An anonymous director reports

FAIRWEST DEFAULTS UNDER DEBTOR-IN-POSSESSION FINANCING

On Sept. 17, 2013, Supreme Group Inc. (SGI) served FairWest Energy Corp. with a demand letter and notice of intention to enforce security pursuant to Subsection 244(1) of the Bankruptcy and Insolvency Act in respect of amounts owing to SGI by FairWest under the debtor-in-possession (DIP) financing provided by SGI to FairWest.

SGI has provided DIP financing to FairWest since FairWest commenced proceedings under the Companies' Creditors Arrangement Act on Dec. 12, 2012. On July 16, 2013, the Court of Queen's Bench of Alberta approved certain amendments to the DIP financing, including additional events of default, which, if triggered, could result in SGI withdrawing its financing from FairWest.

The DIP financing provided that it was an event of default if, on or before Sept. 1, 2013: (i) the Alberta Energy Regulator (AER) had not consented to the transfer of licences for the licensed wells and facilities included in SGI's offer submitted pursuant to the sale and investment solicitation process approved by the court on March 19, 2013, and (ii) no order had been made by the court on notice to the AER approving the offer. Consent was not obtained from the AER and no order was made by the court by Sept. 1, 2013.

The demand letter requires FairWest to repay the amount of $1,836,510.98 plus all additional accrued and unpaid interest, fees and costs due under the DIP financing. If payment or other arrangements satisfactory to SGI for payment cannot be made, SGI will take such further steps as it deems necessary to recover the amounts owing, which could include the appointment of a receiver over the property, assets and undertakings of FairWest.