Stetson Oil & Gas Ltd. has entered into an agreement with a syndicate of underwriters led by Canaccord Capital Corporation and including Macquarie Capital Markets Canada Ltd. (the "Underwriters"). The Underwriters have agreed to act as agent for the sale of up to 50,000,000 units of the Company at a price of $0.20 per unit for total gross proceeds of $10,000,000 (the "Offering").
Each unit will be comprised of one common share and one share purchase warrant, with each whole share purchase warrant entitling the holder thereof to acquire one Stetson common share at a price of $0.30 for a period of 24 months following closing.
Stetson has agreed to acquire leases covering 8,185 acres of Bakken prospective Tribal Lands on the Fort Berthold Reservation in North Dakota. Stetson has also entered into agreements to lease approximately 11,000 acres of land held in trust by the U.S. Department of the Interior for individual tribe members ("Allotment Lands"). Stetson will require funds of approximately US$8.3 million to close the acquisition of these leases which is expected to be due and payable by the end of September, 2008.
In consideration for their efforts, the Underwriters will receive a cash commission equal to 6% of the gross proceeds of the Offering and be issued compensation options that will entitle them to acquire a number of Stetson common shares that is equal to 10% of the units sold under the Offering at a price of $0.30 per warrant exercised for a period of 24 months from the closing date.
The Offering is expected to close on or about September 17, 2008. The Offering is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory approvals, including the approval of the
The Company is also pleased to announce that it has received a bridge loan in the principal amount of CDN$1,707,153.17, the proceeds of which are to be used to make a payment of an equal amount to complete the lease of an initial 2,432 gross acres of Bakken prospective lands in North Dakota for which the Company has received final registration approval from the Bureau of Indians. The bridge loan is evidenced by a debenture issued by the Company, with the amount outstanding to accrue interest at a rate of 12% per year,
The Company also announces that, conditional upon closing of the private placement, it intends to issue by way of a special dividend a preferred share ("Series 1 Share") to each shareholder of the Company. Each Series 1 Share shall entitle the holder thereof to receive, in priority to and to the exclusion of any other class of shares of the Corporation, as and when declared by the Board of Directors of the Corporation out of the monies of the Corporation properly applicable to the payment of dividends, the proceeds of any non-appealable judgment or settlement monies paid to and received by the Corporation in connection with its proposed claim against Thomas Weisel Partners Canada Inc. ("Weisel") and any others who may be found to be liable in respect of the Corporation's incomplete bought deal financing of July 2008 pursuant to an engagement letter with Weisel dated July 14, 2008 (the "Claim") prior to December 31, 2013, subject to deduction of any taxes or similar amounts paid or payable or required to be withheld on such payments and of all expenses of or for the account of the Corporation in recovering such monies.
Such amounts shall be paid rateably on all Series 1 Shares then outstanding. The holders of the Series 1 Shares shall not be entitled to any other dividends or distributions and shall not have any other rights or
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