BOULDER, Colo., Nov. 14, 2002 (PRIMEZONE) -- Arete Industries, Inc. (OTCBB:ARET) announced today that the Company signed a financial consulting agreement with its affiliate, Eagle Capital Funding Corp. to pursue a Variable Rate Bond Finance program to raise approximately $10 to $20 Million for the Company's operations and to fund initial projects under its acquisition and dividend spin-off program. Eagle's program represents an innovation in financing for small public companies and the ultimate structure and the feasibility of the program will be confirmed as the project progresses in the upcoming weeks. Eagle and the Company will begin the documentation and underwriting process in earnest with a goal to complete the financing in January 2003.
Eagle Capital, operated by Company director, Gerald J. Brandimarte, is a specialized financial consulting firm that originates Variable Rate Bond financing for large commercial development projects and asset refinances. Eagle Capital has recently designed the unique bond structure to raise capital for corporations that have difficulty raising capital through conventional debt or equity offerings. Thomas Raabe, CEO of Arete Industries, stated that the structure is ideal for Arete's business plan, and if successfully executed, will provide the needed capital to attract viable business development projects to the Company. The variable rate corporate bonds are to be offered through selected investment bankers and sold to money market funds. The collateral to achieve required debt ratings, asset coverage and debt service will be provided by a mixture of rated instruments purchased with a portion of the total bond proceeds, and repayment will be accelerated from the returns on assets that the Company acquires with the remaining proceeds available to the Company. The Company intends to use most of the available net proceeds from the bond offering to provide growth capital to high growth-stage businesses that are on a path to become publicly traded, in the form of debt and/or equity investment, as a means to leverage the value of its investments and accelerate repayment of the variable rate bonds.
"The Variable Rate Bond Program is a truly unique and aggressive program, that when combined with our dividend, spin-off program, we believe will be effective in helping companies that have no other alternatives to raising capital in the public markets. We are starting with a small initial program to build a track record of success, which we believe can later be duplicated in larger offerings to purse more lucrative projects. We are very excited about this program as an effective way to increase shareholder value of the Company without diluting the common equity shareholders," Raabe concluded.
Arete Industries, Inc. is a public holding company that has been restructuring itself to provide board-level management consulting and investment banking services to, and make investments in, emerging growth companies. Eagle Capital Funding Corp., is a private company formed and owned by the present management of Arete Industries to pursue specialized financial services including debt financing for large commercial projects, including projects pursued within the Company.
Statement as to Forward-Looking Statements: Certain statements contained herein, which are not historical, are forward-looking statements that are subject to risks and uncertainties not known or disclosed herein that could cause actual results to differ materially from those expressed herein. Such risks include the possibility that the total bond offering may be limited to a smaller amount, and that regulatory or accounting limitations may place restrictions on the formal structure and/or the use of proceeds from the bond offering. Additional risks include market risks limiting the marketability of the proposed bonds, and the possibility that underwriters may not be willing to pursue the bond offering given the limited capitalization and operations of the Company.