NX Capital Corp.

November 24, 2006 17:36 ET

NX Capital Corp. Signs Letter of Intent to Acquire Newton Energy Inc.

CALGARY, ALBERTA--(CCNMatthews - Nov. 24, 2006) - NX Capital Corp. (the "Company") - (TSX VENTURE:OES) announced today that it has signed a letter of intent dated November 9, 2006 (the "LOI") with Newton Energy Inc. ("Newton") whereby the Company would acquire all of the outstanding shares of Newton by issuing to the shareholders of Newton a total of 40,102,188 common shares (the "Proposed Acquisition"). The Company currently has issued and outstanding 40,118,233 Common Shares on a fully diluted pre-consolidation basis. The Company has no outstanding options, warrants or other securities convertible into its Common shares Newton is engaged in the oil and gas exploration and development business. The Proposed Acquisition is a reverse takeover and change of business pursuant to the rules of the TSX Venture Exchange Inc. (the "Exchange"). Tom Milne and Barry Sadre-Hashemi, directors and/or officers of the Company, each own approximately 20% of the outstanding voting securities of Newton.

Newton is incorporated in Alberta and its only assets on completion of the Proposed Acquisition will be working capital and cash of at least $150,000, a proprietary database from exploration work conducted to date, knowledge of available onshore plays in the United Kingdom, and management with operational and technical experience onshore in the United Kingdom. Newton currently does not own any oil and gas properties. The business of the Company will be the business of Newton if the Proposed Acquisition is completed.

Newton has undertaken an extensive examination of the borehole and seismic information in the East Midlands Basin and has identified multiple prospects within acreage blocks covering some 300,000 acres. Newton intends to make applications to the United Kingdom Department of Trade and Industry in order to secure the licenses covering the identified prospects pursuant to a licensing round that is expected to be announced in the first quarter of 2007. Of the prospects identified thus far, several have recovered oil to surface or had significant untested oil shows in previous wellbores and require re-drilling and the application of up to date completion methods. Prospects range from low risk/moderate impact to higher risk/high impact. Newton believes the East Midlands basins is a unique opportunity to obtain 100% working interest in significant reserves within an underexplored basin with a proven history of production.

Newton's President, Michael Frey, will be the President and CEO of the combined companies. Barry Sadre-Hashemi, Chief Financial Officer of the Company will become CFO of the combined companies. Merv Chia and Tom Milne, currently directors of NX will be directors of the combined companies, together with Michael Frey and two others to be named in the Information Circular to be sent to shareholders. Tom Milne, Barry Sadre-Hashemi and Matt Campbell, all of Calgary, Alberta, each own 20%, 20%, and 26.7% respectively of the outstanding common shares of Newton, and four other shareholders own the remaining common shares of Newton.

The Company will require additional financing of approximately $1,500,000 in order to meet its obligations related to expected work commitments for the licenses it may obtain. This additional financing is expected to be in the form of equity or debt financing, or a combination thereof. An announcement regarding the details of the financing will be made in due course.

The completion of the Proposed Acquisition is subject to several conditions set out in the LOI, including approval by the directors of the Company and Newton, entering into a definitive share purchase agreement, satisfactory completion of due diligence, shareholder approval and regulatory approval. The Company plans to hold a special meeting of shareholders in January, 2007 to approve the Proposed Acquisition and related matters, including a consolidation on a twenty to one basis or such other basis as is acceptable to the shareholders and regulatory authorities, and a change of name to Newton Energy Inc. or such other name as is acceptable to the shareholders and regulatory authorities. Upon the completion of the Proposed Acquisition of Newton, the Corporation will have only cash and no oil and gas assets, and will therefore not meet the minimum listing requirements of the Exchange. Newton must acquire oil and gas assets which meet the minimum listing requirements of the Exchange before its Common Shares will be reinstated for trading.

The Company has requested a halt in trading of its Common Shares and, pursuant to the rules to the Exchange, the halt in trading is expected to continue until the completion of the Proposed Acquisition and the minimum listing requirements of the Exchange are met. A further press release or filing statement will be issued when the Company acquires assets that meet minimum listing requirements. The Exchange has informed the Company that a sponsorship pursuant to the Exchange rules will also be required at that time, but the Company has not yet engaged a sponsor.

Completion of the Proposed Acquisition is subject to a number of conditions, including Exchange acceptance and disinterested shareholder approval. The Proposed Acquisition cannot close until the required shareholder approval is obtained. There can be no assurance that the Proposed Acquisition will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular to be prepared in connection with the Proposed Acquisition, any information released or received with respect to the Proposed Acquisition may not be accurate or complete and should not be relied upon. Trading in the securities of the Company should be considered highly speculative.

The TSX Venture Exchange has in no way passed upon the merits of the Proposed Acquisition and has neither approved nor disapproved the contents of this press release.

Contact Information

  • NX Capital Corp.
    Merv Chia
    Director & CEO
    (403) 514-9900