EastCoal Inc. Announces Completion of Disposal of Assets and Suspension of Trading on AIM
February 26 2014 - 12:15PM
Marketwired
EastCoal Inc. Announces Completion of Disposal of Assets and
Suspension of Trading on AIM
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Feb 26, 2014) -
EastCoal Inc. (TSX-VENTURE:ECX)(AIM:ECX) ("the Company" or
"EastCoal") announces today that the Company and its wholly-owned,
Cyprus incorporated subsidiary, Gramsico Holdings Ltd. ("Gramsico")
completed the disposal of all of the Company's 0.1% shareholding
and all of Gramsico's 99.9% shareholding in East Coal Company LLC
("ECC") for an aggregate cash consideration of US$499,000, and
completed the disposal of all of the Company's 0.1% shareholding
and all of Gramsico's 99.9% shareholding in Ukraine Energy LLC
("UE") for an aggregate cash consideration of US$1,000, in each
case, pursuant to the terms of share purchase agreements with an
Austrian based company, EFI Holding GmbH ("EFI").
ECC and UE are Ukrainian incorporated companies that were
indirectly wholly-owned by the Company through Gramsico. ECC holds
the assets relating to the Company's material project, the
Verticalnaya mine. There is no profit attributable to the
Verticalnaya mine. UE is an inactive shell company.
The cash proceeds will be used to fund any further proposal to
creditors under the Bankruptcy and Insolvency Act (Canada) (the
"BIA") and negotiating any further transactions that may present
themselves to the Company in order to potentially generate some
additional value for creditors and shareholders.
The share purchase agreements with EFI also provide for a
royalty interest to be earned by the Company equal to US$1.00 per
tonne of coal produced at the Verticalnaya mine, and provide for
the assignment to EFI of the Company's rights pursuant to a loan
agreement dated June 25, 2009 between the Company (as lender) and
ECC as (borrower).
The Company and Gramsico also completed the disposal of all of
the Company's 0.1% shareholding and all of Gramsico's 99.9%
shareholding in Inter-Invest Coal LLC ("IIC") for an aggregate cash
consideration of US$15,020 pursuant to the terms of share purchase
agreements with a Cyprus based company, Strong Group Corporation
Limited ("Strong Group").
IIC is a Ukrainian incorporated company that was indirectly
wholly-owned by the Company through Gramsico. IIC holds the assets
relating to the Company's Menzhinsky mine, and, as previously
announced, IIC is currently in a liquidation process in the
Ukraine.
The share purchase agreements also provide for the assignment to
Strong Group of the Company's rights pursuant to various loan
agreements between the Company (as lender) and IIC as
(borrower).
Following completion of the disposal the Company will now be
treated as an investing company under the AIM Rules.
The Company intends to make a proposal to creditors under the
BIA imminently and will update shareholders following the creditor
meeting.
As a result of the financial uncertainty created by the creditor
proposal process, trading on AIM in the Company's shares has been
suspended with immediate effect, pending clarification of the
Company's financial position.
The Company's listing on TSX Venture Exchange will be moved,
with effect from the opening of the markets on February 27, 2014 to
the NEX exchange as administered by the TSX Venture Exchange as the
Company no longer meets the continued listing requirements of a
Tier 2 issuer on the TSX Venture Exchange.
The Company is still actively seeking further sources of funding
although there can be no guarantee that the Company will be
successful in securing further financing or achieving its
restructuring objectives. If the Company fails to achieve its
financing and restructuring goals it will likely result in the
Company becoming bankrupt.
The Company will make further announcements in due course.
Forward-Looking Statements: This news release contains
discussion of items that may constitute forward-looking statements
within the meaning of securities laws that involve risks and
uncertainties. Although the Company believes the expectations
reflected in such forward-looking statements are based on
reasonable assumptions, it can give no assurances that its
expectations will be achieved. In particular, statements regarding
the potential for the Company to generate any additional value for
creditors and shareholders, the ability of the Company to complete
any further transactions, the ability of the Company to offer
improved proposals to its creditors and the likelihood of the
Company becoming bankrupt if it fails to achieve its financing and
restructuring goals are or involve forward‐looking statements.
These statements reflect management's expectations as of the date
of this press release regarding the Company's future financial
performance and should not be read as guarantees of future
performance or results. Factors that could cause actual results to
differ materially from expectations include the effects of general
economic conditions, actions by government authorities and courts,
uncertainties associated with contract negotiations and additional
financing requirements. These factors and others are more fully
discussed in Company filings with Canadian securities regulatory
authorities.
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.
EastCoal Inc.Abraham JonkerPresident and Acting CFO+1 (604) 973
0079 / +1 (604) 992 5600 (Cell)www.eastcoal.caCenkos Securities
plcAlan Stewart/Derrick Lee+44 (0) 131 220 6939
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