On December 24, 2008, the Company and the holders of the Company's Amended and Restated Senior Secured Convertible
Exchangeable Notes and Series B Senior Secured Convertible Exchangeable Notes entered into an Amendment and Exchange
Agreement (the “Amendment and Exchange Agreement”) and consummated the transactions contemplated thereby, pursuant to
which, among other things:
The Company exchanged:
• $26,000,000 of an Amended and Restated Senior Secured Convertible Exchangeable Note held by three investors for a senior
secured convertible note in the aggregate principal amount of $13,235,000 (the “Series C Note”), which is convertible in
shares of common stock, par value $0.001 per share (the “Common Stock”), of the Company, in accordance with the terms
thereof and
• $3,000,000 of the outstanding principal amount of existing Series B Senior Secured Convertible Exchangeable Note issued to
one Investor for a senior secured convertible note in the aggregate principal amount of $1,765,000 (the “Series D Note),
which is convertible in shares of Common Stock in accordance with the terms thereof.
• Neither the Series C Note nor the Series D Note is exchangeable into shares of common stock, par value $0.001 per share of
PNG Ventures, Inc., a Nevada corporation;
• In addition to the above transactions, one investor exchanged $56,000,000 of an Amended and Restated Senior Secured
Convertible Exchangeable Note for 5.6 million shares of common stock of PNG corporation. This left the Company with
1,400,000 shares of PNG stock which is pledged to other investors holding Amended and Restated Senior Secured
Convertible Exchangeable Note
• Subject to the satisfaction of certain equity conditions, the Company may at any time, at it option, require the Investor to
convert the remaining aggregate principal amount of $5,000,000 of the Amended and Restated Senior Secured Convertible
Exchangeable Note of the Investor in Common Stock, in whole or in part; and
• The Company, certain of its subsidiaries and the Investor entered into a reaffirmation agreement (the “Reaffirmation
Agreement”), which reaffirms the security interest granted by the Company and certain of its subsidiaries with respect to the
Amended and Restated Senior Secured Convertible Exchangeable Notes, the Series B Senior Secured Convertible
Exchangeable Notes, the Series C Note and the Series D Note.
·
The Series C Note ranks pari passu with the Amended and Restated Senior Secured Convertible Exchangeable Notes and the Series D
Note ranks pari passu with the existing Series B Senior Secured Convertible Exchangeable Notes.
The holders of the Company's Amended and Restated Senior Secured Convertible Exchangeable Notes and Series B Senior Secured
Convertible Exchangeable Notes consented to the transactions contemplated by the Exchange Agreement.
As a result of all of the above December 24, 2008 transactions, the Company recognized a gain on the exchanges totaling
$74,774,435. The gain is included in the financial statements for the period ending December 31, 2008.
AI
