Consolidation Services, Inc. (CNSV) announced Monday that effective January 1, 2010, the Company's assets and liabilities are being divided into two different legal entities, CNSV and a corporation ("Newco") owned by CNSV, as the first step in spinning out Newco to each shareholder of record in CNSV.
Each CNSV shareholder (15,258,220 shares outstanding) on January 1, 2010 (the "Record Date") is expected to receive, at some later date, one share of Newco for each share of CNSV owned on the Record Date. Although the separation of assets and liabilities is considered effective as of January 1, 2010; completion of the spin out transaction to the Shareholders of Record is subject to, and conditioned on, management of CNSV working through a number of complex regulatory, accounting, tax and legal issues with the assistance of appropriate professionals.
As of January 1, 2010, CNSV is primarily an oil and gas company with a residual coal royalty receivable on coal assets that were owned by CNSV as of the Record Date. Newco will be primarily a coal company with a residual oil and gas royalty receivable on all oil and gas assets that were owned by CNSV as of the Record Date.
CNSV's CEO anticipates that the division of assets will benefit all CNSV shareholders, past and future, as management anticipates that accumulation of additional oil and gas potential reserves and future development of these potential reserves will be easier under the new structure. CNSV and Newco will be able to make different and independent financing and staffing decisions which maximize the development of their respective assets.
CNSV is engaged in the acquisition and development of oil and gas mineral rights in eastern Kentucky. The Company owns oil and gas rights on approximately 12,000 acres in eastern Kentucky. Reserve reports prepared by independent engineers show an estimated 34.7 billion cubic feet of potential reserves on approximately 10,000 acres. CNSV's other oil and gas rights are in close proximity.
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