PrimeGen Energy Closes $12MM Milestone Financing

PrimeGen Energy Corp.

PrimeGen Energy has closed a $12 million private placement financing of Series "B" convertible debentures. The Debentures, which are convertible in nature, contain a feature that provides the Company with the ability to make interest and principal payments in cash as opposed to common stock. Zuckerman & Partners, LLC acted as the Company's placement agent.

The terms of the funding include the sale of $12,000,000 of Series B Convertible Debentures that mature 24 months from the date of issuance. The Debentures pay 10% interest on an annual basis and are convertible, at the option of the holder, into PrimeGen common stock at $0.10 per share common share (the "Fixed Conversion Price"). Approximately, $6,000,000 from the sale of the Debentures is being released at the closing, and the balance will be released upon the effectiveness of a registration statement registering common shares underlying the Debentures.

The Debentures contain an amortization schedule such that PrimeGen will be required to make payments on the Debentures, equal to 1/20th of the face value of the Debenture, plus accrued interest, beginning on the sixth (6th) month after the date of issuance. As mentioned above, interest and principal payments may be paid in cash or registered common stock. If PrimeGen elects to make a payment in registered common stock, the payment amount will be made in common stock based on a price equal to 80% of the average of the closing prices for PrimeGen's common stock for the ten (10) days before a payment is due (the "Market Price"). If PrimeGen provides notice that it intends to make an interest and principal payment in cash, the Debenture holders will be forced to accept cash and surrender the redeemed portion of the respective Debenture or convert that portion of the Debenture (including interest) into common stock at the Market Price. It is PrimeGen’s intention to service the debenture payments in cash, commensurate with the Company's production revenues.

The Debenture holders shall be issued three (3) separate warrants. The Series A Warrant gives the holder the right to purchase, for two years, 100% of PrimeGen common shares underlying the Debenture at $.50 per share. The Series B Warrant gives the holder the right to purchase, for two years from the effective date of a registration statement, a number of PrimeGen common shares equal to 50% of the number of common shares underlying the debenture, at $.35 per share. The Series C Warrant has a 7-year term and has an exercise price of $.45 per share, but may only be exercised by a Debenture holder who has exercised an equal number of Series B Warrants.

PrimeGen has the right to force the Series A warrant holders to exercise their warrants if PrimeGen's stock price exceeds $.80 per share. PrimeGen has the right to force the Series B warrant holders to exercise their warrants if PrimeGen's stock price exceeds $.50 per share. The Debenture holders also are restricted or gated in terms of the number of shares underlying the Debenture that they may convert.

Robert Charlton, PrimeGen's President and CEO, stated, "The Company has made significant progress executing our business plan, while at the same time achieving substantial common share appreciation. Our management team believes that this milestone financing will take us that much further down the road towards creating and maximizing shareholder value. With the cash from this financing, the Company can now accelerate its development programs on our Russian properties, by scheduling a ten (10) well drill program. We expect to implement this program over the next six months. In addition, the Company can now expand its current land holdings and reserves by implementing a more aggressive acquisition strategy by focusing on more advanced and larger reserve properties. We look forward to updating our shareholders about our existing and prospective projects as events unfold during this exciting time in the oil and gas business."