Echo Energy Canada Inc.

Echo Energy Canada Inc.

December 12, 2007 12:31 ET

Echo Energy Calls Annual and Special Meeting of Shareholders

TORONTO, ONTARIO--(Marketwire - Dec. 12, 2007) - Echo Energy Canada Inc. (TSX VENTURE:EEI) announced today that in accordance with the requirements of the Business Corporations Act (Ontario), its Board of Directors has called an annual and special meeting of shareholders to be held in Toronto on April 22, 2008.

The special meeting has been requisitioned by Challenge Gas Holdings AB and Exclusive Asset Management Inc., the holders of 31.1% of Echo's common shares, to have Echo shareholders vote on a resolution that would replace Robert Moore and Salvatore Pacifico, both current directors of Echo, with Thomas M. Sheppard and Brian Monrad, nominees of the requisitioning shareholders.

The requisitioning shareholders already have 3 directors that represent them on the board or are related to insiders of the requisitioning shareholders, out of a total of 8 directors. If the proposed resolution is passed, the requisitioning shareholders may be considered to control a majority of the seats on the board. In addition, the requisitioning shareholders have indicated that they have the support of 51.9% of current shareholders, including the shares held by the requisitioning shareholders. The requisitioning shareholders have not filed an amended early warning report indicating that they are acting jointly or in concert with persons or companies aggregating to 51.9% and, as such, the majority of the board has no way to independently determine this claim. Should the claim be correct, the proposal, if implemented, may constitute a change of control that may trigger provisions in various contracts between Echo and third parties and may trigger a year end for tax purposes. In addition, in order for Messrs. Sheppard and Monrad to become directors of the company, they must be approved by the TSX Venture Exchange. The Board will require information from each of Messrs. Sheppard and Monrad in order to obtain that approval.

The Board believes that for a company the size of Echo Energy, holding both a special meeting and the annual meeting of shareholders within two months of each other does not make fiscal sense. Echo Energy typically conducts its annual meeting in June, however the Board has decided to combine the requested special meeting with the annual meeting, and to move up the date of the annual meeting by 2 months from its regular time.

The Board believes that an April special meeting is appropriate to permit the Corporation the time to investigate change of control and related issues with respect to the proposal, to obtain the approval of the TSX Venture Exchange, to otherwise properly prepare to hold the special meeting and to combine the special meeting with the Corporation's annual meeting in order to avoid the significant costs associated with holding two meetings within a short time-frame. Shareholders will receive formal notice of the meeting and an information circular with answers to the questions raised by the proposal in sufficient time to consider their decision.

The special meeting was requisitioned following a meeting of the Board on November 20, 2007, at which a majority of directors voted against a resolution tabled by Salvatore Fuda to add Mr. Sheppard as a director. Also at that meeting, a majority of directors voted in favour of a resolution approving a private placement to raise funds to finance the Company's gas reserves development.

The requisitioning shareholders and the Chairman of the Board, Salvatore Fuda, subsequently commenced a lawsuit against Echo Energy Canada Inc. and five of its directors, namely Gary Conn, Michael Hunter, Robert Moore, David Johnstone, and Salvatore Pacifico. The plaintiffs allege that the defendants have engaged in conduct that is oppressive and unfairly prejudicial to the interests of the plaintiffs. The plaintiffs are also seeking an injunction restraining the Board from proceeding with the private placement. The Company and the named directors intend to defend the claim and resist the injunction. The Board notes that the press release of Salvatore Fuda issued on December 11, 2007 in his purported capacity as Chairman of the Board of Echo Energy was not authorized by or discussed with the Board. Echo Energy has not authorized Mr. Fuda to issue press releases in its name or on its behalf.

Salvatore Fuda and Joseph Fuda both voted against the resolution calling the meeting on April 22.

About Echo Energy Canada Inc.

Echo Energy Canada Inc. is a publicly traded energy company with revenue producing natural gas production operations near Port Burwell Ontario, Canada on the shores of Lake Erie.

Issued Common Shares: 52,779,515

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information