Listing: TSX Venture Exchange ("EEI.V")
Issued Common Shares: 60,208,086
TORONTO, May 28 /CNW/ - Echo Energy Canada Inc. ("Echo Energy") announced
today that Echo Energy's Canadian chartered bank (the "Bank") has provided
Echo Energy with notice that the Bank has reduced Echo Energy's borrowing base
from $5,200,000 to $3,300,000 based on the review by the Bank's independent
consultant of Echo Energy's December 31, 2008 external engineering report
prepared by GLJ. The Bank also expressed concern about the covenant requiring
a current ratio of no less than 1.00:1.00 (excluding consideration of the
current portion of the Bank credit facility). The Bank requires Echo Energy to
rectify any default no later than July 25, 2009.
A payment of $1,850,000 will be required to reduce this credit facility
from the May 26 2009 balance of $5,150,000 to the new maximum borrowing base
of $3,300,000. Echo Energy is actively looking at alternative financing
options to address this situation.
The current ratio (excluding consideration of the current portion of the
Bank credit facility) has always been maintained well in excess of the
required ratio of 1.00:1.00, and stood at a ratio of 1.96:1.00 as at March 31,
2009. Management of Echo Energy does not believe that this test will require
any further reduction in the Bank credit facility.
In discussions, the Bank acknowledged that it accepts the reserves
estimates in the GLJ engineering report and that the GLJ valuations would
support an increase in the credit facility, but that the Bank applies much
more conservative pricing assumptions which led to the reduction in the
About Echo Energy Canada Inc.
Echo Energy Canada Inc. is a publicly traded energy company with revenue
producing natural gas production operations near Port Burwell Ontario, Canada
on the shores of Lake Erie.
Statements in this news release that are not historical facts, including
statements about plans and expectations regarding properties, reserves,
transactions and opportunities, capital resources and future financial results
are forward-looking. Forward-looking statements involve risks and
uncertainties, which may cause the Company's actual results in future periods
to differ materially from those expressed. These uncertainties and risks
include changing gas and commodity prices and currency exchange rates, demand
for gas, lack of success of future exploration and development, competition
and other factors discussed from time to time in the company's filings with
the Ontario Securities Commission.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this news release.
For further information:
For further information: Charles Edey, President, at 1-877-396-3540,