NG Energy Looks To Raise $25.0 Million Via Convertible Debentures

NG Energy (TSXV: GASX) is looking to raise fresh capital off the back of yesterday’s announced discovery of 783 feet of net pay within the Brujo-1x well. The firm this morning announced that it will be raising funds via senior secured convertible debentures.

“With the additional capital committed in this financing, the Company will be able to complete its phase 1 exploration program with the Agencia Nacional de Hidrocarburos. After the success experienced with the Magico-1x and Brujo-1x wells, we as a management team are more excited than ever with the potential of Sinu-9,” said CEO Serafino Iacono.

The financing will see the company raise gross proceeds of up to $25.0 million via the sale of 25,000 debentures priced at $1,000 per each. Each debenture is expected to bear interest at a rate of 10% per annum, have a maturity of three years, and includes 1,000 warrants with an exercise price of $1.08 per share for a period of three years.

The debt will also be convertible on the close of business on the maturity date, or upon a change of control, at $0.90 per share.

READ: NG Energy Enters Three Year Agreement For Sale Of 8,000 MMBTU Of Gas

Proceeds from the financing are to be used to complete the Brujo-1x well, as well as the Hechicero-1x well before the end of the year. This is expected to provide the required funds for the firm to complete its phase one exploration program at the Sinu-9 cell block, with remaining proceeds to be used for working capital.

Insiders are expected to commit as much as 10% of the total financing, with the financing expected to be lead by a group of strategic investors. The financing is slated to close within thirty days, subject to completion of due diligence by the strategic investors.

NG Energy last traded at $0.89 on the TSX Venture.

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