Admiral Bay Resources, Inc. Announces Petition for Foreclosure Action Filed by Secured Lenders, Negotiations With Secured Lender
10 May 2010 - 7:00PM
Marketwired
Admiral Bay Resources Inc. (TSX VENTURE: ADB) "Admiral Bay" or the
"Company") today announced that the Company's US subsidiary,
Admiral Bay (USA) Inc. ("Admiral Bay USA"), is in default under its
credit agreement with its senior lenders, GasRock Capital, LLC and
Midtown Acquisitions, LP (formerly known as DK Acquisition
Partners, LP). The obligations of Admiral Bay USA under the credit
agreement are secured, as a first priority, by mortgages over
certain of Admiral Bay USA's oil and gas properties and other
related assets. The senior lenders have filed and served a Petition
for Foreclosure on certain assets of Admiral Bay USA in the
District Court of Greenwood County, Kansas. According to the
Petition, Admiral Bay USA is indebted to the lenders in the
principal amount of $42,501,705.70, plus interest at the default
rate from and after March 31, 2010.
The action by Admiral Bay's lenders, outlined as a possible
outcome of ongoing discussions in Company's March 25, 2010 press
release, comes after the Company and its lenders failed to agree on
terms under which Admiral Bay would have been purchased by a third
party. While Admiral Bay and the third party had agreed in concept
to a combination of the companies, Admiral Bay's lenders rejected
the terms of the transaction as total consideration was less than
the outstanding principal balance of the Company's loan
obligation.
Admiral Bay continues to work with its lenders to seek a
consensual resolution to the foreclosure petition, which would
include the lenders agreeing to provide funds for a partial payment
of trade creditors in exchange for such creditors agreeing to
settlement terms and a release of the Company from further
liability and a framework under which Admiral Bay would continue as
a going concern by exchanging encumbered assets of Admiral Bay USA
for full satisfaction of the outstanding secured obligations owed
to the lenders under the credit agreement.
Should these conditions not be met, Admiral Bay would likely
seek protection under the provisions of federal bankruptcy
statutes, which the Company believes would likely result in
negligible recovery for unsecured creditors.
The Company will provide additional information as
appropriate.
About Admiral Bay Resources
Admiral Bay Resources Inc. (www.admiralbay.com) is an emerging
unconventional gas production company focused on the development of
projects in the Cherokee Basin in southeast Kansas and the
Appalachian Basin in Pennsylvania. Admiral Bay is listed on the TSX
Venture Exchange under the symbol ADB.
Statements in this release that are not historical facts are
"forward-looking statements" within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995. Readers are cautioned
that any such statements are not guarantees of future performance
and that actual developments or results may vary materially from
those in these "forward-looking statements".
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Contacts: Admiral Bay Resources Inc. Steven Tedesco President
& C.E.O. (303) 350-1255 (303) 617-8956 (FAX)
stedesco@admiralbay.com Admiral Bay Resources Inc. Robert Carington
CFO (303) 350-1255 (303) 708-1861 (FAX)
rcarington@admiralbay.com
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