CruzSur Energy Corp. Closes $3.35M Convertible Debenture Financing

VANCOUVER, May 7, 2019 /CNW/ - CruzSur Energy Corp. (the "Company" or "CruzSur" ) (TSXV: CZR) is pleased to announce that it has closed its previously announced non-brokered private placement of secured convertible debentures ("Financing") for aggregate proceeds of $3,350,000. 

The subscribers to the financing have been issued convertible debentures (Debentures") which will bear interest at the rate of 10% per annum until May 7, 2024.

The principal amount of the Debentures are convertible into units of the Company at a conversion price of $0.15 per unit.  Each unit will be comprised of one common share of the Company and one share purchase warrant.  Each warrant will entitle the holder to purchase one common share of the Company at a price of $0.15 until May 7, 2024.  At the option of the Company, accrued interest may be paid in cash or converted into common shares of the Company at the then market price of the Company's common shares, subject to TSX Venture Exchange approval.

The Debentures and any Units acquired on conversion thereof are subject to a hold period expiring on September 8, 2019.  No finder's fees were paid in connection with the Financing.

The Debentures will be secured by a general security agreement on the assets of the Company.

The Company intends to use the net proceeds from the financing to restructure the Company's portfolio of assets and settle outstanding liabilities.

Insiders of the Company were issued Debentures in the aggregate amount of $1,774,000 and, accordingly the Financing is a related party transaction.  Subscribers participating in the Financing who could potentially become a greater than 20% shareholder of the Company upon conversion of the Debentures have undertaken not to convert their Debentures if such conversion would result in them owning 20% or more of the voting securities of the Company, unless and until shareholder approval (excluding their votes) has been received.

Early Warning Disclosure

Pursuant to the Financing, Frank Giustra and his related entities acquired Debentures of the Issuer in the principal amount of $1,085,000, which is convertible into 7,233,333 common shares and 7,233,333 warrants if converted.  Prior to issuance of the  Debentures, Mr. Giustra, directly and indirectly, held and/or controlled, in aggregate, common shares, representing 10.24% of the current issued and outstanding common shares of the Issuer and 523,875 warrants and 200,000 stock options.  Assuming conversion of the debenture and the exercise of the underlying warrants, pre-existing warrants, and options, Mr. Giustra would own and/or control, directly and indirectly, 17,671,783 common shares, representing 44.84% of the issued and outstanding common shares of the Issuer on a partially diluted basis. As referenced above, Mr. Giustra has undertaken not to convert Debentures if such conversion would result in him owning 20% or more of the voting securities of the Company, unless and until shareholder approval (excluding his votes) has been received.

The Issuer has been advised that Mr. Giustra acquired the Debenture for investment purposes and may in the future acquire or dispose of securities of the Issuer, through the market, privately or otherwise, as circumstances or market conditions warrant. A copy of the Early Warning Report filed by Mr. Giustra may be obtained from the Issuer's SEDAR profile.

Serafino Iacono and his related entities acquired a Debenture of the Issuer in the principal amount of $633,000 which is convertible into 4,220,000 common shares and 4,220,000 warrants if converted.  Prior to issuance of the Debenture, Mr. Iacono directly and indirectly, held and/or controlled, in aggregate, common shares, representing 7.41% of the current issued and outstanding common shares of the Issuer and 131,250 warrants.  Assuming conversion of the Debenture and the exercise of the underlying and pre-existing warrants, Mr. Iacono would own and/or control, directly and indirectly, 10,366,200 common shares, representing 31.61% of the issued and outstanding common shares of the Issuer on a partially diluted basis. As referenced above, Mr. Iacono has undertaken not to convert Debentures if such conversion would result in him owning 20% or more of the voting securities of the Company, unless and until shareholder approval (excluding his votes) has been received.

The Issuer has been advised that Mr. Iacono acquired the Debenture for investment purposes and may in the future acquire or dispose of securities of the Issuer, through the market, privately or otherwise, as circumstances or market conditions warrant. A copy of the Early Warning Report filed by Mr. Iacono may be obtained from the Issuer's SEDAR profile.

About CruzSur Energy Corp.

CruzSur is investing in proven leadership and technology to develop oil and natural gas fields it has acquired in areas surrounding some of the key energy producing areas in Colombia and Argentina. With decades of proven experience in Latin America and global energy development, CruzSur's leadership is working with local partners and service providers to deliver the energy for Latin America's future.

Forward-Looking Information

Except for the statements of historical fact, this news release contains "forward-looking information" within the meaning of the applicable Canadian securities legislation that is based on expectations, estimates and projections as at the date of this news release. The information in this news release about the completion of the operations described herein, and other forward-looking information includes but is not limited to information concerning the intentions, plans and future actions of the parties to the transactions described herein and the terms of such transaction. 

Factors that could cause actual results to differ materially from those described in such forward-looking information include, but are not limited to, risks related to the Company's inability to perform the proposed operations.

The forward-looking information in this news release reflects the current expectations, assumptions and/or beliefs of the Company based on information currently available to the Company. In connection with the forward-looking information contained in this news release, the Company has made assumptions about the Company's ability to complete the planned operations and activities. The Company has also assumed that no significant events will occur outside of the Company's normal course of business. Although the Company believes that the assumptions inherent in the forward-looking information are reasonable, forward-looking information is not a guarantee of future performance and accordingly undue reliance should not be put on such information due to the inherent uncertainty therein.

Any forward-looking information speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise.

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.

SOURCE CruzSur Energy Corp.

CruzSur Energy Corp., Ralph Gillcrist CEO & President, Chris Reid CFO, Tel: [phone], E-mail: [email protected]