FIELD ACTIVITY - FINANCING / Intercap Resource Management Corp.
Decenber 19, 1997
Intercap Resource Management Corp. - Yemen Oil Project Commences
Production And Completion Of An Additional U.S.$2.95 Million Financing Of Special Notes
Intercap Resource Management Corp. (IRC/VSE)
Intercap Resource Management Corp. today announces the start of crude oil production from the Kharir field in the East Shabwa permit, approximately 500 kilometres east of Sana'a in the Republic of Yemen. It is anticipated that gross production will increase to 20,000 barrels per day (2,350 net to Intercap) in January 1998.
Intercap's interest in the East Shabwa permit is held via a wholly owned group company's 41.25% shareholding in COMECO Petroleum, Inc. (COMECO). COMECO holds a 28.57% working interest in the project. Other participants include TOTAL Yemen, S.A. as operator with a 28.57% interest, Unocal Yemen, Ltd. also with a 28.57% interest and Kuwait Foreign Petroleum Exploration Co. with a 14.29% interest.
Oil production is scheduled to come from three commercial fields - Kharir, Atuf Northwest and Wadi Taribah - which were discovered in the East Shabwa permit. A second phase of development on the permit will be decided in late 1998, after accumulation of production statistics from the Kharir field and additional data are obtained on the reservoirs.
Intercap is also pleased to announce that it has closed a further U.S.$2,950,000 of the previously announced private placement of Special Notes for total gross proceeds of U.S.$34,950,000, including the Special Notes issued on December 5, 1997.
The Special Notes are convertible into 8% Series A Senior Convertible Debentures of the Company (the ''Debentures'') at any time and will be automatically converted into Debentures on the earlier of (i) the fifth business day following receipt of a prospectus qualifying the distribution of the Debentures on the conversion of the Special Notes and (ii) December 5, 1998.
The Debentures will be secured, bear interest at 8% (subject to adjustment in certain circumstances) for a five year term and will be convertible into common shares of the Company at a conversion price per share of U.S.$1.24 in the first year, U.S.$1.42 in the second year (subject to adjustment as described below), U.S.$1.60 in the third year, U.S.$2.06 in the fourth year and U.S.$2.70 in the fifth year. Debentures converted into common shares within 23 months of December 5, 1997 will entitle the holders to receive one-half of a warrant (a ''Warrant'') to purchase a common share of the Company for each common share received on the conversion. One Warrant will entitle the holder to purchase one common share of the Company at Cdn. $3.00 per share until 24 months after December 5, 1997. If at any time during the second year of the Debentures the trading price of the Company's shares is Cdn.$1.50 or less for 21 consecutive trading days, the conversion price during the remaining part of the second year will be Cdn.$1.50. Commencing December 5, 1998, the Debentures may be converted in whole, at the Company's option, if at any time the market price of the Company's common shares equals or exceeds 150% of the conversion price on each day the principal stock exchange on which the common shares are then traded is open for trading in any 30 consecutive calendar day period. At any time after the third year of the term of the Debentures, the Company will have the right, upon 60 days' notice to the holders of the Debentures, to prepay the whole of the outstanding principal and accrued interest thereon. During such 60 day period the holders of the Debentures may convert the Debentures
into common shares of the Company.
A total of U.S.$162,250 was paid in cash commissions and 31,162 shares and 237,903 brokers' special warrants were issued in connection with the issue of the additional U.S.$2,950,000 of Special Notes. The brokers' special warrants are exercisable to acquire brokers' warrants which entitle the agents to purchase common shares of the Company at U.S.$1.24 per share until December 5, 1998. |
