Business
CGX Energy Agrees to Settle Liabilities Owed to Japan Drilling
Toronto, Ontario--(Newsfile Corp. - October 31, 2018) - CGX Energy Inc. (" CGX Energy ") (TSXV...
About this update from Cgx Energy Inc.
[{"type":"text","content":"CGX Energy Agrees to Settle Liabilities Owed to Japan DrillingToronto, Ontario--(Newsfile Corp. - October 31, 2018) - CGX Energy Inc. (\"CGX Energy\") (TSXV: OYL) announced today that it and its subsidiary CGX Resources Inc. (collectively, the \"Company\") have entered into an agreement with Japan Drilling Co., Ltd. (\"JDC\") to settle all liabilities claimed by JDC from the Company arising from a drilling contract and subsequent settlement arrangements between the parties as detailed in note 9 to the Company's interim consolidated financial results for the three and six-month periods ended June 30, 2018 posted under the Company's profile at www.sedar.com.The agreement with JDC is one step in a series of transactions that CGX Energy is seeking to undertake in order to restructure its liabilities and provide for sufficient working capital to enable CGX Energy to give effect to its business plan. Under the terms of the agreement, the Company is proposing to pay JDC 45% of the principal amount of the funds claimed (or US$6,637,536.80), together with interest accrued on such reduced amount in the sum of US$1,266,500.08 (or US$7,904,036.88 in the aggregate), in order to fully satisfy all liabilities. The completion of this transaction is conditional on CGX Energy successfully completing a financing, which condition may be waived by the Company. The agreement between JDC and the Company will terminate if the closing of the transaction is not completed on or before March 31, 2019. The failure to complete this transaction will result in any liabilities owed to JDC remaining outstanding which liabilities would continue to incur interest.To the knowledge of the Company, JDC owns 14,752,764 CGX Energy common shares (or approximately 13.36% of the outstanding CGX Energy shares). As a result, the transaction is considered to be a related party transaction under Multilateral Instrument 61-101 (\"MI 61-101\"), which absent exemptions would obligate CGX Energy to obtain a formal valuation and obtain approval from a minority of the CGX Energy shareholders. CGX Energy is exempted from the formal valuation requirement pursuant to section 5.5(b) of MI 61-101 and from the minority approval requirement pursuant to section 5.7(1)(c) of MI 61-101 on the basis that JDC beneficially owns voting securities of CGX Energy that carry fewer voting rights than...