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An independent oil & gas company focussing on bringing African oil fields into production that are proven but have not yet been developed.

Message: Letter of Intent for Proposed Sale of the Company and Closing of Bridge Loan

Letter of Intent for Proposed Sale of the Company and Closing of Bridge Loan

posted on May 27, 2009 06:20AM
May 27, 2009
Mart Announces Letter of Intent for Proposed Sale of the Company and Closing of Bridge Loan
CALGARY, ALBERTA--(Marketwire - May 27, 2009) - Mart Resources, Inc. (TSX VENTURE:MMT) ("Mart" or the "Corporation") announces that it has entered into a Letter of Intent for the sale of all of the issued and outstanding shares of Mart to a private African oil and gas company (the "Purchaser") and for the advance by the Purchaser to Mart of a US$3.5 million bridge loan pursuant to an unsecured convertible debenture.

Under the terms of the Letter of Intent, the Purchaser has agreed, subject to the satisfaction of certain conditions including the completion of satisfactory financial and technical due diligence and the finalization of a definitive agreement and closing documentation, to acquire all of the issued and outstanding shares of Mart for cash consideration of C$0.14 per Mart common share. The cash consideration set out in the Letter of Intent represents an 86% premium to the closing price of Mart's common shares on the TSX Venture Exchange on May 26, 2009, the last trading day of the common shares prior to the date of this announcement.

As a further term of the Letter of Intent, the Purchaser has agreed to advance to Mart a bridge loan (the "Bridge Loan") of US$3.5 million to be used by Mart as working capital and for Mart's costs of completing the share purchase transaction. The Bridge Loan, which is to be advanced in two tranches, is evidenced by an unsecured convertible debenture and carries an interest rate of 12% per annum. Under the first tranche, an aggregate of US$3.0 million of the bridge loan has been advanced to date. The second tranche of US$0.5 million is scheduled to be advanced by June 4, 2009. Subject to certain terms and conditions, the Bridge Loan is repayable on the earlier of (i) September 30, 2009; (ii) immediately upon the closing of a superior transaction, or (iii) a minimum of sixty days following the Purchaser's withdrawal from the transaction. The Purchaser has the right to convert the outstanding debt into common shares at a conversion price of C$0.075 per Mart common share should Mart fail to repay the Bridge Loan within the specified time. The Canadian/US dollar rate of exchange to be utilized in the event of a conversion will be determined on the conversion date. Based upon the current Canadian/US dollar conversion rate, the Bridge Loan would be convertible into 41,668,667 Mart common shares.

While the Purchaser has already completed a significant due diligence review of the business and financial affairs of Mart, the Purchaser has until June 26, 2009 in which to complete its final due diligence review. Definitive agreements to conclude negotiations are expected to be completed within fifteen days of the end of the due diligence period. The parties have targeted mid August 2009 for completion and closing of the definitive transaction.

The Letter of Intent contains customary provisions prohibiting Mart from soliciting any other acquisition proposal for the common shares or assets of the Corporation or entering into any agreements relating to an alternative acquisition transaction. These restrictions are subject to certain exceptions which include but are not limited to allowing the board of directors of Mart to accept and recommend to shareholders a superior proposal if it is required to do so in accordance with its fiduciary duties. The Purchaser also has the right to match any such superior proposal. Mart has agreed to pay a break fee of US$2.5 million to the Purchaser under certain circumstances including if (i) Mart accepts a superior proposal that is not matched by the Purchaser, (ii) Mart's board of directors elects not to proceed with the transaction for any reason; or (iii) if Mart's shareholders do not approve the transaction by the requisite majority.

The corporate transaction is expected to be carried out by way of a plan of arrangement under the provisions of the Business Corporations Act (Alberta) and will be subject to the approval of 66 2/3% of the votes cast by Mart shareholders at a special meeting of shareholders expected to be held in mid to late July, 2009. Closing of the transaction is subject to certain other conditions, including Alberta court and other regulatory approvals and is expected to close shortly after the special meeting. An information circular is expected to be mailed out to Mart shareholders in June 2009.

A supplemental press release will be issued once the Purchaser has completed its due diligence and the definitive transaction agreements have been finalized and executed.

About Mart Resources:

Mart Resources Inc. is an independent international petroleum company focused on drilling, developing and producing oil and gas from low-risk proven petroleum properties in Nigeria.
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