FairWest acquires ExploreCo Energy by way of an exempt take over bid. ExploreCo is a private related party oil and gas company. Over 99% (2,605,000 ExploreCo shares) of the issued and outstanding shares of ExploreCo were tendered by ExploreCo shareholders to the Take Over Bid.

The Take-Over Bid closed on December 29, 2008 for an aggregate acquisition cost of $2.1 million resulting in the issuance of 211,259 7% Cumulative Convertible Redeemable Retractable

Preferred Shares, Series 1 in exchange for the tendered ExploreCo shares at a price of $10.00 per Series 1 Preferred Share. Holders of Series 1 Preferred Shares will receive a cumulative dividend of 7% per annum payable quarterly on March 31, June 30, September 30 and December 31 of each year commencing on March 31, 2009.

Each Series 1 Preferred Share is convertible into 33.33 FairWest common shares at any time from the date of issuance and such conversion would result in the issuance of up to 7,041,296 FairWest common shares. Each Series 1 Preferred Share is redeemable at any time on and after December 15, 2010 at the option of FairWest at a price equal to $10.00 per Series 1 Preferred Share with accrued and unpaid cumulative dividends thereon and retractable at any time on and after June 15, 2011 at the option of the holder of Series 1 Preferred Share at a price of at a price equal to $10.00 per Series 1 Preferred Share with accrued and unpaid cumulative dividends thereon. If at any time FairWest common shares trade at or above $0.30 per share for a consecutive period of 10 trading days, FairWest may, at its option, convert all of the outstanding Series 1 Preferred Shares into FairWest common shares on the Conversion Basis.

Tags: ExploreCo Energy Inc., FairWest Energy