MONTREAL, May 5 /CNW Telbec/ - Gale Force Petroleum Inc. (TSXV: GFP) ("Gale Force" or the "Company") today announced that it has closed a CA$5,000,000 straight equity
private placement financing, has made changes to its Board of Directors
and hired new technical personnel.
Ruben Alba and Charles Marleau have joined the Company's Board of
Directors, and Mazen Haddad, Stephen R. Hood, Joseph F. Langston
Antoinette Lizzi, and John Trosclair have stepped down. It was a
condition of the private placement that the Company's Board of
Directors be reduced to 5 members.
"The private placement represents a strong endorsement of Gale Force's
business plan, and will provide us with significant development and
acquisition capital to continue to grow our business", said Michael
McLellan, Chairman and CEO. "The Company should also benefit from its
new, experienced Directors, industry investors and additional technical
and operational personnel".
The Company received gross proceeds of CA$5,000,000 in a private
placement financing through the issuance of 14,090,909 "Common Shares" at $0.22 per share and 8,636,364 Series II Preferred Shares "Series II Preferred Shares" at a price of $0.22 per share.
The Series II Preferred Shares were issued to Iroquois Capital
Opportunity Fund ("ICO Fund"), which is a specialized private equity fund focused on investments in
the oil and gas industry. The Series II Preferred Shares are
non-voting, pay no dividend, and are convertible 1:1 into Common Shares
at the election of the ICO Fund or the Company, subject to a conversion
limit of 9.99%, whereby the shares cannot be converted should ICO Fund,
in conjunction with any Common Shares it already holds, own greater
than 9.99% of the Company's voting Common Shares.
In connection with the private placement, the Company paid an aggregate
of $134,479 in cash commissions, issued 96,854 common shares at a price
of $0.22 per share with an aggregate value of CA$21,308, and issued
2,105,324 non-transferable broker's warrants ("Broker's Warrants") to members of the selling group and various other finders. Each
Broker's Warrant entitles its holder to acquire one Common Share at an
exercise price of $0.22 at any time on or before May 4, 2013.
All of the securities issued by the Company in connection with this
private placement are subject to resale restrictions which expire on
September 5, 2011.
The selling group was led by Palos Merchant Bank, and included All
Group, MGI Securities and Raymond James, all of which are at arm's
length from the Company.
After paying the fees associated with the financing, the Company repaid
the bridge loan of $600,000 it had obtained on March 1, 2011. The
remaining funds are to be used principally for development of the
Company's existing properties, but also for prospective acquisitions,
working capital and general corporate purposes.
DIRECTORS, OFFICERS AND CONSULTANTS
Of the members of the Board of Directors stepping down, Antoinette
Lizzi, CMA, will continue to serve as the Company's Chief Financial
Officer, while each of the other departing members, Mazen Haddad,
Stephen R. Hood, Joseph F. Langston and John Trosclair, P.E., have
agreed to continuing serving as Advisors to the Company for a period of
Ruben Alba, who has joined the Board of Directors, and will also serve
as Chairman of the Reserves Committee, received his Chemical
Engineering Degree from New Mexico State University and has worked in
the oil and gas industry for over 13 years with Halliburton Energy
Services and Superior Well Services. He has an intelligent, energetic
and unique approach to complex reservoir problems involving
geochemistry, geomechanics, surface logistics and environmental
concerns. Ruben has introduced new and novel technologies involving new
fluid chemistry as well as completion processes to reservoirs requiring
cutting edge technology. Ruben now works with Iromad, a specialized oil
and gas technical consultancy (described below). Prior to joining
Iromad, Ruben worked in the management of technical and laboratory
staff in both Halliburton Energy Services and Superior Well Service. He
holds two patents in unique completion technologies and is adept to the
challenges of unconventional reservoirs.
