Longreach Announces Closing of $9,700,000 Non-Brokered Private Placement

   Longreach Announces Closing of $9,700,000 Non-Brokered Private Placement

  PR Newswire

  SAINT HELIER, Jersey, April 10, 2014

SAINT HELIER, Jersey, April 10, 2014 /PRNewswire/ --



LONGREACH OIL AND GAS LIMITED (TSXV: LOI) (the" Company " or " Longreach ")
is pleased to announce that it has closed today a non-brokered private
placement of units with investors for aggregate gross proceeds to the Company
of $9,700,000 (the" Private Placement "). The subscription price per unit
was $1,000 and each unit consisted of one 10% secured convertible debenture of
the Company in the principal amount of $1,000 (collectively, the" Debentures
") and 1,000 ordinary share purchase warrants (collectively,the" Warrants
").

Net proceeds of the Private Placement will be used to support the ongoing
drilling of the Company's Kamar well at Sidi Moktar and for general corporate
and administrative purposes. The completion of the Private Placement
(described initially in the Company's press release dated March 3, 2014) will
permit the Company to continue with its contracted drilling activities of the
Kamar well at Sidi Moktar. The Company intends to refinance or repay the
indebtedness under the Debentures through the proceeds of a subsequent public
or private offering of equity securities, which may include a rights offering
to all shareholders of the Company.

The Debentures mature two years from the date of closing and bear interest at
a rate of 10% per annum, payable quarterly in arrears. Following the first
anniversary of the date of closing, holders of Debentures may convert from
time to time, in whole or in part, outstanding principal under the Debentures
into ordinary shares of the Company (" Shares ") at a conversion price equal
to the greater of: (a) $0.30 (subject to typical adjustments in certain
circumstances); and (b) the current market price of the Shares at the time of
conversion (based on the volume weighted average trading price of the Shares
for the 20 trading days ending on the fifth trading day preceding the date of
conversion). Holders of Debentures are restricted from converting Debentures
without the approval of the TSX Venture Exchange if, as a result of
conversion, the holder would hold more than 20% of the issued Shares. In
addition, following the first anniversary of the date of closing, the Company
may redeem from time to time, in whole or in part, outstanding principal under
the Debentures for cash at a redemption price equal to the face value of the
principal amount being redeemed, plus an amount equal to three months of
interest calculated on the amount of Debentures being redeemed.

The obligations of the Company under the Debentures are secured by a security
interest in the Company's present and after acquired property and, in
connection therewith, the Company and holders of Debentures have executed a
general security agreement under the laws of Jersey (Channel Islands)
providing a security interest in favour of the Debenture holders.

The Debentures provide customary events of default including failure to pay
interest when due within 30 days, failure to repay principal on redemption or
maturity, and the occurrence of insolvency events or proceedings. In
addition, the Company has made certain covenants in favour of holders of
Debentures, including covenanting not to incur additional indebtedness,
covenanting to use commercially reasonable efforts to complete an equity
financing within one year for the purpose of repaying or refinancing the
Debentures, and covenanting to use commercially reasonable efforts to seek
shareholder approval in certain circumstances for the creation of a new
control person, if requested by a holder of Debentures who would otherwise
need such approval in order to permit the full conversion of Debentures.

Each Warrant is exercisable for a term of two years following closing and may
be exercised for one Share at an exercise price of $0.30 per Share (subject to
typical adjustments in certain circumstances). Holders of Warrants are also
restricted from exercising Warrants without the approval of the TSX Venture
Exchange if, as a result of exercise, the holder would hold more than 20% of
the issued Shares.

A commission in the amount of $315,800, representing approximately 3.26% of
the gross proceeds, is payable to a finder in connection with the Private
Placement.

Two of the investors in the Private Placement, being Dundee Corporation ("
Dundee ") and funds advised by West Face Capital Inc. (" West Face "), are
significant shareholders of Longreach, holding 12,291,146 Shares (representing
approximately 15.15% of the issued Shares) and 8,571,453 Shares (representing
approximately 10.56% of the issued Shares), respectively. Accordingly, the
participation of these insiders in the Private Placement is considered a
"related party transaction" pursuant to applicable securities laws and the
policies of the TSX Venture Exchange (the" TSXV ").

Dundee subscribed for a total of 2,820 units comprised of $2,820,000 principal
amount of Debentures and 2,820,000 Warrants. Assuming Dundee fully converted
the principal of the Debentures at the minimum conversion price of $0.30 and
fully exercised its Warrants at $0.30 per Warrant, and assuming there was no
restriction on conversion and exercise as discussed above, Dundee would hold
24,511,146 Shares representing approximately 26.25% of the issued Shares
(calculated on a partially diluted basis).

