Cano Petroleum to Raise $81 Million in Private Equity Deal

Cano Petroleum

Cano Petroleum, Inc. (Amex: CFW) has entered into definitive agreements with institutional investors, in a private equity transaction, to sell approximately 49,116 shares of convertible preferred stock at a price of $1,000.00 per share and approximately 6,584,247 shares of common stock at a price of $4.83 per share, the three day average closing price of the stock prior to the execution of the definitive agreements, plus a warrant component. Written commitments were received on August 25, 2006. The convertible preferred stock will be convertible to common stock at a price of $5.75 per share and the common stock will be subject to 25% warrant coverage at an exercise price of $4.79 per share. Gross proceeds from the transactions are anticipated at approximately $81 million. Closing of the transactions is subject to certain closing conditions, including approval of Cano's senior lender and the American Stock Exchange.

Cash proceeds from the financing will be used to retire approximately $69 million in current debt, provide working capital and for general corporate purposes, including the funding of Cano's fiscal 2007 capital budget.

The convertible preferred, common stock and warrants offered in the private placement have not been registered under the Securities Act or state securities laws and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or an applicable exemption from the registration requirements.

This notice shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of such state.

Company: Cano Petroleum more info
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