Nextraction Closes $1,500,000 Bridge Loan Facility with Related PartyOctober 3, 2011
Vancouver, BC - Nextraction Energy Corp. (TSX-V: NE) (the "Company”), is pleased to announce that it has entered into a loan agreement and promissory note with Anthem Capital Corp. (the “Lender”) with respect to a Bridge Loan facility (the “Loan Facility”) in the principal amount of up to $1,500,000. The Company has completed its first horizontal oil well in the Provost Field of Alberta and is planning to commence a second well immediately. The proceeds of the loan are to be used for the drilling of the second well, construction of production facilities at Provost and for general corporate and administrative purposes.
In consideration of establishing the Loan Facility, the Company has paid the Lender a facility fee in the amount of $15,000 (being 1% of the principal amount of the Loan Facility). The Loan Facility has an initial term of three months and can be extended for an additional month at the option of the Company. Interest on the Loan Facility shall accrue at the rate of 20% per annum from the date of advance, calculated and compounded semi-annually. To secure the Company’s obligations under the Loan Facility, the Company has entered into a general security agreement with the Lender, pursuant to which it has granted the Lender general security up to the amount of the principal amount of the Loan Facility in all of its present and after acquired personal property.
The Lender is a “Related Party” of the Company pursuant to TSX Venture Exchange policies, as Eric Carlson, a director and shareholder of the Company, owns a controlling interest in the Lender. As such the transaction constitutes a “Related Party Transaction”.
The Loan Facility agreement has been reviewed by the Board of Directors of the Company and was unanimously approved on September 28, 2011 by all directors, other than Eric Carlson, who declared his interest in the Loan Facility and abstained from voting with respect to the Loan Facility and the related documents and transactions. The directors eligible to vote with respect to the Loan Facility, having investigated and considered potential transactions with other arms-length lenders, believe the Loan Facility to be in accordance with available market rates and in the best interests of the Company. It is not anticipated that the Loan Facility or related transactions will have any effect on the percentage of securities of the Company owned by Mr. Carlson.
In accordance with the Company’s Code of Business Conduct and Ethics, Mr. Carlson obtained the prior consent of the Company’s Ethics Officer to the placement of the Loan Facility with the Company, based on his controlling interest in the Lender.
The Company is relying on exemptions from the formal valuation and minority approval requirements that apply to Related Party Transactions which are available to the Company as the fair market value of the Loan Facility and the consideration payable in respect thereof, being less than 25% of the Company’s current market capitalization.
Given that it is in the best interests of the Company to have access to the funds pursuant to the Loan Facility, it is reasonable for this transaction to close in less than 21 days from the announcement of the Loan Facility and as such the Company may draw down on the Loan Facility within less than 21 days.
About Nextraction Energy Corp.
Nextraction Energy Corp. is a Canadian junior oil and natural gas company engaged in the exploration and development of oil and natural gas resources in North America. The Company’s model is the “next round of extraction on known plays.” Nextraction targets projects along trends with known reserves that provide low risk, high return development opportunities in both conventional and unconventional resource projects. In addition to the Provost pool, the Company is producing light oil and liquids rich gas at its Pinedale Anticline property in Wyoming.
For further information on behalf of Nextraction Energy Corp., please contact:
Mark S. Dolar
President and Chief Executive Officer
Nextraction Energy Corp.
Toll Free: 1-888-630-0370
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