CALGARY, ALBERTA--(Marketwire - Nov. 30, 2012) - MENA Hydrocarbons Inc. ("MENA" or the "Company") (TSX VENTURE:MNH) announced today that Messrs. Graham Lyon, President and Chief Executive Officer, Joerg Pigaht, Vice President and Chief Operating Officer, and James Strachan, Vice President and Chief Geoscientist, have resigned their offices with the Company and its subsidiaries. Mr. Lyon has also resigned as a director of MENA. In addition, the employment of all other employees and consultants of MENA's UK subsidiary have terminated. MENA thanks Mr. Lyon and his team for their service and contributions to MENA during this difficult time.
Mr. Magdy Bassaly, a director of MENA and its largest shareholder, has agreed to serve as MENA's interim President and Chief Executive Officer while the board of directors searches for a new senior management team. Mr. Jason Bednar will remain in his positions as a director and the Vice President, Finance and Chief Financial Officer of MENA.
Term loan financing
As of November 29, 2012, certain directors and officers of MENA have advanced approximately CAD$2.0 million to MENA to pay costs and expenses of MENA and its subsidiaries on no set terms and conditions for repayment or security. In addition, certain directors, officers and shareholders of MENA have loaned MENA the aggregate sum of approximately CAD$528,000 to pay certain costs associated with the resignations of MENA's senior management and general and administrative expenses of MENA.
The past advances and new loans are evidenced by promissory notes issued by MENA and a subsidiary of MENA (as the case may be) in favour of such directors, officers and shareholders (the "Term Loans"). The promissory notes are unsecured, bear interest at 8% per annum and are repayable on the earlier of (i) November 29, 2013; (ii) MENA completing a financing for gross proceeds of not less than $7,500,000; (iii) a demand made by a lender at any time following the sale by MENA of all or substantially all of its US assets, other than the loans made by Mr. Bassaly to fund operations in Egypt which would not be repayable in the case of such sale; (iv) a demand made by a lender to MENA after any specified events of default has occurred and is continuing; and (v) the occurrence of a specified event of insolvency relating to MENA. In addition, MENA must issue the lenders a total of 9,943,903 common shares of the MENA at a deemed price of $0.05 per share (representing a deemed value of 20% of the principal amount outstanding under the loans) for no additional consideration in exchange for the lenders agreeing to make the Term Loans.
The Term Loans in favour of the directors and officers of MENA are considered related party transactions for the purposes of TSXV Policy 5.9 which incorporates the requirements of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). These loans are exempt from the valuation and minority approval requirements of MI 61-101 due to, amongst other available exemptions, the financial hardship exemptions set out in sections 5.5(g) and 5.7(1)(e) of MI 61-101. The sole independent director of MENA who did not have an interest in the Term Loans reviewed the participation of the directors and officers in the Term Loans and determined that MENA is in serious financial difficulty, such loans are designed to improve the financial position of MENA, and the terms of such loans are reasonable in the circumstances of MENA. Accordingly, such loans are exempt from minority shareholder approval and formal valuation requirements of M1 61-101.
The Term Loans have been conditionally approved by the TSXV but remain subject to final acceptance of the TSXV.
About MENA Hydrocarbons
MENA Hydrocarbons is an international oil and gas company focused on growing an asset base of production, development and high impact exploration in the Middle East and North Africa region. In Egypt, MENA owns and operates the development lease for the Lagia oil field, a 32 square kilometre onshore block located on the Sinai Peninsula, directly adjacent to the Gulf of Suez. In Syria, MENA owns a 30% participating interest in Block 9 in Syria, a 10,032 square kilometre onshore block prospective for crude oil, natural gas and condensate. In the United States, MENA owns 6,242 gross acres (with an 81.2% average working interest) in Northwestern Montana with light/medium oil reserves. MENA's shares currently trade on the TSX Venture Exchange under the symbol "MNH".
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.