WesternZagros Secures Additional Funding

By John Lee.

WesternZagros Resources has announced that it has entered into an investment agreement with Crest Energy International LLC, under which Crest will purchase, through a non-brokered private placement, 51,000,000 Common Shares in the Company at $1.25 per share for gross proceeds of $63.75 million.

This price represents an approximate 25 percent premium to the March 8, 2013 closing share price of $1.00. Crest currently holds 9.9% of the issued and outstanding Common Shares and following completion of the Private Placement will hold approximately 19.8%.

In addition, WesternZagros and Crest have entered into a senior secured loan agreement pursuant to which Crest has agreed to loan to WesternZagros US$57.5 million (approx. $59.2 million). The Loan will accrue interest at the rate of 6 percent per annum and will be secured by 10 percent of the outstanding shares of WesternZagros's operating subsidiary.

The Loan, together with all accrued interest, is to be repaid in full on the last day of the 18th calendar month following the month in which funding of the Loan occurs, subject to certain prepayment terms, including but not limited to a partial repayment obligation in the event of a future equity offering by the Company or following the occurrence of an event of default.

The proceeds from the Private Placement and the Loan will be used for WesternZagros's 2013 capital and operating program pursuant to which the Company will focus on the continued appraisal of the Kurdamir Oligocene discovery, exploration activities on the Garmian Block and continued appraisal of the existing Sarqala discovery.

Completion of the Private Placement and the Loan are subject to certain conditions. The Company expects the closing to occur on or before March 18, 2013. The Common Shares issued under the Investment Agreement will be subject to a hold period until the date which is four months from closing.

Pursuant to the Investment Agreement, Crest will continue to have certain rights to participate for its pro-rata share in future equity issuances by the Company. In addition, upon completion of the Private Placement, Crest will have the right to appoint an additional nominee to the Company's Board of Directors. Eric Stoerr, an officer of Crest, has been a member of the Board since August 2012.

RBC Capital Markets acted as financial advisor to the Company on the Private Placement.

(Source: WesternZagros)

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