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3MV Energy Corp
Symbol C : TMV
Shares Issued 37,181,369
Close 2012-12-18 C$ 0.20
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3MV acquires FarmCo, reacquires 75% interest in 2 wells

2012-12-20 00:29 ET - News Release

Mr. Curtis Schoenfeld reports

3MV ENERGY ANNOUNCES RE-ACQUISITION OF 75% INTEREST IN 2 WELLS BY COMPLETING THE ACQUISITION OF 1696704 ALBERTA LTD. AND FURTHER SETTLEMENT OF DEBT

Further to previous press releases, 3MV Energy Corp. has reacquired the 75-per-cent interest of two newly (or recently) drilled wells by acquiring all of the outstanding securities of 1696704 Alberta Ltd. (FarmCo). Pursuant to the farm-out agreement between FarmCo and 3MV, FarmCo drilled two wells on 3MV's Fiske property, with FarmCo financing 100 per cent of costs to completion to earn a 75-per-cent interest, subject to existing royalties. 3MV now has a 100-per-cent working interest in the two Fiske wells. Currently, production equipment is being installed on the wells, and 3MV will provide the market with production updates in the coming weeks.

Securities exchange

The company acquired all of the 3,600,100 common shares and 3.6 million warrants of FarmCo by issuing 3,600,100 3MV common shares and 3.6 million 3MV warrants to FarmCo securityholders in exchange for 3,600,100 FarmCo common shares and 3.6 million FarmCo warrants. Each 3MV warrant is exercisable at 50 cents per share for a period of 18 months from the original date of issuance. Following the acquisition, FarmCo is a wholly owned subsidiary of 3MV.

These transactions are consistent with 3MV's present goal to preserve its cash and are subject to the approval of the TSX Venture Exchange. According to TSX-V rules and applicable securities legislation, the securities issued pursuant to the shares for debt transactions are subject to a four-month-and-one-day hold period, commencing on the closing date and ending on April 20, 2013. The issuance of the common shares will not result in a change of control.

Related-party transaction

Securityholders of FarmCo include: (a) Curtis Schoenfeld, president, chief executive officer and a director of 3MV and president and a director of FarmCo, (b) Gordon W. Marsden, vice-president, engineering, of 3MV and secretary and a director of FarmCo, (c) Audax Investments Ltd., a company controlled by Dallas C. Duce, a director and control person of 3MV, and (d) Serpa Ventures Ltd., a company controlled by Alex Francoeur, a director of 3MV.

The acquisition from each director and/or officer is considered related-party transactions for the purposes of Multilateral Instrument 61-101 (protection of minority securityholders in special transactions). Following the closing of the acquisition: (1) Mr. Schoenfeld will, directly or indirectly, beneficially own or control 460,100 common shares of the company on a non-diluted basis (1.02 per cent) and 860,100 common shares on a fully diluted basis (1.07 per cent); (2) Mr. Marsden will, directly or indirectly, beneficially own or control 456,000 common shares of the company on a non-diluted basis (1.01 per cent) and 856,000 common shares on a fully diluted basis (1.07 per cent); (3) Mr. Duce will, directly or indirectly, beneficially own or control 22,059,986 common shares of the company on a non-diluted basis (48.87 per cent) and 47,308,272 common shares on a fully diluted basis (58.92 per cent); and (4) Mr. Francoeur will, directly or indirectly, beneficially own or control 124,660 common shares of the company on a non-diluted basis (0.28 per cent) and 224,660 common shares on a fully diluted basis (0.28 per cent).

According to MI 61-101, a related-party transaction requires formal valuation and minority shareholder approval unless exempt. The acquisitions are exempt from the formal valuation and minority approval requirements due to the financial hardship exemption set out in Section 5.5 (g) and Section 5.7 (1) (e) of MI 61-101. A committee of independent directors reviewed the acquisitions and determined that, as 3MV is in serious financial difficulty and the acquisitions are designed to improve the financial position of 3MV, the terms of the acquisitions are reasonable in the circumstances of 3MV. Accordingly, the acquisitions are exempt from minority shareholder approval and formal valuation requirements of M1 61-101.

The acquisitions are closing in fewer than 21 days due to the company's immediate need to address its financial situation, which shorter period is both reasonable and necessary in the circumstances. MI 61-101 requires that, if a material change report is filed fewer than 21 days before the expected date of the closing of the transaction, an explanation is to be provided why the shorter period is reasonable or necessary in the circumstances.

Further settlement of debt

Further to the press releases dated Oct. 18, 2012, Nov. 6, 2012, Nov. 13, 2012, and Nov. 19, 2012, 3MV is also pleased to announce that it is has agreed to convert $427,053.76 of trade and professional services debt into 1,708,219 units of the company at a conversion price of 25 cents per unit. Each unit will be composed of one share and one common share purchase warrant. Each warrant will entitle the holder to purchase one additional share of the company at an exercise price of 50 cents per share for a period of 18 months following the date of issuance. To date, the company has converted $1,477,570.35 of debt into an aggregate of 5,910,209 common shares and 5,148,649 warrants. 3MV is continuing to solicit its creditors for conversion.

These transactions are consistent with 3MV's present goal to preserve its cash and are subject to the approval of the TSX Venture Exchange. According to TSX-V rules and applicable securities legislation, the securities issued pursuant to the share-for-debt transactions are subject to a four-month-and-one-day hold period, commencing on the closing date and ending on April 19, 2013. The issuance of the common shares will not result in a change of control.

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