Transeastern Power Trust & Mediterranean Resources Ltd Arrangement - Waratah Capital Ltd Responds to Petition

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Sept. 25, 2015) -

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Waratah Capital Ltd wishes to advise all Mediterranean Resources Ltd. (NEX:MNR) ("Mediterranean" or "MNR") shareholders that it has today responded to the Supreme Court Petition in the above Arrangement. In summary, Waratah says;

Waratah opposes the relief sought in MNR's Petition for approval of the Plan of Arrangement and is asking the Court for:

1. An Order that the application by the Petitioner, Mediterranean Resources Ltd. ("MNR") for a Final Order in respect of the Plan of Arrangement (as defined in the Petition) be dismissed.
   
   
2. Alternatively:
   
   
   1. a Declaration that the results and any corresponding resolutions from the Annual General and Special Meeting of the shareholders of MNR held at Suite 900 - 855 West Georgia, Vancouver, British Columbia on Friday, September 25, 2015 are a nullity.
      
      
   2. An Order that a subsequent Annual General and Special Meeting of the shareholders of MNR for the purposes described in paragraph 3 of the Order of the Honourable Justice Walker pronounced on August 28, 2015 (the "Interim Order") be held after at least 21 days after delivery of the Documents (as defined below) by MNR to Waratah (the "Subsequent Meeting").
      
      
   3. An Order granting leave to MNR to apply to vary the Interim Order for the purposes of the Subsequent Meeting.
      
      
3. An Order that MNR shall, within 14 days of the date of the Order, deliver to Waratah the following documents:
   
   
   1. all documents submitted to MNR by Transeastern for the purposes of the Acquisition including but not limited to:
      
      
      1. Transeastern's business proposal, marketing plans, projections, forecasts, and financial analysis in relation to the Acquisition;
         
         
      2. all consolidated financial projections for Transeastern detailing operational cash flow for the power plants (detailing power prices, green certificates, CAPEX, operational costs etc.), projected distributions to the trust owners and how these distributions will be funded, distribution ratios, and specific modeled acquisitions, if any;
         
         
      3. any internal marketing plans, business proposals, projections and financial analysis completed or assembled with regard to Sprott Asset Management's investment of approximately $18 million in March of 2015;
         
         
      4. all financial and operational performance reports of each power plant owned by Transeastern since the date in commission;
         
         
      5. all power-purchase agreements currently in place or in negotiation for all 5 power plants owned by Transeastern;
         
         
      6. all documents relating to the proposed or anticipated usage by Transeastern of the cash received from MNR;
         
         
      7. all tax-related memos, rulings and planning documents in relation to the tax structures and distribution strategies established by Transeastern;
         
         
      8. Transeastern's original forecasts and business plan as at the initial public offering date;
         
         
      9. all communications with Romanian officials regarding the purchase of power plants in Romania and the corresponding power purchase agreements and green certificates;
         
         
      10. all country-specific research on purchase price agreement pricing in Romania and anticipated trends; and
          
          
   2. all documents reviewed by, prepared by or prepared for MNR in connection with its assessment and analysis of the Acquisition including but not limited to:
      
      
      1. research conducted by MNR;
         
         
      2. notes and memoranda prepared by MNR;
         
         
      3. correspondence between MNR and Transeastern;
         
         
      4. correspondence between the board of directors;
         
         
      5. documents from third party advisors including but not limited to correspondence, opinions and reports.
         
         

(the "Documents")

4. In the further alternative, an Order that the application by MNR for a Final Order in respect of the Plan of Arrangement (as defined in the Petition) be adjourned until at least 21 days after delivery of the Documents.

In addition, Waratah commenced litigation against MNR claiming that it is entitled to additional shares in MNR, the details of which are summarised below:

1. Waratah commenced an action against MNR: Waratah Capital Ltd. v. Mediterranean Resources Ltd., Supreme Court of British Columbia Vancouver Registry No S-156926 (the "Shares Litigation").
   
   
2. Waratah alleges that MNR, in breach of an agreement, failed to issue shares in it as a result of advances made by Waratah to or on behalf of MNR. As part of the Shares Litigation, Waratah is seeking an order that MNR issue the equivalent of CDN$5,466.40 and US$268,977.50 in common shares to Waratah.
   
   
3. The Shares Litigation was filed on August 21, 2015 and served on or about August 26, 2015.
   
   

Notwithstanding, Waratah observes that the Shares Litigation (and its underlying dispute) does not appear to be referenced or included in any of:

1. the Petition;
   
   
2. Affidavit #1 of Robert Abenante;
   
   
3. the Interim Order;
   
   
4. the Plan of Arrangement;
   
   
5. the Information Circular; or
   
   
6. the Fairness Opinion of Stephen Semeniuk.
   
   

As a result, Waratah is not in a position to properly assess the reasonableness of the Plan of Arrangement in an informed manner as it is unclear whether MNR or Transeastern have considered the potential impact of the Shares Litigation on the transaction.

In addition to the Shares Litigation, Mr. Pickett, a former Director of MNR commenced litigation against MNR and its board of directors alleging that he was wrongfully removed from the board of directors.

Waratah is very concerned that on May 28, 2014, Transeastern entered into a Milestone Unit Agreement with Mr. Ashish Kapoor (former CFO), Mr. Gabriel Sanilou (COO), Mr. J. Colter Eadie (CEO), and Mr. Ravi Sood (Chairman), which offered significant Transeastern trust units to these individuals if the Transeastern distributions are maintained. This creates a significant risk of dilution to the other Transeastern investors and provides management with incentives to maintain and/or increase the distributions, irrespective of any losses or lack of revenue.

Furthermore, an independent Special Committee was not appointed to review the transaction. Waratah says that the failure by the board of directors of MNR to appoint a Special Committee supports increased disclosure by the board of directors in relation to their analysis of the transaction. The shareholders should have been provided with substantially the same information and analysis that the board of directors had including any information relating to the alternatives considered and the analysis as to why said alternatives were not adopted.

As set out in the Petition, the board of directors of MNR are shareholders in MNR and were each set to receive some form of consideration as a result of the transaction. Consequently, it would have been prudent for the board of directors to have appointed an independent Special Committee, so as to avoid any potential for a conflict of interest.

Waratah therefore says that it not in a position to make a reasonably informed decision given the current information disclosed by MNR. As a result, Waratah maintains that the Meeting and/or Petition should be adjourned pending delivery of the Documents to Waratah.

For and on behalf of Waratah Capital Ltd

Nicholas C. Taylor, Director