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Detector Seeks Approval for Issuance of Convertible Debenture

2008-04-02 13:21:00

Detector Seeks Approval for Issuance of Convertible Debenture

CALGARY, ALBERTA–( EMWNews – April 2, 2008) – Detector Exploration Ltd. (TSX VENTURE:DEX) announces that Detector is seeking approval from TSX Venture Exchange (“TSX-V”) for an issuance of $800,000 of convertible Debentures on the following terms:

(a) the debentures (1) shall pay interest at the rate of Prime +3%, (2) shall mature on April 30, 2010 and (3) shall be convertible at $0.40 per Common Share from May 1, 2008 to and including April 30, 2009 and $0.50 per Common Share from May 1, 2009 to and including April 30, 2010; and (4) are redeemable by the Corporation at any time after May 1, 2009 upon 14 days notice;

(b) upon conversion of the debentures a debentureholder shall be entitled to receive:

(i) the number of Common Shares of the Corporation (rounded down to the nearest whole number) that the applicable conversion price yields (i.e. $0.40 during the year ended April 30, 2009 and $0.50 during the year ended April 30, 2010) based on the dollar amount of debentures converted;

(ii) a number of Common Share purchase warrants equal to 1/2 of the number of Common Shares obtained on conversion (rounded down to the nearest whole number), each whole warrant exercisable until April 30, 2010 to acquire 1 Common Share at $0.65 per share.

The final terms of the Debentures and Warrants may be varied from the foregoing as may be approved by TSX-V.

As Ronald E. Alexander is President, C.E.O. and Director, Edward A. James is C.F.O. and Director of Detector, (the “Related Parties”), the issuance of the Units to Ronald E. Alexander, and Edward A. James are “related party transactions” within the meaning of Multilateral Instrument 61-101 (previously OSC Rule 61-501 incorporated by reference into TSX-V Policy 5.9). As a related party transaction, the following additional disclosures are provided as required by Section 5.2 of MI 61-101.

The purpose of the Convertible Debenture issue from the perspective of Detector is to provide Detector with capital needed to fund continuing exploration activities. Since the Convertible Debenture issuance transaction only involves up to $800,000, little effect on Detector’s business and affairs is expected from the issuance of the Convertible Debentures.

The Related Parties, to the extent that they hold shares in Detector will experience the same effects as other Detector shareholders as a result of the issuance of the Convertible Debentures. The Related Parties, through their investment in the Convertible Debentures will be entitled to receive interest and return of the principal in priority to shareholders. If the Related Parties exercise the conversion right then the Related Parties will be entitled to receive Common shares at a price of $0.40 to $0.50 (depending on when they convert) which may be below the market price of shares at the time of conversion. If the Related Parties exercise the acquisition right under the Warrants then the Related Parties will be entitled to receive Common shares at a price of $0.65 which may be below the market price of shares at the time of conversion.

The review and approval process that has been adopted by Detector for this transaction is as follows:

a) the Board of Directors of Detector has already approved the issuance of the Debentures in principal and the distribution of this press release describing the Debenture issue;

b) execution of definitive documentation issuing the Debentures will not occur until the Board of Directors as a whole approves the Debenture documentation;

c) Detector has determined that distribution of an information circular to shareholders, preparation and distribution of a formal valuation and seeking of Detector shareholder approval of the Debenture issue is not necessary under MI Policy 61-101 (including TSX-V policy 5.9 which incorporates such policy by reference) because the fair market value of the consideration for the transaction (i.e. the portion the Related Parties are buying) is less than 25% of Detector’s market capitalization (both in terms of the face amount of the units and the number of shares that could be acquired on conversion of the debentures and exercise of the warrants). Detector has determined Detector’s market capitalization to be approximately $2,264,000 based on 11,918,701 Common Shares outstanding and using a market price of $0.19;

d) completion of the issuance of the Units will be subject to final TSX-V approval.

The proposed closing date for the Debenture issue is scheduled for May 1, 2008. Since Detector has determined that the proposed transaction is exempt from the time consuming aspects of NI 61-101 (i.e. preparation of valuations and distribution of proxy materials to shareholders for shareholder approval), the time remaining until the proposed closing date should represent a reasonable amount of time for Detector to complete the transaction.

Detector is an oil and gas corporation whose shares are listed for trading on TSX Venture Exchange Inc. under the symbol DEX.

As of April 2, 2008 Detector has outstanding 11,918,701 Common Shares, and 590,000 options to acquire Common Shares. Detector’s “public float” (total shares outstanding less those held by directors, officers and 10% shareholders and associates) has been calculated by Detector to be 5,736,585 shares.

TSX Venture Exchange Inc. has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

For more information, please contact

Detector Exploration Ltd.
Ronald E. Alexander
President
(403) 264-1880
(403) 265-9105 (FAX)

or

Detector Exploration Ltd.
Suite #650, 520 – 5th Avenue S.W.
Calgary, Alberta, T2P 3R7

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Jordan Taylor

Jordan Taylor is Sr. Editor & writer from San Diego, CA. With over 20 years and 2650+ articles edited rest assured your Press Release will see traction.

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