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Insignia Energy Ltd. (ISN:CA) News

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 October 6, 2011 - 6:34 PM EDT
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Insignia Energy Ltd. Announces $30 Million Rights Offering
Insignia Energy Ltd. Announces $30 Million Rights Offering

/NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES NEWS WIRE SERVICES./

CALGARY, Oct. 6, 2011 /CNW/ - Insignia Energy Ltd. ("Insignia" or the "Company") (TSX: ISN) is pleased to announce that it has filed a preliminary short form prospectus with the securities regulatory authorities in each of the provinces and territories of Canada in connection with a proposed $30 million rights offering (the "Rights Offering") to all shareholders in qualifying jurisdictions, with proceeds raised being used to temporarily reduce bank indebtedness and to fund ongoing capital expenditures.  The Company believes that by reducing its indebtedness, it will be in a stronger financial position to continue to execute its capital expenditure program.

Each holder of record of Insignia common shares ("Common Shares"), as of a record date to be announced, will receive one right (a "Right") for each Common Share held. Each Right will entitle the holder thereof to acquire 0.9230816 of a Common Share at a subscription price of $1.06 per Common Share (the "Subscription Price"). The Rights Offering will include an additional subscription privilege under which holders of Rights who fully exercise their Rights will be entitled to subscribe for additional Common Shares, if available, that were not otherwise subscribed for in the Rights Offering. The Rights will be exercisable for 21 days. The record date and expiry date for the Rights Offering will be determined at the time of filing of the final short form prospectus.

To subscribe for Common Shares, a completed rights certificate, together with payment in full of the Subscription Price for each Common Share subscribed for, must be received by the subscription agent for the Rights Offering, Valiant Trust Company (the "Subscription Agent"), prior to the expiry date.

The Rights Offering is being made to holders of Common Shares in all of the provinces and territories of Canada. Rights certificates will not be mailed to holders of Common Shares resident outside of Canada ("Non-Qualifying Shareholders"). Non-Qualifying Shareholders will be sent the final short form prospectus and a letter advising them that their rights certificates will be issued to and held by the Subscription Agent, which will hold those Rights as agent for the benefit of all Non-Qualifying Shareholders. The Subscription Agent will attempt, on a best-efforts basis, to sell the Rights of Non-Qualifying Shareholders (other than those shareholders from whom Insignia accepts subscriptions) over the facilities of the Toronto Stock Exchange (the "TSX"). The Subscription Agent will mail cheques representing the net proceeds, less applicable withholdings and without interest, from such sales.

Insignia will accept subscriptions from Non-Qualifying Shareholders, if they satisfy the Subscription Agent and the Company that such offering to, and subscription by, such holder or transferee, is lawful and in compliance with all securities and other laws applicable in the jurisdiction where such holder or transferee is resident. A Non-Qualifying Shareholder who meets these requirements and wishes to exercise Rights must follow the procedures outlined in the final short form prospectus.

The directors and executive officers of the Company as well as Insignia's significant shareholder, Brookfield Special Situations Partners Ltd. ("Brookfield"), have indicated that they intend to participate in the Rights Offering to the fullest extent possible.

In connection with the Rights Offering, Brookfield has agreed to make certain amendments to the Investor Rights Agreement dated June 2, 2008 (the "Original Investor Rights Agreement") and Insignia, Brookfield and the individual shareholders of Insignia that were parties to the Original Investor Rights Agreement have entered into an Amended and Restated Investor Rights Agreement (the "Amended Investor Rights Agreement") to reflect these amendments.  These amendments become effective upon the completion of the Rights Offering.

The Amended Investor Rights Agreement, among other things, provides Brookfield with participation, demand distribution and piggyback distribution rights on effectively the same terms (or on terms no more favourable to Brookfield) as contained in the Original Investor Rights Agreement and contains certain restrictions on Brookfield pertaining to Change of Control Transactions (as defined in the Amended Investor Rights Agreement) and its participation right in future issuances of Common Shares.

