Xtract has offered to acquire all of the issued and outstanding common stock in Elko Energy Inc (Elko) that it does not already own, for new ordinary shares in Xtract, on the basis of seven Xtract shares for every Elko share ("the Acquisition"). Presently Elko has 100,010,049 common shares in issue of which 49,975,000 are owned by Xtract.

The transaction will result in Xtract issuing 350,245,343 new ordinary shares to the holders of Elko common stock. In addition Elko has warrants and options outstanding representing, in total, 8,277,500 which will be converted into rights over Xtract shares on similar terms. Prior to the Acquisition Xtract has 914,965,026 ordinary shares in issue.

The Acquisition is being effected by way of a plan of arrangement under the Business Corporations Act (Ontario) and is subject to, inter alia, approval by both two-thirds of the Elko shareholders voting at the specially convened general meeting including Xtract and its affiliates and a simple majority of Elko shareholders voting at the meeting, excluding Xtract and its affiliates. Xtract has received commitments to vote in favour of the Acquisition from the directors of Elko who own Elko common shares and major shareholders and these together with its own holding represent 66.4% of the shares in issue. The Acquisition will also be subject to approval by the Ontario Superior Court of Justice.

Following receipt of preliminary court approval, a circular setting out, inter alia, the offer will be delivered to the Elko shareholders in advance of the meeting. Subject to the completion of the Acquisition, Xtract will be issuing new ordinary shares which will require the approval of the Xtract shareholders at a general meeting to be held in early August 2011.

The Acquisition of the issued and to be issued shares in Elko will mean that Xtract will no longer be considered as an investing company. Under the AIM Rules the transaction is deemed to be a reverse takeover. Xtract has sought a suspension of trading in its shares until it is in a position to publish an Admission Document and, thereafter, it will re-apply for admission to AIM. Accordingly, at the request of the Company, trading on AIM for the under-mentioned securities will be suspended from 7:30am on 21 June 2011.

Ordinary Shares of 0.1p each fully paid (914,965,026)(GB00B06QGC57)

An Admission document that will include a notice convening a general meeting to consider the Acquisition and the related issue of shares will be posted to Xtract shareholders in the coming weeks.

The Directors are also considering the future funding requirements of the enlarged business and resolutions in that regard may be proposed at the same general meeting

Peter Moir, Chief Executive of Xtract Energy, commented,"We have focused our time on rebalancing the asset portfolio of the Company and the acquisition of Elko is the logical next step in this process. Xtract has a clear vision and solid strategy to create a platform for sustainable growth with significant near term operational upside potential for shareholders. The Board looks forward to completion of the Acquisition and the re-admission of Xtract as an operating company on AIM."

Tags: Xtract Energy