FOR IMMEDIATE DISSEMINATION VIA OTC DISCLOSURE & NEWS SERVICE
NewFrontier Energy, Inc. (the “Company”) is pleased to announce that as of theclose of business on August 31, 2012, the stated value of all of the Series B12% Cumulative Convertible Preferred Stock (the “Preferred Stock”) issued by theCompany plus all accrued but unpaid dividends will be converted into theCompany’s Common Stock at a conversion rate of 22 cents ($.22) per common share (the “Conversion”). 22 cents per share represents the book value of the companyas of February 29, 2012, the Company’s most recent fiscal year end.
TheConversion was approved by the board of directors of the Company on August 30, 2012 and by the majority of the holders of the Preferred Stock on August 31, 2012. Because the majority of the holders of the Preferred Stock consented to the Conversion, the requisite vote in favor of the Conversion and the requisiteamendment to the Preferred Stock designation of rights and preferences had been obtained and the vote of other Preferred Stock shareholders was not necessary.Accordingly, no special meeting of shareholders was required under Colorado law,and no such meeting was held.
Asa result of the Conversion, approximately 11.86 MM additional shares of Common Stock will be issued by the Company to the current holders of the Preferred Stock upon their delivery of their Preferred Stock certificates to the Company for conversion. The Conversion also has the effect of eliminating from the Company’s balance sheet both Dividends Payable and Derivative Liability, thereby eliminating liabilities in excess of $1.2 MM from the Company’s Balance Sheet.
Immediatelyprior to the conversion, there were 24 holders of the Preferred Stock holding shares with a collective stated value of $1,405,956.25. This stated value was accruing dividends atthe rate of 12% per annum, a rate far in excess of current rates of return available to the Company. Historically, the Company has been unable to make periodic dividend payments due to limitations on its cash flow or because of state law requiring cessation of dividends during periods of time when the payment of a dividend would impede the rights of creditors.
More importantly, in the opinion of the Company’s management, the very existence of the Preferred Stock has been, and would continue to be, an impediment to our ability to obtain financing, interest potential business partners and permit us to acquire new businesses or be of interest to other businesses as a merger candidate.
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