Eurogas Corporation

Eurogas Corporation

June 16, 2009 15:05 ET

Eurogas Corporation-Update at the Request of the TSX Venture Exchange

TORONTO, ONTARIO--(Marketwire - June 16, 2009) - Eurogas Corporation ("Eurogas" or the "Company") (TSX VENTURE:EUG) has issued this press release at the request of the TSX Venture Exchange (the "Exchange") in connection with the Exchange's review of the Company. The Exchange requires additional disclosure of two historical transactions. One transaction involved the forgiveness of a $1,000,000 loan, and bonuses totalling $651,475 approximating the estimated personal taxes associated with the loan forgiveness, to the founding and since deceased Chairman and Chief Executive Officer of the Company in consideration of his long-term contribution and relative compensation as a founding member of and key contributor to the Company. The other transaction involved loaning $2,747,496 to limited partners controlled by two directors of Eurogas on the same terms as loans concurrently made to five arms length limited partners for an aggregate $4,616,148. Those related party elements required that notice be provided to the Exchange and a press release issued which were not completed through inadvertence. The loan forgiveness, bonuses and loans were disclosed in Eurogas' continuous disclosure documents. The disclosure relating to the bonuses did not reference that they approximated the estimated personal taxes associated with the loan forgiveness. The transactions were approved by the Board of Directors or the Compensation Committee, as the case may be, including Ned Goodman, the Chairman and a director of Eurogas and the Chief Executive Officer and a controlling shareholder of Dundee Corporation, which at the time held and continues to hold more than 50% of the outstanding common shares of Eurogas.

1) Loan Forgiveness:

The first transaction involved a loan made in 1997 to the then Chairman and Chief Executive Officer of Eurogas, Julio Poscente, to purchase 1,000,000 common shares of Eurogas at a price of $1.00 per share. The shareholders of the Company approved the loan and the repayment terms whereby the loan would be repaid from the proceeds from the eventual sale of these shares which were pledged as security. Eurogas subsequently forgave $100,000 of the loan in each of 2004 and 2005 and, in each of those years, also provided Mr. Poscente with a bonus of $70,000. At the end of December 2006, the Company forgave the remaining $800,000 outstanding following the death of Mr. Poscente and declared a bonus of $511,475 to his estate and released the pledged shares held as security. At each of those times it had been determined that the applicable bonus, which approximated the amount of personal taxes payable by the Chairman and Chief Executive Officer or his estate in connection with the forgiveness of the loans, was reasonable and appropriate in the circumstances. Mr. Poscente was a founding member of the Company and a key individual responsible for the discovery and ultimate claim of three exploration properties, one of which remains the principal asset of Eurogas and another which was the principal asset of its wholly-owned subsidiary, Eurogas International Inc., until August 5, 2008. Eurogas had determined that the arrangements relating to the loan were reasonable and appropriate given Mr. Poscente's long-term contributions and relative compensation. The amount of the loan forgiven and bonus granted in any one year were not material to the Company at the time. Jay Poscente, the son of Julio Poscente, was appointed a director of the Company following his father's death in December 2006 and remained on the Board of Directors until May 22, 2009.

2) Related Party Loan:

Eurogas holds an interest in the Castor Exploration Permit through its 73.7% interest in the Castor UGS Limited Partnership (the "Castor UGS LP"). In May 2007, the partners in the Castor UGS LP were subject to a $28 million cash call. Eurogas funded the entire cash call including the non-controlling limited partners' portion of the cash call totalling $7,363,644. There were seven non-controlling limited partners, two of whom were controlled by two directors of Eurogas. The loans to the two non arm's length limited partners totalling $2,747,496 represented 37% of the aggregate loans to the seven limited partners, the other five of whom were at arm's length to the Company and who negotiated the loans. The loans were secured by a pledge of the limited partnership interests of the non-controlling limited partners and were subject to interest at market rates. In 2008 the loans were repaid in full. At the time the loans were made, the non-controlling limited partners also granted Eurogas a right of first offer and a right of first refusal in respect of any future sale of their limited partnership interests, and their certificates of ownership remain with Eurogas in order to ensure compliance with the above and for other required purposes.

Eurogas Corporation is listed on the TSX Venture Exchange under the symbol EUG and is engaged directly in the development of a major underground storage facility off the east coast of Spain. For more information on Eurogas, visit the website

Certain information set forth in this document, including management's assessment of each of the Corporation's future plans and operations, contains forward-looking statements. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond the Corporation's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. The Corporation's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits the Corporation will derive from them. The Corporation disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Neither 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.

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