Kereco Energy Announces Closing of C$70 Million Convertible Debenture Offering and Acquisition of Assets


    (TSX: KCO)

    CALGARY, June 25 /CNW/ - Kereco Energy Ltd. ("Kereco") announces that it
has closed its previously announced financing for C$70 million aggregate
principal amount of convertible unsecured subordinated debentures due June 30,
2012 (the "Debentures"). The bought deal financing was underwritten by a
syndicate co-led by BMO Capital Markets and GMP Securities L.P. and including
CIBC World Markets Inc., Canaccord Capital Corporation, Cormark Securities
Inc., FirstEnergy Capital Corp., Orion Securities Inc. and Tristone Capital
    The Debentures will bear interest at a rate of 4.75% per annum payable
semi-annually, and will be convertible at the option of the holder into common
shares of Kereco at a conversion rate of 100 common shares per $1,000
principal amount of Debentures, which is equal to a conversion price of
C$10.00 per common share, subject to adjustment under certain circumstances as
described in the related indenture.
    The net proceeds from this offering will be used to repay indebtedness
and to fund the balance of Kereco's previously announced exploration and
development capital expenditure program for 2007 and, if not expended in 2007,
for 2008.
    Kereco also announces that its previously announced acquisition of assets
in the Ferrier area of Alberta from a third party for $36.6 million closed on
June 8, 2007, as expected. In conjunction with the acquisition, Kereco now has
a $202 million credit facility in place with its pre-existing banking

    Kereco is a growth oriented, intermediate natural gas exploration,
development and production company operating exclusively in western Canada.
Kereco's common shares are publicly traded on the Toronto Stock Exchange under
the trading symbol "KCO" and the Debentures will be listed and posted for
trading at the opening of market on June 25, 2007 under the symbol "KCO.DB".

    The securities offered have not been registered under the U.S. Securities
Act of 1933, as amended, and may not be offered or sold in the United States
absent registration or an applicable exemption from the registration
requirements. This press release shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of the securities
in any State in which such offer, solicitation or sale would be unlawful.

For further information:

For further information: Kereco Energy Ltd., Grant Fagerheim, President
and Chief Executive Officer, Phone (403) 290-3401; Or Stephen C. Nikiforuk,
Vice-President, Finance and Chief Financial Officer, Telephone: (403)

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