Oilexco cancels offering of up to $150 million five-year convertibles

By Rebecca Melvin

New York, Nov. 20 - Oilexco Inc. canceled an offering of up to $150 million of five-year convertible bonds and common shares following a Thursday board meeting, according to a news release.

The board decided to cancel the offering due to it being viewed as overly dilutive to shareholders in light of current market conditions and due to it not reflecting accurately the value of the company's assets, the release said.

The company has appointed Morgan Stanley to assist it in reviewing other strategic and financial options, including mezzanine and debt financing and industry and financial partnerships.

Earlier in the week, the company had filed a preliminary prospectus and an amended prospectus that said the company intended to offer up to $150 million of senior unsecured bonds via a Canaccord Adams Inc.-led syndicate including FirstEnergy Capital Corp. to yield 15% with an initial conversion premium of 22%.

It also intended to offer up to 20 million of common shares, with an issue price of C$2.25 per share.

Net proceeds were to have been used to repay a portion of bank debt, allowing deferral of the remainder until November 2009, to fund 2009 capital spending and to fund general corporate purposes.

The securities were not being offered or registered in the United States and were subject to regulatory approval in the provinces of British Columbia, Alberta, Manitoba and Ontario.

Oilexco is a Calgary, Alta.-based oil and gas exploration and production company active in the United Kingdom, specifically in the Outer Moray Firth and Central Graben areas of the U.K. central North Sea.

Oilexco shares are listed on the London Stock Exchange and the Toronto Stock Exchange under the symbol "OIL."

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