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Cabo Drilling Announces Closing of First Tranche of Private Placement of Debenture Units for Gross Proceeds of $2.7 Million

Cabo Drilling Corp. (TSX VENTURE: CBE) ("Cabo Drilling" or the "Company") announces today that it has closed the first tranche (the “First Tranche”) of its non-brokered private placement of debenture units (the “Units”), raising gross proceeds of $2,705,000 which is part of a larger offering (the “Offering”) to raise a total of up to $5,000,000.

The full Offering is anticipated to consist of 5,000 Units at a price of $1,000 per Unit for gross proceeds of $5,000,000. Each Unit will be comprised of one secured subordinate debenture in the principal amount of $1,000 (a "Debenture") and 500 common shares (the “Common Shares”) of the Company.

The Debentures have a face value of $1,000 per Debenture, a maturity date of May 30, 2015 (the “Maturity Date”), and will accrue interest at a rate of 12% per annum payable semi-annually in arrears on November 30th and May 31st in each year commencing November 30, 2012. The November 30, 2012 interest payment will represent accrued interest for the period from the closing date. The Debentures will be redeemable, in whole or in part, at any time following the closing date, for cash at 102% of the principal amount of the Debentures, together with accrued and unpaid interest, at the Company’s sole option on not more than 60 days’ and not less than 30 days’ prior written notice.

The Debentures will be secured against all assets of the Company, but subordinated to an existing demand loan facility, an equipment loan the Company is currently pursuing and an existing bridge loan facility.

The Company will use the net proceeds of the Offering for general working capital purposes. The securities issued under this private placement are subject to a hold period under applicable Canadian securities legislation of four months and a day expiring on October 1, 2012. Closing of the Offering remains subject to TSX Venture Exchange approval.

Under this First Tranche, a finder's fee of $162,300 in cash will be paid to Ascendant Securities Inc. ("ASI"). In addition, ASI will receive an aggregate of 1,352,500 share purchase warrants (the "Finder's Warrants"), with each such Finder’s Warrant entitling ASI to purchase one common share at a price of $0.12 at any time up to 24 months from the closing date of this transaction. The Company will also issue 311,075 common shares to ASI for corporate advisory services.

About Cabo Drilling Corp. (TSX VENTURE: CBE)

Cabo Drilling Corp. is a drilling services company headquartered in North Vancouver, British Columbia, Canada. The Company provides mining related and specialty drilling services through its Canadian divisions in Surrey, British Columbia; Montréal, Quebec; Kirkland Lake, Ontario; and Springdale, Newfoundland; Cabo Drilling (Panama) Corp. of Panama, Republic of Panama; Cabo Drilling Panama-Pacifico Corp. of Panama, Republic of Panama doing business as Cabo Drilling Colombia Corp.; Balkan States Drilling SH.P.K. of Tirana, Albania; and Cabo Drilling (International) Inc. The Company's common shares trade on the Frankfurt Exchange under the symbol: DHL and on the TSX Venture Exchange under the symbol: CBE.

ON BEHALF OF THE BOARD

John A. Versfelt, Chairman, President and CEO
Contact Information:    John A. Versfelt, Chairman, President and CEO
Cabo Drilling Corp.
Phone: (604) 984-8894 / Fax: (604) 983-8056

For further information about the Offering, please contact:
Justin Sim
Investment Banking
Ascendant Securities Inc.
416-477-3418

Further information about the Company can be found on the Cabo website (www.cabo.ca) and SEDAR (www.sedar.com).

This news release may contain forward-looking statements including but not limited to comments regarding the expected use of proceeds of the financing. Forward-looking statements address future events and conditions and therefore, involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

 


Last Updated: 05/31/2012