Underground Energy Corporation (TSXV:UGE) announced a non-brokered private placement of secured convertible debentures for gross proceeds of $6,000,000 on September 20, 2012. Each debenture will mature on the date that is 18 months from the initial closing date of the transaction subject to extension, at the option of company for a term of an additional six months following the maturity date. The security to be granted by the company on the debentures will consist of a first floating charge on all of the assets of the company and its subsidiary. The debentures will bear interest at a rate of 15% per annum, payable quarterly in arrears from the date of closing of the transaction and may be paid in cash or shares of the company. Each debenture is convertible into shares of the company at the option of the holders at any time prior to the debentures being repaid at a conversion price of $0.10 per share. In addition to this investors will receive five share purchase warrants for each dollar of debenture subscribed for with each warrant being exercisable into one share of the company at an exercise of $0.10 per share. These warrants will be exercisable until all the debentures have been repaid. At the option of the company the debentures may be prepaid prior to the maturity date provided that at least 12 months of interest has been paid to the holders of debentures. The debentures will be subject to a four month hold period from closing. The initial closing of the transaction is anticipated to occur on or around September 28, 2012, with a final closing scheduled to occur on or around October 12, 2012.

On October 5, 2012, the company has closed its initial tranche. The management and directors has invested $621,000. The debentures issued will be convertible into 6,210,000 common shares. The closing of the transaction is expected to take place on October 30, 2012. Each debenture matures on April 4, 2014, subject to extension, at the option of the company for a term of an additional six months following the maturity date. The debentures bear interest at a rate of 15% per annum, payable quarterly in arrears from the date of closing and may be paid in cash or shares. In addition, investors have received 3,105,000 share purchase warrants exercisable into one share at an exercise of $0.10 per share. These warrants will be exercisable until all the debentures have been repaid. The debentures and warrants will be subject to a four month hold period from the date of issuance.