GTO Resources completes US$ 165 million equity financing

Alexander Richter 22 Aug 2009

GTO Resources Inc. announces the successful completion of its equity financing efforts, providing the company with US$ 165 million. The group includes Western GeoPower, Polaris Geothermal and privately held Ram Power.

Announced this week, GTO Resources Inc. (NEX BOARD: GTR-H) sent out the following release. This release relates to GTO Resources Inc. and Western GeoPower Corp. (TSX VENTURE: WGP.V) and Polaris Geothermal Inc. (TSX: GEO.TO). Currency below is in Canadian Dollars.

“GTO Resources Inc. (“GTO”) (NEX BOARD: GTR-H) is pleased to announce that it has successfully completed its previously announced equity financing (the “Financing”) of subscription receipts (“Subscription Receipts”) with a syndicate of agents led by Cormark Securities Inc. and including Raymond James Ltd., Ambrian Partners Limited, Canaccord Capital Corporation, Dundee Securities Corporation and Wellington West Capital Markets Inc. (collectively, the “Agents”). Pursuant to the Financing, an aggregate of 59,800,000 Subscription Receipts were issued (including 7,800,000 Subscription Receipts issued pursuant to the exercise in full by the Agents of an over-allotment option) at a price of $3.00 per Subscription Receipt for aggregate gross proceeds of $179,400,000.

The proceeds of the Financing, less the Agents’ expenses, will be held in escrow pending the completion of the business combination involving GTO, Polaris Geothermal Inc., Western GeoPower Corp. and Ram Power, Inc. (the “Business Combination”), as disclosed in the press releases of GTO dated June 30, 2009 and July 15, 2009. Each Subscription Receipt purchased under the Financing will entitle the holder to receive, for no additional consideration, one common share in the combined entity following completion of the Business Combination.

The proceeds of the Financing will be used to develop key projects of the combined businesses upon completion of the Business Combination, debt repayment of the combined entity and for working capital and general corporate purposes.

The gross proceeds of the Financing will be returned to holders of the Subscription Receipts if the Business Combination has not been completed by November 3, 2009.

In connection with the Offering, the Agents received a 6% cash commission, which amount shall remain in escrow pending the completion of the Business Combination. Additionally, the Corporation issued an aggregate of 3,588,000 broker warrants (the “Broker Warrants”) to the Agents, whereby each Broker Warrant entitles the holder thereof to purchase one common share of the Corporation at an exercise price of $3.00 per common share. The Broker Warrants are exercisable for a period of two years commencing upon the completion of certain conditions, including the completion of the Business Combination. In the event that the Business Combination has not been completed by November 3, 2009 the Broker Warrants shall terminate pursuant to their terms.

The Subscription Receipts and the Broker Warrants issued pursuant to the Financing are subject to a hold period under applicable securities laws expiring on December 21, 2009.”

Source: Company release via Yahoo Finance