Canada’s Rally Energy announced the closing of a fully subscribed $8.5-million financing managed by Jennings Capital Inc. Net proceeds of approximately $7.9 million are to be used to finance development drilling activities in Rally's Issaran oil field in Egypt.
Some $2.5-million were raised through a unit offering of common shares and warrants and six-million dollars were raised through an offering of 12 percent unsecured convertible subordinated debentures.
According to President and CEO John McLeod, "proceeds of this offering allow Rally to proceed immediately with commencement of an expanded drilling program in Egypt. The first well in our program is expected to spud prior to the end of June."
Development drilling will primarily target large undriled areas of the Nukhul formation that have been identified.
The unit offering was priced at $0.85 per unit. 2,941,177 units were issued. 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.
An agent's commission of $174,000 was paid in relation to unit subscriptions. In addition, 205,882 agent's warrants were issued to the agent. Agent's warrants are exercisable for one dollar per common share on or before Dec. 31, 2004.
The six million dollar, 12 percent unsecured convertible subordinated debentures are entitled to semi-annual interest payments and mature on July 1, 2006. 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 $1.10 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. An agent's commission of $420,000 was paid in relation to debenture subscriptions. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