Pursuant to the Amended Investor Rights Agreement, Brookfield has agreed that until July 31, 2013 it will not (and will cause its associates and affiliates to not), without the prior written consent of the independent board members of Insignia, commence a Change of Control Transaction.  This restriction by Brookfield not to commence a Change of Control Transaction will not apply in the event (i) there occurs any Change of Control Transaction with a bona fide third party which is approved the independent board members of Insignia or (ii) an unsolicited offer for the Common Shares is made by a bona fide third party.  

Pursuant to the Amended Investor Rights Agreement, Brookfield has also agreed that until July 31, 2013 it will not (and will cause its associates and affiliates to not), without the prior written consent of the independent board members of Insignia, purchase or acquire more than it's Pro Rata Interest in New Securities (as defined in the Amended Investor Rights Agreement) in connection with any issuances or offering of Common Shares, excluding the Rights Offering and any other rights offerings completed by Insignia during this two year term.

A copy of the Original Investor Rights Agreement and the Amended Investor Rights Agreement is available on SEDAR at www.sedar.com.

The Rights Offering is subject to regulatory approval, including that of the TSX.

Further details concerning the Rights Offering and the procedures to be followed by holders of Common Shares are contained in the preliminary short form prospectus available on the Company's profile at www.sedar.com. The preliminary short form prospectus is still subject to completion or amendment. There will not be any sale or any acceptance of an offer to buy the securities until a receipt for the (final) prospectus has been issued.

This news release does not constitute an offer to sell, or the solicitation of an offer to buy securities in any jurisdiction, including the United States, absent U.S. registration or an applicable exemption therefrom, nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state. The Rights and the Common Shares issuable on exercise of the Rights will not be and have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to, or for the account or benefit of, a U.S. person, absent registration or an applicable exemption therefrom.

About Insignia

Insignia is a publicly listed junior oil and gas exploration and development company based in Calgary, Alberta. Insignia's shares trade on the TSX under the symbol "ISN".

Advisories

Forward Looking Statements

Statements throughout this Press Release that are not historical facts may be considered to be "forward looking statements". These forward looking statements sometimes include, among others, words to the effect that management believes or expects a stated condition or result. All estimates and statements that describe the Company's objectives, goals, or future plans, including, without limitation, management's assessment of future plans and operations, the timing and completion of the Rights Offering and the anticipated benefits therefrom, the use of proceeds of the Rights Offering, the intentions of insiders with respect to the Rights Offering, anticipated commodity prices and their impact, anticipated demand for commodity prices, timing of expenditures, budgeted capital expenditures and the nature of those expenditures and the method of funding thereof, drilling plans and the timing of drilling and wells to be brought on production, completion and tie-in of wells and the timing thereof, exit production rates and allocation of capital, may constitute forward-looking statements under applicable securities laws and necessarily involve risks including, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, volatility of commodity prices, imprecision of reserve estimates, environmental risks, competition from other producers, incorrect assessment of the value of acquisitions, failure to complete and/or realize the anticipated benefits of acquisitions, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources and changes in the regulatory and taxation environment. As a consequence, the Company's actual results may differ materially from those expressed in, or implied by, the forward-looking statements. Forward-looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. Although the Company believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because the Company can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this document, assumptions have been made regarding, among other things: the ability of the Company to obtain equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects which the Company has an interest in to operate the field in a safe, efficient and effective manner; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through development and exploration; future oil and natural gas prices; interest rates; the regulatory framework regarding royalties, and the ability of the Company to successfully market its oil and natural gas products. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the Company's operations and financial results are included elsewhere herein and in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com), or at the Company's website (www.insigniaenergy.ca). Furthermore, the forward-looking statements contained in this Press Release are made as at the date of this Press Release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.


Source: Canada Newswire (October 6, 2011 - 6:34 PM EDT)