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Press release from Marketwire

MGM Energy Corp. Announces $11.8 Million Rights Offering

Monday, October 22, 2012

MGM Energy Corp. Announces $11.8 Million Rights Offering13:18 EDT Monday, October 22, 2012CALGARY, ALBERTA--(Marketwire - Oct. 22, 2012) -THIS PRESS RELEASE IS NOT FOR DISTRIBUTION TO ANY UNITED STATES NEWSWIRE SERVICES OR OTHERWISE FOR DISTRIBUTION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF UNITED STATES SECURITIES LAWMGM Energy Corp. (TSX:MGX) ("MGM Energy" or the "Company") is pleased to announce today that it will be offering rights ("Rights") to holders of its common shares ("Common Shares") of record at the close of business on October 30, 2012 ("Record Date"), expiring at 4:00 p.m. (Calgary time) on December 4, 2012 (the "Expiry Date"). The rights offering is subject to all regulatory approvals, including that of the Toronto Stock Exchange (the "TSX").MGM Energy will issue to registered holders of its outstanding Common Shares as of the Record Date one Right for each share held. Under the terms of the rights offering, 4.25 rights will entitle the holder to purchase one Common Share at a subscription price of $0.16 per share. The rights offering will include an additional subscription privilege under which Rights holders who fully exercise their rights will be entitled to subscribe pro rata for additional Common Shares, if available, that were not otherwise subscribed for in the rights offering. The subscription price is equal to approximately 75% of the volume weighted average trading price of the common shares on the TSX for the 5 day period ending on October 19, 2012. The Common Shares are expected to commence trading on the TSX on an ex-rights basis at the opening of business on October 26, 2012, meaning that Common Shares purchased on, or following that date will not be entitled to receive the Rights under this rights offering. At that time, the Rights are expected to be posted for trading on the TSX under the symbol MGX.RT. Trading of the Rights is expected to continue until 10:00 a.m. (Calgary time) on the Expiry Date. Rights not exercised on or before 4:00 p.m. (Calgary time) on the Expiry Date will be void and have no value. This rights offering is expected to increase the number of MGM Energy's issued and outstanding common shares by approximately 23.5%.In connection with the rights offering, the Company has entered into a Standby Purchase Agreement with Clayton H. Riddell, CEO and director of MGM Energy and its largest shareholder. Mr. Riddell has committed to purchase any Common Shares not otherwise subscribed for by Rights holders under the rights offering. Mr. Riddell and Paramount Resources Limited ("Paramount") currently beneficially own or control or direct, directly or indirectly, 31.4% and 14.0%, respectively, of the issued and outstanding Common Shares of MGM Energy, for a total of 45.4% of the Common Shares. If upon the exercise of the Rights, the holdings of Mr. Riddell and Paramount would, in aggregate, exceed 49% of the issued and outstanding Common Shares of the Company, MGM Energy will issue non-voting shares to Mr. Riddell for that number of Common Shares that would otherwise have been issued on an exercise of Rights but for the application of the 49% limitation.A rights offering circular (the "Circular") in respect of this rights offering will be filed in all jurisdictions within Canada. Full details of the rights offering, including information regarding the distribution of the Rights and the procedures to be followed, are included in the Circular, which will be filed today on SEDAR at www.sedar.com and will be mailed to eligible shareholders shortly after the Record Date.The rights offering will raise gross proceeds of approximately $11.8 million. The net proceeds from the Rights Offering will be used to fund general and administrative expenses, commitments and capital expenditures. Based on current expenditure levels, the net proceeds from the Rights Offering plus the Company's existing working capital is expected to be sufficient to fund operations until 2014. Advisory This news release does not constitute an offer to sell, or the solicitation of an offer to buy securities in any jurisdiction, including the United States, absent registration or an applicable exemption therefrom, nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities law of such state. The Rights and the Common Shares will not be and have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to, or for the account or benefit of, a U.S. person, absent registration or an applicable exemption therefrom. MGM Energy is a Canadian oil and natural gas exploration and development company active in Northern Canada. MGM Energy's common shares are listed on the TSX under the symbol "MGX".Forward-Looking Information This news release contains forward-looking information which is not comprised of historical facts. Forward-looking information involves risks, uncertainties and other factors that could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information. Forward-looking information in this news release includes statements with respect to MGM Energy's intention to complete the rights offering and the timing and procedures related thereto, the listing of the rights on the TSX and the timing thereof and the use of proceeds from the rights offering. Material assumptions and factors that could cause actual results to differ materially from such forward-looking information includes management's ability to raise the anticipated gross proceeds from the rights offering and the failure to obtain final approval from the TSX and the securities commissions. Although MGM Energy believes that the material assumptions and factors used in preparing the forward-looking information in this news release are reasonable, undue reliance should not be placed on such information, which only applies as of the date of this news release, and no assurance can be given that such events will occur. MGM Energy disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, other than as required by law.FOR FURTHER INFORMATION PLEASE CONTACT: Contact Information: MGM Energy Corp.Henry SykesPresident(403) 781-7800(403) 781-7801 (FAX)MGM Energy Corp.Rick MillerChief Financial Officer(403) 781-7800(403) 781-7801 (FAX)