Charles Marleau, who has also joined the Board of Directors, and will
serve as a member of the Reserves Committee and Audit Committee, is
President and Co-Founder of Palos Management. He is responsible for
managing and trading the investment funds and supervises administration
of the fund. Charles graduated from McGill University with a Bachelor's
degree in Economics and completed the Canadian Investment Manager
designation. He serves on Board of Directors of numerous private
companies, a private school and a Canadian public company. Charles is
also a member of the Institutional Equity Traders Association, Montreal
University Club, Montreal Oil Club and the Young Entrepreneurs
The following table summarizes the current Directors and Officers of the
Board of Directors
Michael McLellan - Chairman of the Board
Michael McLellan - Chairman and CEO
Guillaume Dumas - Chairman of the Audit Committee
Emery Johnson - COO
Ruben Alba - Chairman of the Reserves Committee
Antoinette Lizzi - Vice-President and CFO
Guillaume Dumas - Corporate Secretary
The Company has also signed a one year mandate with Iromad, a
specialized oil and gas consultancy to provide the Company with
technical and operational expertise. The fees earned under the
one-year mandate will be US$278,000. A description of Iromad and the
nature of the services it provides can be found below.
The Company also announced that, subject to shareholder approval, it has
amended its stock option plan to a "rolling plan", which would permit
the Company to issue up to 10% of the number of issued and outstanding
common shares. The Company also issued 900,000 options with an
exercise price of $0.33 to directors and consultants, vesting
immediately, subject to the provisions of the Company's stock option
plan. The stock option plan amendment and stock option issuance are
subject to shareholder approval and TSX Venture Exchange approval.
ABOUT GALE FORCE PETROLEUM INC. − www.GaleForcePetroleum.com
Gale Force Petroleum is a public corporation focused on acquiring and
exploiting undervalued oil and gas reserves in mature basins, bringing
operational expertise and capital to lower-risk, development-type
projects. The Company currently owns producing oil and gas properties
in Texas, Oklahoma and Tennessee.
ABOUT PALOS MERCHANT BANK L.P.
Palos Merchant Bank L.P. ("Palos") engages in merchant banking activities and provides a variety of
corporate finance services including: capital-raising, credit
syndication, buyout financing, advice on mergers and acquisitions,
restructuring and due diligence. There are two major differences
between Palos and traditional investment banks: (1) Palos invests its
our own money alongside other investors, typically as the lead
investor, and (2) Palos does not engage in underwriting. Palos
Merchant Bank also becomes involved in the governance of the companies
in which it invests, usually by taking an active role at the Board of
Directors level. The managers of the Palos have extensive experience in
corporate finance, private equity, venture capital and seed financing.
ABOUT IROQUOIS CAPITAL OPPORTUNITY FUND, L.P
Iroquois Capital Opportunity Fund, L.P. ("ICO Fund") is a private equity fund focused on investments in the oil and gas
industry. ICO Fund invests in low risk oil and gas assets and in
technologies that increase production, improve recovery factor and
reduce costs to apply these technologies to change the economics of the
targeted assets. The fund is managed by a seasoned team that includes
former senior national oil company executives, former senior oil
service executives, oilfield technology venture capitalists and
financiers experienced at structuring investments in the oil and gas
ABOUT IROMAD LLC
Iromad was formed through the convergence of veteran oil and gas
professionals, innovative technologists, leading entrepreneurs, and
experienced investment professionals. Iromad's vision is to facilitate
the delivery of technologies for the enhanced development of mature oil
and gas assets and unconventional hydrocarbons, providing cutting-edge
solutions to issues faced by national oil companies and independent
petroleum producers. Iromad focuses on solutions that will increase
recoverable reserves, enhance production, and reduce lifting costs.
This demands a long-term perspective, breadth and depth of expertise,
and solid project management in order to outlast the cyclic nature of
oil and gas commodity markets.
Forward looking statements:
Statements included herein, including those that express management's
expectations or estimates of our future performance, constitute
"forward-looking statements" within the meaning of applicable
securities laws. Forward-looking statements are based on assumptions
and estimates that are subject to various risks and uncertainties,
including the risks disclosed under the heading "Risks and
Uncertainties" in the Company's periodic filings on SEDAR, for example,
in its Management Discussion and Analysis for the year ended June 30,
2010. Such information contained herein represents management's best
judgment as of the date hereof based on information currently
available. The Company does not assume the obligation to update any
forward-looking statements, except as required under applicable law.
"Neither TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release."
SOURCE GALE FORCE PETROLEUM INC.
For further information:
Michael McLellan, CFA, Chairman & CEO, +1.514.221.2030