ZaZa Wraps Up $2.5MM Equity Financing

ZaZa Energy Corporation announced that the Company has closed on a definitive agreement with an institutional investor for a cash financing of $2.5 million in gross proceeds.

Under the terms of the agreement, ZaZa has issued shares of its newly designated Series A 5% Convertible Preferred Stock in a private placement. The Preferred Stock has a total liquidation preference of $2.5 million and is convertible, at the option of the holder, into 2,500,000 shares of common stock, subject to anti-dilution protections customary for this type of transaction. The agreement also provides for the issuance by the Company of warrants to purchase up to 1,875,000 shares of the Company's common stock with an initial exercise price of $2.25, subject to anti-dilution price protections customary for this type of transaction. Each warrant will be exercisable into one share of ZaZa common stock, for a period of five years beginning six months after the close of the transaction. 

Pursuant to a registration rights agreement, the Company has agreed to file one or more registration statements with the SEC covering the resale of the shares of common stock issuable upon conversion of the Preferred Stock and upon exercise of the warrants. However, exercise of the warrants will be restricted for a period of six months.

ZaZa has a significant drilling inventory in the liquids rich area of East Texas through an approximate 150,000 gross acre AMI with EOG Resources. The Company intends to use the proceeds from the transaction to drill and develop its Buda-Rose `stack-and-frack' wells, execute workovers for production enhancement in existing wells, and for working capital.

Northland Capital Markets served as the exclusive placement agent on the transaction.