Richard - Don - Francoise / Tusk Energy Update
10/25/96 News Release:
OCTOBER 25, 1996
TUSK Announces Financing Arrangements
CALGARY, ALBERTA--TUSK Energy Inc. has executed a letter of
intent with three brokerage firms for the sale of 3.2 million special
warrants at a price of $1.25 per special warrant for gross proceeds
of $4.0 million. Each special warrant will be convertible by the holder
into one common share of TUSK and a half common share purchase
warrant at no additional charge. Two common share purchase
warrants will entitle holders to purchase an additional common share
for $1.40 for a period of one year.
The issue will be co-managed by Jennings Capital Inc., Calgary and
Brenark Securities Inc. and MacDougall, MacDougall and MacTier
Inc., both of Toronto. The agents will receive a commission equal
to 7 percent of the subscription proceeds together with 256,000
agents' warrants entitling the holder to acquire one common share
for each warrant, at a price of $1.25, for a period of one year.
The proceeds of the issue will be used, together with bank
borrowings, to pay for the acquisition by the Company of a 16.73
percent working interest and a 0.87 net profits interest in the
Meekwap D-2A Unit. The acquisition, announced by the Company
in their news release of September 09, 1996, is scheduled to close
November 14, 1996 and to be effective from June 1, 1996.
The acquisition will have a significant impact on TUSK's production
and cash flow. Following the acquisitions, the Company's CASH
FLOW will be approximately $2.5 million or $0.49 per common share
after giving effect to the issuance of special warrants contemplated,
with production in excess of 800 boepd, mostly light oil, and the
Company's Debt/cash flow ratio will be approximately 1.2x.
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