ACTION ENERGY INC. COMPLETES ACQUISITION OF CAVALON CAPITAL PARTNERS INC. AND REDUCES SECURED DEBT

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[{"type":"text","content":"\nACTION ENERGY INC. COMPLETES ACQUISITION OF CAVALON CAPITAL PARTNERS INC. AND REDUCES SECURED DEBT\n\n Mar. 3, 2011 (TheNewswire.ca) -- CALGARY, ALBERTA (March 3, 2011) Action Energy Inc. (OOTC:AECFF) (\"Action\")(NEX:AEC.H) is pleased to announce that it has completed the acquisition of Cavalon Capital Partners Inc. (\"Cavalon\") and has reduced its secured indebtedness by approximately $1.88 million as contemplated by the Financial Support and Forbearance Agreement (\"Support Agreement\") entered into by Action with Cavalon, its secured lender, and announced on February 18, 2011.Action completed the acquisition of all of the issued and outstanding shares of Cavalon (\"Cavalon Shares\") for a purchase price of $1,713,440. Upon closing, the assets of Cavalon consisted of an interest in a non-operated oil and gas property located in the area of Clive, Alberta, and secured indebtedness of Action to Cavalon in an amount equal to the purchase price for the Cavalon Shares. Cavalon reduced the outstanding balance of the secured indebtedness by the amount of the purchase price and by an additional $168,100 to be paid to an arm's length third party and assigned the balance of approximately $865,064 and related security to Cavalon Capital Corp. (\"Corp.\"). In connection with the assignment of the remaining secured debt, Corp. agreed to forbear in the enforcement of the security, to terminate the accrual of interest on the debt and to provide Action with ongoing financial support as Action undertakes the reorganization and revitalization of its business and affairs. The acquisition of the Cavalon Shares and the repayment of indebtedness was completed using funds received from Action's participation in a restructuring involving a group of labour and management service companies which was completed and announced by way of a press release issued on March 1, 2011 (the \"LMS Transaction\").The acquisition of Cavalon was a related party transaction within the meaning of applicable Canadian securities laws as the shareholders of Cavalon were Greg Matthews, a director of Action, and the spouse of David Tonken, a director and officer of Action. The board of directors (excluding Messrs. Tonken and Matthews) approved the acquisition on the basis that it was necessary to reduce Action's secured indebtedness, obtain continued forbearance in relatio...

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