The sale was made to investment funds managed by Paulson & Co., the company said.
It plans to use a portion of the proceeds to repay the remaining debt it owes to Crest Energy International of US$44.5 million, plus accrued interest. The remainder will be used to fund its capital and operating activities.
"We are pleased to close this financing with Paulson. The funding provides Convertible Notes with a maturity date beyond that in the Crest loan and additional capital to finance a portion of additional exploration activities or pre-development activities the company pursues in 2014," said CEO Simon Hatfield in a release late Tuesday.
The convertible notes have a face value of C$1,000 per note, a coupon of 4 per cent, a maturity date of December 31, 2015, and will be convertible into common shares of the company at a price of C$1.45 apiece. The notes will bear interest from the date of issue, payable semi-annually, with the first interest payment due on December 31, according to WesternZagros' statement.
Paulson already holds 11.1 per cent of the oil and gas company, and its stake would increase to 18.6 per cent if it were to exercise its conversion rights under the convertible notes.
WesternZagros is focused on acquiring properties and exploring for, developing and producing crude oil and natural gas in Iraq. It holds a 40 percent working interest in two production sharing contracts with the Kurdistan Regional Government.
In late May, the Canadian oil and gas company with operations in Iraqi Kurdistan reported a 33 percent increase in its cash position at the end of the first quarter as proven resources and output potential improve.
Total current assets, including cash and cash equivalents as well as short-term investments, rose to $198.9 million as of March 31, from $149.2 million at the end of December, the Calgary, Alberta-based company said.