Prophecy Provides Update on Closing of $1.14 Million Final Tranche of Private Placement
VANCOUVER, BRITISH COLUMBIA--(Marketwired - May 31, 2013) - Prophecy Coal Corp. ("Prophecy" or the "Company") (TSX:PCY)(OTCQX:PRPCF)(FRANKFURT:1P2) provides the following update on the private placement which was the subject of its February 7 and April 16, 2013 news releases (the "Placement").
Prophecy expects shortly to close a second and final tranche of the Placement, which will involve the issuance of 8,142,857 units (each a "Unit") of the Company for aggregate consideration of $1,140,000. Each Unit consists of one common share (a "Share") and 0.75 common share purchase warrant (a "Warrant"), at a purchase price of $0.14 per Unit. Each whole Warrant is exercisable for one common share of Prophecy at a price of $0.18, expiring two years from the date of issue. It is anticipated that the final tranche closing will happen during the week of June 2-June 8, 2013.
The Company amended the Placement to include an additional warrant ("Adjustment Warrant") in each Unit sold in the final tranche. Each Adjustment Warrant may be exercised for no additional consideration for a period of 12 months following the closing of the final tranche of the private placement, for a fraction of a common share of Prophecy. The fraction will be calculated by first dividing the Unit subscription price of $0.14 by the market price (subject to a floor market price of $0.105) at the time of exercise, then subtracting one (1) from that resulting number to determine the fraction. Market price is defined as the 20 day moving average price for the Company's common shares. The Adjustment Warrants must be exercised in their entirety and may not be exercised in part, and the holder of Adjustment Warrants may not sell any securities of the Company within 20 days prior to exercise. Adjustment Warrants may also only be exercised to the extent that the holder continues to hold the shares and warrants comprising the Units of which the Adjustment Warrants formed part.
On April 16, 2013, the Company announced that it had completed the closing of a first tranche of the Placement, raising $613,560 through the issuance of 4,382,571 Units. The Company has applied to the TSX for approval to issue Adjustment Warrants to subscribers who purchased units in the first tranche closing of the Placement. If approved by the TSX, the issuance of these Adjustment Warrants will be subject to disinterested shareholder approval, which will be sought at the Company's next shareholders' meeting.
Upon closing of the final tranche, in total the Company will have raised $1,753,560 through the issuance of 12,525,428 Units in the Placement (exclusive of the Adjustment Warrants). The Placement was reduced from the originally announced 60 million Units due to the prolonged Chinese regulatory approval process required by NewMargin Prophecy Coal Limited, which is at arm's length to the Company, to invest in Canada, and adverse market conditions, resulting in an amendment to NewMargin Prophecy Coal Limited's original subscription of 40 million Units. Insiders purchased 1 million Units of the placement.
Finder's fees of 6% were paid in connection with a portion of the first tranche of the Placement. All securities issued in connection to the Placement are subject to a 4 months and one day hold period from the date of security issuance.
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