in the provinces of British Columbia, Alberta, Manitoba and Ontario and the offering is subject to regulatory approval.

We seek Safe Harbor.