The financing will involve the issuance of 11,400,000 Special Warrants to three investors at US$2.23 per Special Warrant. Each Special Warrant entitles the holder to receive, at no additional cost, one common share and one common share purchase warrant. Each common share purchase warrant entitles the holder to purchase one common share at a price of US$2.63 per share until the fifth anniversary date of the closing.
Robert Friedland, Ivanhoe Energy's Deputy Chairman and largest shareholder, will subscribe for 2.2 million special warrants for a total of US$4.9 million. Upon completion of this transaction. Mr. Friedland's overall interest in Ivanhoe Energy will remain at slightly over 20%.
"Ivanhoe Energy is entering the final stages of commercializing its proprietary heavy oil upgrading technology (HTL). Participation in this financing is an opportunity to demonstrate support for the commercialization program and my commitment to helping the company's management team execute their business plan," Mr. Friedland said.
An institutional investor will take one half of the issue for $12.7 million. A third institutional investor subscribed for 3.5 million Special Warrants for a total of US$7.8 million of which US$4 million will be used to retire long-term debt.
These transactions will result in a net cash infusion of approximately US$21.4 million plus the elimination of $4 million of Ivanhoe Energy's long- term debt. The transaction is expected to close next week.
The Special Warrants, common shares and purchase warrants issuable upon the exercise of the Special Warrants, and the common shares issuable upon the exercise of the purchase warrants, have not been, and will not be, registered under the United States Securities Act of 1933, as amended, nor under the securities laws of any U.S. state. These securities may not be offered or sold in the United States unless registered under the Securities Act of 1933 or an exemption from registration is available.
Ivanhoe Energy is an independent international oil and gas exploration and development company pursuing long-term growth in its production and reserve base using key technologies, including its proprietary heavy oil upgrading process, state-of-the-art drilling and enhanced oil recovery (EOR) techniques and the conversion of natural gas to liquids (GTL). Core operations are in the United States and China, with business development opportunities worldwide.
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