Non-brokered deal sells notes to strengthen working capital position
By Devika Patel
Knoxville, Tenn., Sept. 20 - Underground Energy Corp. said it has negotiated a $6 million non-brokered private placement of secured convertible debentures.
The convertible debentures mature in 18 months and accrue interest at 15%. The debenture may be converted into common shares at $0.10 per share, which is a 42.86% premium to the Sept. 19 closing share price of $0.07.
Investors will also receive five warrants for each $1.00 invested. The warrants are each exercisable at $0.10 until the debentures have been repaid. The strike price is also a 42.86% premium to the Sept. 19 closing share price.
Settlement of the first tranche is expected Sept. 28, with a final closing slated for Oct. 12.
Proceeds will be used to commission a salt water disposal well at Zaca and to optimize the Chamberlin 3-2 and Chamberlin 2-2 wells. In addition, proceeds will be used to strengthen the company's working capital position and for general corporate purposes.
Underground Energy is a Santa Barbara, Calif., oil and gas exploration and production company.
| Issuer: | Underground Energy Corp.
|
| Issue: | Secured convertible debentures
|
| Amount: | $6 million
|
| Maturity: | 18 months
|
| Coupon: | 15%
|
| Conversion price: | $0.10
|
| Warrants: | Five warrants for every $1.00 invested
|
| Warrant strike price: | $0.10
|
| Agent: | Non-brokered
|
| Pricing date: | Sept. 20
|
| Settlement dates: | Sept. 28, Oct. 12
|
| Stock symbol: | OTCBB: UGGYF
|
| Stock price: | $0.07 at close Sept. 19
|
| Market capitalization: | $14.55 million
|
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