Horizon Petroleum closes tranche of debenture financing

Executive Summary

• Horizon Petroleum Ltd. has closed an initial tranche of a secured convertible debenture unit offering, raising $170,000 in aggregate gross proceeds from six investors.
• The financing includes significant equity upside, with each $1,000 unit convertible into 10,000 common shares and 5,000 warrants, subject to specific exercise prices and timelines.
• A portion of the financing involves related-party transactions, with directors and officers subscribing to 125 units, relying on specific exemptions from Multilateral Instrument 61-101.

Key Details

• Transaction Structure: Closed initial tranche of 170 secured convertible debenture units.
• Price and Proceeds: Priced at $1,000 per unit for aggregate gross proceeds of $170,000.
• Interest Terms: 15% per annum interest, paid annually in arrears, accruing from the issuance date for 24 months.
• Seniority: Second position secured, subordinate to $720,000 of debentures issued on May 20, 2025 (due May 20, 2026).
• Conversion Rights: Holders may convert $1,000 principal into:
  • 10,000 common shares (issued at 10 cents per share).
  • 5,000 common share purchase warrants.
• Warrant Terms: Exercisable for 36 months from closing at an exercise price of 15 cents per share.
• Use of Proceeds: Payment of annual concession fees to the Polish government and general corporate purposes.
• Hold Period: All securities are subject to a hold period of four months and one day from the date of the release.
• Regulatory Treatment: Treated as a loan with bonus warrants by the TSX Venture Exchange; subject to TSX Venture Exchange acceptance.
• Related-Party Transaction: Directors and officers subscribed for 125 units under the same terms. The company relied on exemptions from formal valuation and minority approval requirements under MI 61-101 (sections 5.5(a) and 5.7(1)(a)). No special committee was established, and no material change report was filed 21 days prior to closing.
• Finders' Fees: No finders' fees were paid in connection with the initial tranche.