Strategic American Oil Corporation Closes $2.5 Million Financing


    


    
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<p>CORPUS CHRISTI, Texas, <chron>Oct. 16</chron> /CNW/ -- Strategic American Oil Corporation (OTC Bulletin Board:   SGCA) (the "Company") is pleased to announce that, effective on <chron>October 15, 2009</chron>, the Company completed a private placement (the "Private Placement") financing involving the sale of an aggregate of 12,500,000 units of the Company (each a "Unit") to 30 purchasers (each a "Purchaser") at a subscription price of <money>$0.20</money> per Unit and for gross proceeds of <money>$2,500,000</money>.</p>
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<p>10,890,000 Units were sold for cash consideration, yielding <money>$2,178,000</money>, and 1,610,000 Units were sold in settlement of debt in the aggregate amount of <money>$322,000</money>.  Taking into account the settlement of such debt, and after deducting the payment of <money>$50,000</money> in legal fees pursuant to the terms of the Securities Purchase Agreement (as defined below) and certain finder's fees in the amount of <money>$87,750</money>, the net cash proceeds to the Company were <money>$2,040,250</money> which will be used for working capital purposes and otherwise in the discretion of the Company's management.</p>
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<p>A total of 1,600,000 Units out of the 12,500,000 Units are being held in escrow pending receipt by the Company of subscription funds totaling <money>$320,000</money>, which is expected to occur on or about <chron>Friday, October 16, 2009</chron>.</p>
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<p>Pursuant to the terms of the securities purchase agreement (the "Securities Purchase Agreement"), as entered into between each Purchaser and the Company, each Unit is comprised of one common share (each a "Share") and one transferable common stock purchase warrant (each a "Warrant") of the Company, with each such Warrant being exercisable for one additional common share of the Company (each a "Warrant Share") at an exercise price of <money>$0.35</money> per Warrant Share for a period of five years from the closing of the Private Placement, that is, until <chron>October 15, 2014</chron>.</p>
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<p>Pursuant the terms of the Securities Purchase Agreement and subject to the terms thereof, the Purchasers have a right to participate in subsequent financings by the Company for up to five years from the date of the closing of the Private Placement on the same terms, conditions and price provided for in such subsequent financings.  In addition, the Securities Purchase Agreement contains a price protection provision pursuant to which the Company will be required to issue additional shares to the Purchasers in the event the Company participates in a subsequent financing during the next three years in which securities are issued at less than the per Unit subscription price paid by such Purchasers, provided that the number of additional shares issuable to any Purchaser shall not exceed the number of Shares originally purchased by the Purchaser upon the closing of the Private Placement.</p>
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<p>The Warrants, like the Securities Purchase Agreement, also contain a price protection provision, such that in the event that the Company issues shares or rights to acquire shares at a price less than the exercise price of the Warrants, the exercise price per Warrant Share will be reduced to equal such lower price and the number of Warrant Shares issuable pursuant to the Warrants shall be increased such that the aggregate exercise price, after taking into account the decrease in the exercise price per Warrant Share, equals the aggregate exercise price prior to such adjustment, provided that the number of additional Warrant Shares issuable pursuant to any Warrant shall not, in the aggregate, exceed the number of Warrant Shares originally issuable under such Warrant.</p>
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<p>In addition to the Securities Purchase Agreement, the Company entered into a registration rights agreement with each of the Purchasers, pursuant to which the Company has agreed to file a registration statement to register the Shares and Warrant Shares.</p>
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<p>The Company relied on exemptions from registration under the <location>United States</location> Securities Act of 1933, as amended (the "Securities Act"), provided by Rule 506 of Regulation D (with respect to 29 of the 30 Purchasers) and Regulation S (with respect to the remaining Purchaser), based on representations and warranties provided by the Purchasers in their respective Securities Purchase Agreement and, with respect to the one Purchaser for whom the Company relied upon Regulation S, pursuant to representations and warranties provided by such Purchaser in a side letter entered into by and between such Purchaser and the Company.</p>
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<p>The Shares, the Warrants and the Warrant Shares have not been registered under the Securities Act and may not be offered or sold in the <location>United States</location> absent registration or an applicable exemption from the registration requirements.</p>
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    About Strategic American Oil Corporation

    
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<p>The Company (OTCBB: SGCA) is an exploration and production company with operations in Texas, Oklahoma, Louisiana and Illinois.  The Company draws on an internationally recognized team of geologists, engineers and executives with extensive oil and gas exploration and production experience.  The Company's objective is to find and acquire oil and gas projects of merit and develop those projects to their full potential.</p>
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    For further information please contact:   www.strategicamericanoil.com.

    
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<p>Corporate Office:   Suite 2015, 600 Leopard Street, Corpus Christi, Texas  78473.</p>
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    Investor Relations:   (800) 643-5815.

    Safe Harbor Statements

    
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<p>Except for the statements of historical fact contained herein, the information presented in this news release constitutes "forward-looking statements" as such term is used in applicable <location>United States</location> and Canadian laws. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.  Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects" or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans, "estimates" or "intends", or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved) are not statements of historical fact and should be viewed as "forward-looking statements". Such forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks and other factors include, among others, the actual results of exploration activities, variations in the underlying assumptions associated with the estimation or realization of oil or gas resources, the availability of capital to fund programs and the resulting dilution caused by the raising of capital through the sale of shares, accidents, labour disputes and other risks of the oil and gas industry including, without limitation, those associated with the environment, delays in obtaining governmental approvals, permits or financing or in the completion of development or construction activities, title disputes or claims limitations on insurance coverage.  Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended.  There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements.  Accordingly, readers should not place undue reliance on forward-looking statements contained in this news release and in any document referred to in this news release.</p>
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<p>Forward looking statements are made based on management's beliefs, estimates and opinions on the date the statements are made and the Company undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change, except as required by applicable law.  Such forward-looking statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions, including, the risks and uncertainties outlined in our most recent financial statements and reports and registration statement filed with the <location>United States</location> Securities and Exchange Commission (the "SEC") (available at <a href="http://www.sec.gov">www.sec.gov</a>).  Such risks and uncertainties may include, but are not limited to, the risks and uncertainties set forth in the Company's filings with the SEC, such as the ability to obtain additional financing, the effect of economic and business conditions, the ability to attract and retain skilled personnel and factors outside the control of the Company.  These forward-looking statements are made as of the date of this news release, and the Company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.  Although the Company believes that the beliefs, plans, expectations and intentions contained in this news release are reasonable, there can be no assurance those beliefs, plans, expectations or intentions will prove to be accurate.  Investors should consider all of the information set forth herein and should also refer to the risk factors disclosed in the Company's periodic reports filed from time-to-time with the SEC.</p>
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<p>This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.</p>
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For further information: For further information: Investor Relations of Strategic American Oil Corporation, 1-800-643-5815 Web Site: http://www.strategicamericanoil.com

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STRATEGIC AMERICAN OIL CORPORATION

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