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Bronco Energy
Message: Announces Private Placement Financing
| April 21, 2009 |
| Bronco Announces Private Placement Financing |
| CALGARY, ALBERTA--(Marketwire - April 21, 2009) - THIS PRESS RELEASE IS NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH US NEWSWIRE SERVICES. Bronco Energy Ltd. ("Bronco" or the "Company") (TSX:BCF) announced today a best efforts private placement (the "Offering") of up to $15 million principal amount of Secured Subordinated Convertible Debentures (the "Debentures"). RBC Capital Markets is the exclusive placement agent and financial adviser to the Company for the Offering. The Company has granted RBC Capital Markets an option, exercisable until 24 hours prior to closing, to place up to an additional $5 million principal amount of Debentures. The Debentures mature on April 30, 2012 and will bear interest at a rate of 6% per annum, payable semi-annually in arrears on April 30 and October 31 each year commencing on October 31, 2009. The Debentures will be convertible into common shares of Bronco, at the option of the holder, at a conversion price of $0.50 per share, subject to customary anti-dilution adjustments. The Debentures will not be redeemable prior to the maturity date. Subscribers of Debentures will also receive 1,000 share purchase warrants (the "Warrants") per $1,000 principal amount of Debentures. Each Warrant will entitle the holder to purchase one common share of the Company, at any time prior to April 30, 2014, at a price of $0.57 per common share, subject to customary anti-dilution adjustments. The net proceeds from the Offering will be used for capital expenditures and working capital purposes. Operations "We are pleased with our production over the last three months and to-date in April," said Peter Pelensky, CEO of Bronco. "This Offering will fund our 2009 capex plan to bring on production from the last ten of our 68 wells. The infrastructure is substantially in place and capex of approximately $4.6 million will further optimize production and upgrade the battery to reduce operating costs further." The average net production estimated for Q1 2009 is 1,047 boepd (including 822 bopd of raw bitumen and 1,353 mcfpd of gas). For the period April 1 to 20, 2009, the average net production estimate is 1,350 boepd (including 950 bopd of raw bitumen and 2,400 mcfpd of gas). With the cost reductions implemented over the past 10 weeks and at current oil and gas prices, Bronco should achieve positive netbacks exiting Q2 2009. Financing Details The Debentures and Warrants will be offered in each of the provinces of Canada by way of private placement pursuant to an exemption from the prospectus requirement and in the U.S. pursuant to an exemption from registration. The Offering is subject to certain closing conditions, including the approval of the Toronto Stock Exchange (the "TSX") and the consent of Bronco's lender under its senior secured credit facility. The Company will provide additional details regarding the terms of the Offering and the Debentures in a subsequent press release. It is anticipated that certain insiders of the Company, including directors and officers, may subscribe for Debentures and Warrants under the Offering. In addition, certain subscribers may become insiders of the Company following completion of the Offering as a result of acquiring Debentures and Warrants convertible or exercisable for 10% or more of the outstanding common shares of the Company. Pursuant to TSX requirements, the Company will provide details of any subscriptions by existing or new insiders, and any effect that the Offering may have on control of the Company, in a subsequent press release. A committee of directors of the Company, free from any interest in the Offering and unrelated to the parties involved in the Offering, has recommended proceeding with the Offering. Based on the recommendation of these directors, their belief that the Company is in serious financial difficulty and their belief that the Offering will improve the Company's financial situation, the board of directors believes that the Offering is reasonable in the circumstances. As the number of common shares issuable pursuant to the conversion of the Debentures and the exercise of the Warrants exceeds the number of securities issuable under the rules of the TSX without shareholder approval, the Company has applied to the TSX for an exemption from the requirement to seek shareholder approval, as required pursuant to Section 607(g) of the TSX Company Manual, in accordance with Section 604(e) of the TSX Company Manual on the basis of the Company's financial hardship. This press release is not an offer to sell securities in the United States. Securities may not be offered or sold in the United States in the absence of registration or an exemption from registration. Disclosure provided in respect of barrels of oil equivalent per day ("boepd") may be misleading, particularly if used in isolation. A boepd conversion ratio of six thousand cubic feet of gas per day ("mcfpd") to one barrel of oil per day ("bopd") is used and is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. |
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