By Angela McDaniels
Seattle, Jan. 18 - Welton Energy Corp. will sell up to C$10.5 million of convertible debentures in a rights offering, according to a company news release.
Under the offering, shareholders as of Jan. 30 will receive transferable rights to subscribe for and purchase C$10.5 million 8% secured convertible debentures due 2009.
Shareholders will receive one right for each common share held, and 3,667 rights will entitle the holder to purchase a convertible debenture at a price of C$1,000 on or before Feb. 24.
Rights holders will under certain conditions be entitled to subscribe for additional convertible debentures.
The debentures will be convertible into Welton Energy common shares at a conversion price of C$1.55 per share at any time prior to the earlier of the last business day before a redemption date or the debentures' maturity date.
The stock closed at C$1.44 on Wednesday. The company has 38,502,974 common shares outstanding.
After July 15, 2007, the company may redeem the convertible debentures if the weighted average trading price of its common shares exceeds C$2.06 for a period of 20 days.
Proceeds will be used principally to repay a note that was advanced to acquire Era Oil & Gas Corp. in September and is owed to some of Welton Energy's directors and Brompton Financial Ltd.
Brompton Financial, which owns 14.2% of Welton's outstanding common shares, and Welton Energy's directors, who own 15.06% of Welton's outstanding common shares, anticipate participating in the offering to the full extent of the common shares they hold, the company said.
Brompton Financial also has provided a standby commitment to subscribe for any convertible debentures not taken up by other shareholders.
Welton Energy, an oil and gas exploration and development company based in Calgary, Alta., filed a prospectus for the offering.
| Issuer: | Welton Energy Corp.
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| Issue: | Rights for C$10 million 8% secured convertible debentures due 2009
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| Expiration: | Feb. 24
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| Ratio: | 1 right per share, 3,667 shares per C$1,000 convertible debenture
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| Stock symbol: | TSX: WLT
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| Share price: | C$1.44 at close Jan. 18
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| Convertible debentures
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| Maturity: | 2009
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| Coupon: | 8%
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| Conversion price: | C$1.55
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| Call: | After July 15, 2007 subject to C$2.06 hurdle
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