Mart Resources announces intent to sell all shares to African company

By Jennifer Chiou

New York, May 27 - Mart Resources, Inc. said it has entered into a letter of intent for the sale of all of its outstanding shares to a private African oil and gas company.

The purchaser will advance to Mart a $3.5 million bridge loan in the form of an unsecured convertible debenture to provide for working capital and for the transaction.

The African company will acquire all Mart shares for the cash consideration of C$0.14 apiece, representing an 86% premium to the closing price of Mart's common shares on the TSX Venture Exchange on May 26.

The bridge loan will be in two tranches in the form of a 12% debenture. Under the first tranche, the company has already received $3 million. The second tranche for $500,000 is slated for June 4.

The loan is repayable on the earlier of Sept. 30, upon the closing of a superior transaction or a minimum of 60 days following the withdrawal from the stock purchase transaction.

The purchaser has the right to convert the outstanding debt into common shares at a conversion price of C$0.075 per Mart share should Mart fail to repay the bridge loan within the specified time. Based on current conversion rates, the bridge loan would be convertible into 41,668,667 Mart common shares.

Completion of the transaction is slated for August.

The African company has the right to match any superior proposal, and Mart has agreed to pay a break fee of $2.5 million if it accepts a superior proposal that is not matched or if its board or shareholders do not wish to proceed.

The corporate transaction is subject to the approval of two-thirds of Mart shareholders at a special meeting expected in mid- to late July.

Calgary, Alta.-based Mart is an oil and natural gas exploration company.

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