Sudbury Capital Corporation
TSX VENTURE : SUD.P

January 31, 2007 14:25 ET

Sudbury Capital Corporation Update on Proposed Qualifying Transaction

TORONTO, ONTARIO--(CCNMatthews - Jan. 31, 2007) -

(NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA)

On October 17, 2006, Sudbury Capital Corporation ("Sudbury") (TSX VENTURE:SUD.P), a capital pool company, issued a press release annoucing the proposed business combination (the "Qualifying Transaction") with Sea Dragon Energy Inc. ("Sea Dragon"). The proposed Qualifying Transaction will constitute Sudbury's qualifying transaction pursuant to the policies of the TSX Venture Exchange (the "Exchange").

Pursuant to Exchange Policy 2.4 - Capital Pool Companies ("Policy 2.4"), Sudbury was required to file with the Exchange, within 75 days after the press release announcing the Qualifying Transaction, the initial documents (the "Initial Documents") required by Section 12.3 of Policy 2.4. The Initial Documents include a draft CPC Filing Statement (Form 3B2).

On December 21, 2006, Sudbury issued a press release annoucing that the Initial Documents would not be filed with the Exchange within 75 days after the press release annoucing the Qualifying Transaction as a result of delays in preparation of the Initial Documents and that the Exchange had granted a 30 day extension to January 30, 2007 for the filing thereof. The delay was as a result of Sea Dragon, Mogul Energy International Inc. ("MEII") and Mogul Energy Ltd. ("MEL") (Sea Dragon, MEII and MEL are collectively referred to as the "Defendants") being served with a statement of claim in the Supreme Court of British Columbia (the "Claim") by Transpacific Petroleum Corp. ("Transpacific") and Ghareeb Awad ("Awad") (Transpacific and Awad are collectively referred to as the "Plaintiffs"). As previously disclosed, the claims made against Sea Dragon by the Plaintiffs were with respect to the East Wadi Araba concession in the Gulf of Suez, Egypt (the "East Wadi Concession").

The parties have now voluntarily settled the Claim and exchanged mutual releases in connection with the Claim. Pursuant to the terms of a fully executed settlement agreement dated January 24, 2007 between Sea Dragon and the Plaintiffs (the "Sea Dragon Settlement Agreement"), the Plaintiffs have agreed not to advance the Claim against Sea Dragon and provided a mutual release thereof. As part of the settlement, the Plaintiffs have also executed an extension agreement (the "Extension Agreement") dated January 24, 2007 with Dover Investments Limited and the Defendants with regards to the East Wadi Concession wherein it was agreed to permit Sea Dragon and MEII (i) until July 17, 2007 to complete the first well to the approval of the Egyptian General Petroleum Corporation ("EGPC"); and (ii) until July 17, 2009 to complete the second and an additional third well to the approval of the EGPC, and to allow Sea Dragon to use and reproduce the data from Transpacific's seismic mapping of the East Wadi Concession, in consideration of Sea Dragon issuing 1,500,000 common shares in the capital of Sea Dragon to Awad and 1,500,000 common shares in the capital of Sea Dragon to Transpacific (collectively, the "Sea Dragon Shares") and the payment of US$40,000 to Transpacific within 10 days and 30 days, respectively, from the execution of the Sea Dragon Settlement Agreement. It was further agreed by the Plaintiffs that the Sea Dragon Shares shall be subject to the identical escrow restrictions that the Exchange may impose on Sea Dragon's directors and officers, pursuant to the Exchange's policies.

Pursuant to the terms of separate settlement agreements dated January 24, 2007 between the Plaintiffs and each of MEII and MEL, the Plaintiffs agreed not to advance the Claim against MEII and MEL and to provide a mutual release thereof.

The Initial Documents, including the filing statement, will not be filed with the Exchange by January 30, 2007, in accordance with the extension for filing same granted by the Exchange, as a result of delays in preparation of same caused by settlement of the Claim amongst the parties.

As a result of the aforementioned delay, Sudbury has obtained from the Exchange a 30 day extension to March 1, 2007 for the filing of the Initial Documents relating to the Qualifying Transaction.

As noted above and in Sudbury's press releases dated October 17, 2006 and December 21, 2006, completion of the Qualifying Transaction is subject to a number of conditions, including, but not limited to, acceptance by the Exchange and if applicable pursuant to Exchange requirements, majority of the minority shareholder approval. Where applicable, the Qualifying Transaction cannot close until the required approvals have been obtained. There can be no assurance that the Qualifying Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the proposed Qualifying Transaction, any information released or received with respect to the proposed Qualifying Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered to be highly speculative.

This press release contains projections and forward-looking information that involve various risks and uncertainties regarding future events. Such forward-looking information can include without limitation statements based on current expectations involving a number of risks and uncertainties and are not guarantees of future performance of Sudbury. These risks and uncertainties could cause actual results and Sudbury's plans and objectives to differ materially from those expressed in the forward-looking information. Actual results and future events could differ materially from those anticipated in such information. These and all subsequent written and oral forward-looking information are based on estimates and opinions of management on the dates they are made and expressly qualified in their entirety by this notice. Sudbury assumes no obligation to update forward-looking information should circumstances or management's estimates or opinions change.

The Exchange has in no way passed upon the merits of the proposed Qualifying Transaction and has neither approved nor disapproved the contents of this release.

Contact Information

  • Sudbury Capital Corporation
    Charles J. Lilly
    Director
    (705) 522-2400
    or
    Sea Dragon Energy Inc.
    David Thompson
    President
    (604) 608-8704