Oilexco Files Amended Preliminary Prospectus

Oilexco Incorporated filed an amended preliminary prospectus with securities regulators for an offering of Convertible Senior Unsecured Bonds and Common Shares. The offer is being marketed on a commercially reasonable efforts basis led by Canaccord Adams Inc., and includes FirstEnergy Capital Corp.

The offer consists of US$150,000,000 aggregate principal amount of Convertible Senior Unsecured Bonds due 2013 and up to 20,000,000 common shares at an issue price of C$2.25. Subject to market conditions, the offering is anticipated to close on or about December 5, 2008.

 The Bonds are expected to be senior, unsecured obligations of Oilexco bearing interest at an annual rate of 15% payable quarterly in arrears commencing in March, 2009 and maturing five years and one day following the closing date. Bonds are expected to be convertible at the option of the holder into common shares of Oilexco at a conversion price of C$2.74 per common share from the 41st day after the closing date to the 6th business day before the maturity date. If a holder converts Bonds before the third anniversary of the closing date, then Oilexco would pay to the holder two-thirds of the nominal value of the remaining interest that would otherwise be payable on the Bonds up to the third anniversary of the closing date. The Make-Whole premium would be payable in cash or Oilexco common shares at the option of Oilexco, with the number of common shares determined by the volume weighted average trading price of Oilexco's common shares on the Toronto Stock Exchange for the ten trading days prior to the date of conversion.
 
Oilexco would have the right to convert all but not some of the Bonds into common shares at the same conversion price from the date which is three years and 21 days after the closing date if the value of a common share issuable on conversion exceeds 200% of the conversion price over a certain trading period.
 
The net proceeds from the offering will be used to repay 30 million of bank indebtedness, which allows the deferral of the remaining 70 million until November 2009, to fund the Corporation's 2009 capital spending program at its development properties and for general corporate purposes.
 
An amended and restated preliminary prospectus qualifying the distribution of the Bonds and Common Shares has been filed in the provinces of British Columbia, Alberta, Manitoba and Ontario and the offering is subject to regulatory approval. The securities offered have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States unless exemptions from the registration requirements of such Act and applicable state securities laws are available.
 
 
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