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Substantial Investment Promises New Opportunities for AmerAlia
LONE TREE, Colo., Oct 02, 2008 /PRNewswire-FirstCall via COMTEX/ -- AmerAlia, Inc. (Pink Sheets: AALA) has entered into a restructuring agreement with private equity funds managed by The Sentient Group, a specialist international resources funds manager. Sentient became the company's largest shareholder in August 2007 after buying equity and debts previously held by the Jacqueline Badger Mars Trust. Sentient is also a lender to AmerAlia and its subsidiaries.
AmerAlia and Sentient expect to complete the restructuring late in October. They expect AmerAlia will become substantially debt free and own 18% of its subsidiary Natural Soda Holdings. Sentient will exchange all its existing loans to Holdings and its 53.5% ownership of Natural Soda, Inc. for the other 82% of Holdings. Holdings will then own all of Natural Soda, the operating subsidiary. The Holdings board of directors will comprise representatives from Sentient, AmerAlia and management.
Sentient will also convert loans into shares of AmerAlia common stock and will purchase additional shares. AmerAlia creditors will be offered shares to settle their obligations at $0.36 per share, the same price that Sentient is paying to exchange loans it has recently made to AmerAlia. AmerAlia and Sentient intend that AmerAlia will have cash reserves of approximately $4 million for working capital and investment in Holdings after the restructuring is completed. AmerAlia's further investment in Holdings will be matched by additional investment from Sentient in proportion to its ownership. The shareholders intend that Holdings will have up to $16 million available to invest in further development of Natural Soda.
AmerAlia anticipates that it will have approximately up to 70 million shares outstanding after closing and that Sentient will own between 55% and 77% of its equity. The outcome will depend on the level of acceptances by note holders and creditors for the share offer. AmerAlia will call a shareholders meeting to increase its authorised capital, to confirm a new Holdings shareholder agreement and to elect up to four Sentient nominees to its board of directors.
Mr. Bill Gunn, Chairman and CEO of AmerAlia, said, "We are delighted to see Sentient show its support for our activities in this way. The conversion of its loans to equity will significantly improve our capital structure and provide opportunities for others to invest in our shares. We look forward to further developing our business interests for the benefit of all our shareholders."
The Chairman of Sentient, Mr. Peter Cassidy, said, "We too are pleased to see our long held plans come to fruition. We are excited about the potential inherent in Natural Soda's sodium and water assets and the prospect of securing access to the underlying oil shale resources. We look forward to improving their value for both our own investors and the other AmerAlia shareholders".
Natural Soda produces naturally occurring sodium bicarbonate from its Bureau of Land Management leases covering 9,543 acres in Northwest Colorado. It has a solution mining and processing plant capable of producing more than 100,000 tons per year. It produces almost all grades of sodium bicarbonate, commonly called baking soda. Natural Soda also owns a reservoir and extensive conditional and unconditional water rights in the Colorado River drainage system. The sodium leases and adjacent areas also contain large oil shale resources. Natural Soda does not own rights to the oil shale but intends to apply for title if regulations to lease the oil shale resources are promulgated and approved by the federal government.
