EastCoal Announces Shares for Debt Settlement
VANCOUVER, BRITISH COLUMBIA, Dec 20, 2012 (Menafn - MARKETWIRE via COMTEX) --Further to a previous news release of December 3, 2012 of EastCoalInc. (the "Company" or "EastCoal") announcing aCDN2,000,000 loan (the "Salida Loan") received by the Company fromSalida Capital LP ("Salida") (on behalf of a fund managed by Salida(the "Fund")), the Company is pleased to announce that Salida (onbehalf of the Fund) has agreed, subject to the approval of the TSXVenture Exchange, to convert the Salida Loan, together with allaccrued but unpaid interest thereon, into common shares (the"Settlement Shares") in the capital of the Company at a deemed issueprice per common share of CDN0.194 (the "Shares for DebtSettlement") in accordance with Policy 4.3 of the TSX VentureExchange. The Shares for Debt Settlement will occur concurrentlywith, and be conditional upon, the closing of the previouslyannounced Admission (as defined and described below) and Placing (asdefined and described below), and the issue price per common sharepursuant to the Shares for Debt Settlement will be equal to the issueprice of common shares under the Placing.
Pursuant to the Shares for Debt Settlement, the Company proposes toissue up to 10,414,848 Settlement Shares to Salida (on behalf of theFund) in full settlement of the Salida Loan and all accrued butunpaid interest thereon.
On the basis that Salida is an insider of the Company for thepurposes of the policies of the TSX Venture Exchange, itsparticipation in the Shares for Debt Settlement may be considered a"related party transaction" within the meaning of MultilateralInstrument 61-101 - Protection of Minority Security Holders inSpecial Transactions ("MI 61-101") which is incorporated into Policy5.9 of the TSX Venture Exchange. As the Shares for Debt Settlementmay be a related party transaction, the following additionaldisclosures are provided (following the listing of disclosures inSection 5.2 of MI 61-101).
In conducting their review and approval process with respect to theShares for Debt Settlement, the board of directors of the Companyhave determined that the distribution of an information circular toshareholders, the preparation and distribution of a formal valuationand the seeking of shareholder approval for, and in connection with,the Shares for Debt Settlement is not necessary under MI 61-101,which is incorporated into Policy 5.9 of the TSX Venture Exchange,because:
1.pursuant to Section 5.5(a) of MI 61-101 the board of directors of the
Company have determined, in good faith, that neither the Settlement
Shares issued to Salida (on behalf of a fund managed by Salida), nor the
aggregate deemed value of the Settlement Shares will exceed 25% of the
market capitalization of the Company on the date hereof, and on that
basis the Shares for Debt Settlement falls within an exemption from the
formal valuation requirement of Section 5.4 of MI 61-101; and
2.for the purposes of Section 5.7(1)(a) of MI 61-101, the board of
directors of the Company have determined, in good faith, that neither
the Settlement Shares issued to Salida (on behalf of the Fund), nor the
aggregate deemed value of the Settlement Shares will exceed 25% of the
market capitalization of the Company on the date hereof, and on that
basis the Shares for Debt Settlement falls within an exemption to the
minority shareholder approval requirement of Section 5.6 of MI 61-101.
The Company has not filed a material change report 21 days prior to theclosing of the Shares for Debt Settlement as the agreement to effectthe Shares for Debt Settlement has only recently been reached withSalida (on behalf of the Fund).
Further to a previous news release of December 11, 2012, the Companyhas applied for the admission (the "Admission") to the AIM market ofthe London Stock Exchange plc of the Company's existing share capitaland additional common shares in the capital of the Company to beissued pursuant to a private placement (the "Placing") to becompleted concurrently with the Admission. The closing of the Placingand Admission will be subject to certain conditions, including, butnot limited to, the receipt of all necessary approvals including theapproval of the TSX Venture Exchange and the final approval of thedisinterested directors of the Company. The Placing and Admission arestill currently expected to close on or about December 28, 2012.
By Order of the Board,
John Byrne, Chairman
About EastCoal Inc.
EastCoal Inc. is currently producing coking coal from the Menzhinskymine, which is operated by its 100% owned subsidiary Inter-InvestCoal, and developing the Verticalnaya anthracite mine, which isoperated by its 100% owned subsidiary East Coal Company.
This press release contains projections and forward-lookinginformation that involve various risks and uncertainties regardingfuture events. Such forward-looking information can include withoutlimitation statements based on current expectations involving anumber of risks and uncertainties and are not guarantees of futureperformance. There are numerous risks and uncertainties that couldcause actual results to differ materially from those expressed in theforward-looking information. These and all subsequent written andoral forward-looking information are based on estimates and opinionson the dates they are made and are expressly qualified in theirentirety by this notice. Except as required by law, EastCoal assumesno obligation to update forward-looking information shouldcircumstances or management's estimates or opinions change.
Neither the TSX Venture Exchange nor its Regulation Services Provider(as that term is defined in the policies of the TSX Venture Exchange)accepts responsibility for the adequacy or accuracy of this release.
Contacts:
EastCoal Inc.
Abraham Jonker
President
(604) 681-8069
EastCoal Inc.
George Lawton
CFO
(604) 681-8069
(604) 685-4675 (FAX)
Cenkos Securities plc
6, 7, 8 Tokenhouse Yard
London EC2R 7AS
SOURCE: EastCoal Inc.
Copyright 2012 Marketwire, Inc., All rights reserved.
