Melbourne, Mar 6, 2009 AEST (ABN Newswire) - Environmental Clean Technologies Limited (ASX:ESI) advises that it has terminated the subscription agreement with Pacific Capital Value Limited ('PCVL') dated 18 November 2008 ('Subscription Agreement') by mutual arrangement with that company.
On Friday 13 February 2009 PCVL purported to issue ESI with a 'notice of default' in relation to a conversion notice given for some of the convertible notes issued to PCVL under the Subscription Agreement on 17 December 2008. On Monday 16 February 2009 ESI served PCVL with a notice of breach alleging failures by PCVL to perform its obligations under the Subscription Agreement, and gave PCVL 10 Business Days in which to remedy those failures. Given these events, ESI announced on 16 February 2009 that it considered it unlikely that any more convertible notes would be issued to PCVL and stated that ESI would inform ASX of further developments in relation to these matters.
ESI is pleased to advise that the differences between ESI and PCVL have now been fully resolved, and the Subscription Agreement and all outstanding convertible notes issued under it have been terminated.
A total of A$150,000 of convertible notes were converted as part of the settlement arrangements, and the 8,572,206 shares issued on conversion of those convertible notes were used together with the 1,427,794 shares held by PCVL to satisfy PCVL's obligations to return 10,000,000 shares to the share lenders under the share lending facilities established to support the Subscription Agreement.
The two share lenders have entered into voluntary escrow deeds with the Company under which they may not sell, transfer or otherwise dispose of the shares until 3 March 2010.
ESI and PCVL have entered into mutual releases in relation to all rights and obligations of each party to the other in connection with the Subscription Agreement, the convertible notes and all related matters.
Accordingly, following these procedures PCVL will not hold any convertible notes or shares and the rights and obligations of both parties under the Subscription Agreement are at an end.
ESI Chief Executive Kos Galtos said today; "This is a very welcome development. While convertible note facilities such as those offered by PCVL are ideal for some companies, they proved to be unsuited to a company at the stage of operational and financial development of Environmental Clean Technologies. We are confident that our short term capital requirements will be provided by our existing shareholder base, and believe that the financing of the Coldry Pilot Plant and other initiatives is better undertaken by a more conventional use of structured debt and equity capital.
Resolution of the PCVL arrangements removes the potential overhang in the market of PCVL's convertible notes."
About Environmental Clean Technologies Ltd
Environmental Clean Technologies Limited (ASX:ECT) is in the business of commercialising leading-edge coal and iron making technologies, which are capable of delivering financial and environmental benefits.
We are focused on advancing a portfolio of technologies, which have significant market potential globally.
ECT's business plan is to pragmatically commercialise these technologies and secure sustainable, profitable income streams through licencing and other commercial mechanisms.
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