Canada’s Rally Energy has entered into an agreement with Jennings Capital Inc. to raise a maximum of $8.5 million. Net proceeds are to be used to fund development drilling in Rally's Issaran oilfield in Egypt.
A maximum of $2.5 million is to be raised through a unit offering of common shares and warrants, and a maximum of six million dollars is to be raised through an offering of 12 percent unsecured convertible debentures.
Proceeds from this offering will allow Rally to proceed immediately with commencement of an expanded drilling program in Egypt. Development drilling will primarily target large un-drilled areas of the Nukhul formation that have been identified.
The unit offering is priced at $0.85 per unit. Each unit consists of one common share and one-half of a common share purchase warrant. Each full warrant is exercisable for one dollar per common share on or before December 31, 2004.
Closing will occur on or about June 12, 2003. Closing is subject to the execution of a formal agency agreement and receipt of regulatory approvals. An agent's commission of seven percent will be paid in relation to unit subscriptions.
In addition, agent's warrants equal to seven percent of the number of units sold shall be issued to the agent. Agent's warrants will be exercisable for one dollars per common share on or before December 31, 2004.
The 12 percent unsecured convertible debentures are entitled to semi-annual interest payments and have a term of three years. The debentures are convertible, at the option of the holder, at any time prior to July 1, 2005 into common shares at a conversion price of one dollar per common share.
After July 1, 2005, the conversion price increases to $1.1 per common share. The debentures are not redeemable by Rally prior to January 1, 2005. Thereafter, debentures are redeemable at par, in whole or in part, if the closing price of Rally's common shares is at or above two dollars for 30 consecutive trading days.
The debentures will be subordinated to a maximum of four million dollars of bank indebtedness; and to indebtedness incurred as development debt with the primary purpose of financing the costs of development of oil and gas properties owned by the corporation.
An agent's commission of seven percent will be paid in relation to debenture subscriptions. Closing will occur on or about June 12, 2003. Closing is subject to the execution of a formal agency agreement and receipt of regulatory approvals. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
