Cancen Closes Second Tranche of its Private Placement and Provides Update on Mezzanine Financing
EDMONTON, ALBERTA--(Aug. 30, 2012) -
Cancen Oil Canada Inc. ("Cancen" or the "Corporation") (TSX VENTURE:COI) is pleased to announce that it has closed the second tranche of its previously announced private placement financing (the "Private Placement") consisting of 12% secured subordinated convertible debentures ("Secured Subordinated Debentures") and units of the Corporation ("Units").
Pursuant to the second closing of the Private Placement, the Corporation raised aggregate gross proceeds of $4,223,800 through the issuance of (i) 3,688 Secured Subordinated Debentures for gross proceeds of $3,688,000; and (ii) 893,000 Units at an issue price of $0.60 per Unit for gross proceeds of $535,800. When combined with the initial closing of the Private Placement on August 2, 2012, Cancen has raised aggregate gross proceeds of $7,183,800 through a syndicate of agents led by Stonecap Securities Inc. and including Wolverton Securities Ltd. (the "Agents") together with Macquarie Private Wealth Inc. as a special selling group member. The Agents were paid a cash commission and advisory fees of $317,982 and were granted 317,307 compensation warrants (the "Compensation Warrants"), with each Compensation Warrant entitling the holder to acquire one common share of the Corporation ("Common Shares") at a price of $0.60 per Share until August 30, 2014.
The net proceeds from the Private Placement will be used to fund the Corporation's 2012 capital expenditure program and for general working capital purposes.
The Corporation and the Agents anticipate that a third and final closing of the Private Placement will take place near the end of September, 2012.
As previously announced on August 3, 2012, the Corporation has entered into a term sheet with Tallinn Capital Corp. ("Tallinn") pursuant to which Tallinn has offered a loan to the Corporation (the "Mezzanine Financing") subject to a number of conditions including the satisfactory completion of due diligence by Tallinn. The Corporation continues to work with Tallinn in providing such information as requested and anticipates being in a position to provide further details on the status of the Mezzanine Financing upon closing of the third tranche of Private Placement. Completion of the Mezzanine Financing is subject to several conditions precedent, including completion of due diligence by Tallinn, Cancen board of director approval, regulatory approval, completion of formal security documentation, Cancen meeting a minimum equity financing condition, as well as the usual other conditions for financings of this nature.
The Secured Subordinated Debentures have a face value of $1,000 per Secured Subordinated Debenture, a maturity date of July 31, 2016, and are convertible into common shares of the Corporation at the option of the holder at a conversion price, subject to certain adjustments, of $1.00 per Common Share (the "Conversion Price") being a conversion rate of 1,000 Cancen Common Shares for each $1,000 principal amount of Secured Subordinated Debentures. The Secured Subordinated Debentures accrue interest at a rate of 12.0% per annum payable semi-annually in arrears on January 31 and July 31 in each year commencing January 31, 2013. The January 31, 2013 interest payment will represent accrued interest for the period from the closing date. After July 31, 2015 and prior to the maturity date, the Corporation may, at its option, subject to providing not more than 60 and not less than 30 days prior notice, redeem the Secured Subordinated Debentures, in whole or in part, at par plus accrued and unpaid interest provided that the volume weighted average trading price of the Common Shares of the Corporation on the TSX Venture Exchange during the 20 consecutive trading days ending five trading days preceding the date on which the notice of redemption is given is not less than 125% of the Conversion Price.
Subject to specified conditions, the holders of the Secured Subordinated Debentures may elect, subject to regulatory approval, to have the Corporation repay the outstanding principal amount of the Secured Subordinated Debentures, on maturity or redemption, through the issuance of common shares of the Corporation.
The Units have an issue price of $0.60 per Unit and are comprised of one (1) common share and one (1) common share purchase warrant of the Corporation. Each warrant entitles the holder thereof to acquire one additional common share of the Corporation at a price of $0.85 for a period of 24 months following closing of the Private Placement.
The Secured Subordinated Debentures and the Units issued as part of the second closing are subject to a four month hold period expiring on December 30, 2012.