The US oil and gas corporation JMG Exploration, Inc., which reported on the acquisition of the BVI holding company Newco Group in August 2006, has announced the termination of share exchange with this company organized under the laws of the British Virgin Islands. The Agreement has failed to close as of December 31, 2007, and the termination is effective immediately.
Currently terminated share exchange was contemplated by the Share Exchange Agreement by and among JMG, Newco, Bahamas-incorporated ESAPI Ltd., and some other parties, dated September 5, 2007. Also, pursuant to a Loan, Stock Pledge and Security Agreement, in September 2007 JMG made a $3 million loan to BVI-based Newco, to enable Newco to purchase approximately 39% interest in Indian company Iris Computers Ltd. The loan bears annual interest of 8%; by its terms, it expired on December 31, 2007. The BVI company has failed to repay the loan and any accrued interest on the loan to JMG.
A notice was sent by JMG to Newco on January 3, 2008, informing that Newco is in default under the Loan Agreement and, if the default is not cured within 15 days, JMG will act as a secured creditor, transferring the shares of Newco into the name of JMG. US company tried to settle the matter, offering to allow Newco to repay, on certain terms, the $3mln loan and accrued interest until March 31, 2008. The offer also required that JMG and Newco mutually release each other from further liability. Newco had to accept the offer until January 10, 2008.
JMG's Board of Directors has elected to extend existing warrants for an additional year with and expiration in January 15th, 2009. The strikes prices on the warrants will remain in place.
