FINANCING / Redeco Reaches Accord With Costilla
ASE SYMBOL: RE
MAY 4, 1998
CALGARY, ALBERTA--Redeco Energy Inc. today announced that it has
reached with Costilla Energy, Inc., its 50 percent joint venture
partner in Moldova, whereby Costilla has provided to Redeco
sufficient working capital to allow Redeco to pursue additional
financing or a restructuring of its affairs. This agreement
remedies a previously announced payment default by Redeco to
Costilla.
Under the agreement, Costilla has paid US$350,000 to Redeco, will
forgive all outstanding amounts owned by Redeco to Costilla
(estimated currently at US$1.6 million) and will assign Redeco a
3.5 percent royalty interest on Concession revenues generated in
Moldova. In exchange, Redeco has agreed to assign a 50 percent
cost-bearing interest in the Moldovan Concession to Costilla.
Assignments under the transaction will occur following approval by
Redeco's founding shareholders, who hold over 60 percent of the
issued and outstanding shares of Redeco, have agreed to support
this agreement and vote in favor of the arrangement at the
Shareholders Meeting scheduled for June 24, 1998.
Redeco has the right, at any time until August 2, 1998, to
reacquire all or a part of its cost-bearing interest in the
Concession by repaying the $350,000 plus accrued interest, paying
amounts owed under the Operating Agreement, as well as giving back
the royalty interest.
William C. Liedtke, CEO of Redeco, said "Redeco is extremely
pleased with the opportunity presented by this agreement. It
relieves the Company from short term financial pressure and frees
up our resources to go out into the market with what we believe is
a very exciting story."
"In Romania, the National Agency for Mineral Resources awarded us
last week three concession blocks covering more than 3.1 million
acres in Southern Romania, subject to final government approval.
In Moldova, we have now confirmed, through analysis of the
extensive Soviet seismic study of the Moldovan deep basin, that
earlier Soviet drilling never reached, much less tested, the 30
deep structures indicated."
Liedtke further stated that the Company's recent progress, coupled
with the continued strengthening of the international oil markets,
should boost the Company's ability to attract new investment,
either through direct financing or strategic alliance with another
company, both of which the Company is actively pursuing.
Redeco is an oil & gas exploration and development company
headquartered in Calgary, Alberta. In addition to the Romanian
concessions under award, Redeco holds a 50 percent interest in the
oil and gas exploration and production rights to an
8.3-million-acre concession covering the entire country of Moldova
on the eastern border of Romania. Today, Redeco has three fields
under development in Moldova.
The Company is listed on the Alberta Stock exchange under the
symbol "RE". |
