CALGARY , July 13, 2016 /CNW/ - Madalena Energy Inc. ("Madalena" or the "Company") (TSXV: MVN and OTCQX: MDLNF) is pleased to announce an initial closing of CAD$1.8 million , primarily to insiders, of a non-brokered private placement of 12% secured convertible debentures with a June 30, 2019 maturity date (the "Convertible Debentures"). The Madalena Board of Directors has authorized the issuance of up to CAD$10 million of Convertible Debentures and as such, additional closings may occur.
The recent positive ownership changes at Coirón Amargo provided the Company with operatorship and a 90% working interest at Coirón Amargo Sur Este . These changes also reduced near-term work commitments at Coirón Amargo and when combined with the proceeds of the private placement, will help to alleviate the current liquidity challenges facing the Company.
The Convertible Debentures are convertible into common shares of the Company ("Common Shares") at a conversion price of CAD$0.25 per Common Share. Interest on the Convertible Debentures will be payable semi-annually, in arrears. The Company may, upon notice to holders of Convertible Debentures, prepay the outstanding principal of the Convertible Debentures and any unpaid interest thereon at a price equal to:
- 106% of such amount if such notice is provided within 6 months of the closing date of the issuance of the relevant Convertible Debentures (the "Closing Date");
- 105% of such amount if such notice is provided between 6 -12 months after the Closing Date;
- 104% of such amount if such notice is provided between 12 -18 months after the Closing Date;
- 103% of such amount if such notice is provided between 18 - 24 months after the Closing Date; and
- 102% of such amount if such notice is provided 24 months (or later, up to the maturity date) after the Closing Date.
If a "Change of Control" (as defined in the trust indenture for the Convertible Debentures) occurs within the time frames above, a similar call premium is payable to holders of Convertible Debentures.
The Convertible Debentures will not be listed on a stock exchange and are subject to a Canadian hold period that expires four months and a day after the Closing Date. The above description of the Convertible Debentures is in summary form and is subject to the details provided in the trust indenture for the Convertible Debentures, a copy of which will be made available on SEDAR.