Roxi Petroleum announced the following corporate update:
Canamens Energy BV has informed Roxi that it has exercised its option under stage 2 of the BNG disposal agreement, approved by Roxi shareholders in November 2009, to purchase a further 12 percent of the BNG asset from Roxi for a further funding commitment of US $23 million, all of which will be treated as a loan to BNG Energy, repayable from future revenue from production at the BNG Contract area.
In December 2009, under stage 1 of the BNG disposal agreement, Canamens acquired 23% of the BNG asset to Roxi in return for funding commitments of US $32 million from Canamens, of which US $27 million has been treated as a loan to BNG Energy B.V repayable from future production at the BNG Contract Area. Canamens also paid Roxi US $2 million on signing.
Following the exercise of option by Canamens, Roxi will hold a 23.41 percent. interest in the BNG Contract area.
As a result of Canamens decision to exercise their option under stage 2, Roxi's 2010 BNG work program commitments are now fully funded.
Repayment of Arawak convertible loan
The Directors also announce that Kuat Oraziman, a director of the Company, has made available a loan of US $3 million to allow the repayment of a US $3 million convertible loan due to Arawak Energy. Had the Arawak loan not been repaid before March 31, 2010, Arawak had the option to convert the amount due with interest to 20,174,457 Roxi shares representing 4.84 percent of Roxi's issued share capital.
Mr Oraziman's loan is to Galaz and Company LLP and has been made under the financial assistance provisions of Kazakh company law. The loan is interest free and due for repayment on July 1, 2010.
As Mr Oraziman is a director of the Company the loan is a related party transaction. It is the view of all the Independent Directors, being all the directors except Mr. Oraziman, who have been so advised by Matrix Corporate Capital LLP, that the loan from Mr Oraziman is in the best interests of the Company. In providing advice to the Independent Directors Matrix Corporate capital LLP has taken into account the Independent Directors' commercial assessment.
Update on LG / Galaz
The proposed transaction with LGI in respect of Roxi's interest in the Galaz assets is progressing well and a further announcement will be made in due course.
David Wilkes, CEO, commented, "Canamens decision to exercise stage 2 of the BNG assets disposal agreement is a very positive development. As a result Roxi's 2010 BNG work program commitments are now fully covered."
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