Xcite Energy Limited ("Xcite Energy" or the "Company") - Issue of US$50 million of Unsecured 14% Loan Notes

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TSX-V, LSE-AIM: XEL

TORONTO, April 5, 2012 /PRNewswire/ - Xcite Energy announces that it has today issued US$50 million of unsecured Loan Notes to a fund managed by West Face Capital Inc. ("West Face"), a Canada-based investment management firm.

The Loan Notes have an initial term of 360 days and, subject to West Face approval, may be extended by XEL for a further 360 days. The Loan Notes bear interest at 14% per annum payable in arrears on 31 March, 30 June, 30 September and 31 December in each relevant year and at maturity.  Interest can be paid or rolled up into the principal amount of the Loan Notes at the Company's discretion.

West Face is entitled to receive a maintenance fee equal to 1% of the outstanding principal amount of the Loan Notes 180 days from issue date and at maturity. The Company has paid a fee of US$1 million to a third party in connection with the initiation of this transaction.

The Company may prepay the Loan Notes at any time after 14 August 2012, either in full or in part in an amount equal to at least 10% of the principal amount outstanding, provided that it also pays on the amount prepaid accrued interest up to the date of prepayment and an amount equal to the interest that would have been paid on the amount prepaid up to maturity.

In certain circumstances (including any person(s) acquiring a 35% or greater holding in XEL's shares, the current directors of XEL ceasing to constitute the majority of its board, the amalgamation or merger of XEL into another company or the liquidation of XEL), holders of Loan Notes may elect to have all or part of the principal amount of their Loan Notes prepaid together with accrued interest and an amount equal to the interest up to maturity that would have been paid, on the amount prepaid.

Prepayment of the Loan Notes, together with accrued interest and an amount equal to the interest that would have been paid up to maturity, on the amount prepaid, may also be required from the proceeds of any non-ordinary course disposal of assets by XEL or its subsidiary, Xcite Energy Resources Limited.

West Face is also entitled to be paid in the event of any prepayment on the Loan Notes an amount equal to the maintenance fee that it would have been otherwise paid on the amount of Loan Notes prepaid.

The funds raised by the issue of these Loan Notes strengthen the Company's balance sheet and provide additional contingency funding during the important Phase 1A work programme on the Bentley field. The funds will be used for the Company's working capital requirements and general corporate purposes.

Oriel Securities Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Xcite Energy and for no one else in connection with the subject matter of this announcement and will not be responsible to anyone other than Xcite Energy for providing the protections afforded to its clients or for providing advice in connection with the subject matter of this announcement.

Morgan Stanley, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Xcite Energy and for no one else in connection with the subject matter of this announcement and will not be responsible to anyone other than Xcite Energy for providing the protections afforded to its clients or for providing advice in connection with the subject matter of this announcement.

Forward-Looking Statements 

Certain statements contained in this announcement constitute forward-looking information within the meaning of securities laws. Forward-looking information may relate to the Company's future outlook and anticipated events or results and, in some cases, can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "target", "potential", "continue" or other similar expressions concerning matters that are not historical facts. These statements are based on certain factors and assumptions including expected growth, results of operations, performance and business prospects and opportunities. While the Company considers these assumptions to be reasonable based on information currently available to us, they may prove to be incorrect. Forward-looking information is also subject to certain factors, including risks and uncertainties that could cause actual results to differ materially from what we currently expect. These factors include risks associated with the oil and gas industry (including operational risks in exploration and development and uncertainties of estimates oil and gas potential properties), the risk of commodity price and foreign exchange rate fluctuations and the ability of Xcite Energy to secure financing. Additional information identifying risks and uncertainties are contained in the Company's annual information form dated 26 October 2010 and in the annual Management's Discussion and Analysis for Xcite Energy dated 22 March 2012 filed with the Canadian securities regulatory authorities and available at www.sedar.com. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.

Neither the 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.

SOURCE Xcite Energy Limited