West Face subscribed for a total of 1,880 units comprised of $1,880,000
principal amount of Debentures and 1,880,000 Warrants. Assuming West Face
fully converted the principal amount of the Debentures at the minimum
conversion price of $0.30 and fully exercised its Warrants at $0.30 per
Warrant, West Face would hold 16,718,119 Shares representing approximately
18.72% of the issued Shares (calculated on a partially diluted basis).

The Private Placement was unanimously approved by the board of directors of
the Company (the" Board "), excluding two directors who, as a result of their
position with the participating insiders, declared their interest in the
Private Placement and abstained from voting. The Board has determined that
the fair market value of the consideration for, and the subject matter of, the
Private Placement, as it relates to the participation by related parties, is
less than 25% of the Company's market capitalization. Accordingly, the
Company is exempt from the requirement to obtain a formal valuation and
minority shareholder approval for the Private Placement. The Company did not
file a material change report at least 21 days prior to the closing of the
Private Placement because the participation of, and subscription agreements
with, participating insiders was not known or entered into until immediately
prior to closing.

The Private Placement remains subject to final acceptance by the TSXV. The
Debentures and Warrants (and the Shares which may be issuable pursuant to the
conversion and exercise thereof) are subject to a four month hold period
ending August 11, 2014.

All monetary amounts referred to in this press release are to Canadian
dollars.

About Longreach 

Longreach is an independent oil and gas company focused on its significant
land position in Morocco. The Company has a 50% operated interest in the Sidi
Moktar license area covering 2,683 square kilometres and is working closely
with ONHYM as a committed long-term partner to unlock the hydrocarbon
potential of the region. Morocco offers a politically stable environment to
work within and has extremely favourable fiscal terms to energy producers.
Longreach is a public company listed on the TSX Venture Exchange under the
symbol "LOI".

Additional information about the Company can be found at
http://www.longreachoilandgas.com and under the Company's SEDAR profile at
http://www.sedar.com .

About West Face Capital Inc. 

West Face Capital Inc. is one of Canada's leading alternative investment
managers combining control-through-distressed, high-yield, negotiated finance,
proactive equity, and private equity activities. West Face's capabilities are
underpinned by a seasoned multi-disciplinary investment team, proprietary
origination channels, deep sector expertise, and the ability to address
investment targets in domestic and international markets.

Special Note Regarding Forward Looking Statements 

This press release contains forward-looking statements. These statements
relate to future events or the Company's future performance. All statements
other than statements of historical fact are forward-looking statements.
Forward-looking statements are often, but not always, identified by the use of
words such as "may", "will", "should", "expect", "plan", "anticipate",
"believe", "estimate", "predict", "project", "potential", "targeting",
"intend", "could", "might", "continue" or the negative of these terms or other
similar terms. Forward-looking statements in this press release include, but
are not limited to, statements regarding the potential future equity offering
by the Company for the purpose of repaying or refinancing the Debentures, as
well as the continued development of the Company's projects in Morocco.
Forward-looking statements are only predictions. Forward-looking statements
involve known and unknown risks, uncertainties and other factors that may
cause actual results or events to differ materially from those anticipated in
such forward-looking statements. Some of the risks and other factors which
could cause results to differ materially from those expressed in the
forward-looking statements contained in this press release include, but are
not limited to: general economic conditions in Canada, the Kingdom of Morocco
and globally; industry conditions, including fluctuations in the price of oil
and gas, governmental regulation of the oil and gas industry, including
environmental regulation; fluctuation in foreign exchange or interest rates;
risks inherent in oil and gas operations; political risk, including
geological, technical, drilling and processing problems; unanticipated
operating events which could cause commencement of drilling and production to
be delayed; the need to obtain consents and approvals from industry partners,
regulatory authorities and other third-parties; stock market volatility and
market valuations; competition for, among other things, capital, acquisitions
of reserves, undeveloped land and skilled personnel; incorrect assessments of
the value of acquisitions or resource estimates; any future inability to
obtain additional funding, when required, on acceptable terms or at all;
credit risk; changes in legislation; any unanticipated disputes or
deficiencies related to title matters; dependence on management and key
personnel; and risks associated with operating in and being part of a joint
venture. Although the forward-looking statements contained in this press
release are based upon assumptions which management of the Company believes to
be reasonable, the Company cannot assure that actual results will be
consistent with its expectations and assumptions. Material factors and
assumptions which management of the Company has considered in connection with
making the forward-looking statements in this press release include that the
Company will be able to raise adequate proceeds and refinance or repay the
Debentures on terms acceptable to the Company. Undue reliance should not be
placed on the forward-looking statements contained in this news release as
there can be no assurance that the plans, intentions or expectations upon
which they are based will occur. These statements speak only as of the date
of this press release, and the Company does not undertake any obligation to
publicly update or revise any forward-looking statements except as expressly
required by applicable securities laws.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that
term is defined in policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release. 

For further information:

Martin Arch Chief Financial Officer and Secretary Tel: +44-203-137-7756
march@longreachoilandgas.com
 
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