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Arctos settles $4.57-million debt with cash and shares

2007-06-11 05:24 MT - News Release

Mr. William Ward reports

ARCTOS RECEIVES CONDITIONAL TSX APPROVAL FOR DEBT SETTLEMENT, ANNOUNCES DEBENTURE FINANCING

Arctos Petroleum Corp. has now received conditional TSX Venture Exchange approval to proceed with the closing of the debt settlements announced in the company's news in Stockwatch of May 4, 2007. Arctos also announces that it will raise funds of up to $1.5-million from a debenture financing.

Arctos will settle $4,575,948 in outstanding net debt through the payment of $1,220,235 in cash and the issuance of 31,846,265 common shares of the company. One creditor, with debt owed of $2,481,018, will be settled in full by the payment of a total of $1,171,485 in cash and the issuance of 11,405,745 common shares of the company. Ten creditors, with net debt owed of $2,092,802, will be settled in full by the payment of a total of $48,750 in cash and the issuance of 20,440,520 common shares of the company. The TSX-V has conditionally approved the transactions contemplated herein subject to review and acceptance of personal information forms from certain individuals who are associated with corporations who will become insiders of the company.

Arctos plans to complete a non-brokered private placement of non-convertible debentures in the principal amount of up to $1.5-million. Proceeds from the private placement will be used to pay the cash portion of the aforementioned debt settlement, with the remainder applied to general working capital. The debentures will have a 12-month term and shall bear interest at 10 per cent per year, calculated and paid quarterly, and any principal or interest outstanding under the debentures shall be secured against the general assets of the company. The sale of the debentures is subject to approval of the TSX-V. Insiders of the company may purchase convertible debentures in the principal sum of up to $500,000.

The company is now positioned to move forward with an active business plan that will be focused on acquiring oil and gas assets together with a selective drilling program.