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  • Writer's pictureG2 Energy

G2 Energy's G2 Energy TX1 reinstates mortgage deal

Mr. Slawek Smulewicz reports


Further to G2 Energy Corp.'s news releases dated Jan. 20, 2023, and March 15, 2023, regarding an alleged default of the debenture (defined herein), the company, as guarantor, has entered into a reinstatement, renewal and release agreement, dated as of March 29, 2023, with its subsidiary G2 Energy TX1 Inc. (G2 TX1), as mortgagor, and Cloudbreak Discover PLC, as mortgagee, pursuant to which, among other things, the loan documents (defined herein) will be reinstated to the extent as if no default had occurred.

Cloudbreak is the holder of a debenture in the principal amount of $2-million executed by G2 TX1 and guaranteed by the company. The debenture is secured by a certain deed of trust, fixture filing, assignment of as-extracted collateral, security agreement and financing statement dated as of April 27, 2022, covering the real property located in Cochran county, Texas, improvements situated thereon, and other property, as described in the deed of trust (the mortgaged property). The debenture is further secured by a security pledge agreement dated May 23, 3022, from G2 Energy Holding U.S. Inc., as pledgor, to Cloudbreak, as lender. The debenture, the deed of trust and the security pledge agreement are collectively referred to as the loan documents.

Cloudbreak alleged that there were a number of defaults by the company and G2 TX1 in respect of the debenture and G2 and G2 TX1 disputed certain of these claims. Despite G2's efforts to negotiate a solution in January and February, 2023, on Feb. 17, 2023, Cloudbreak accelerated the maturity of the debenture and demanded payment in full of all amounts owed thereunder, and also caused the substitute trustee of the deed of trust to post the mortgaged property for foreclosure sale, which led to unnecessary and time-consuming legal posturing. The parties have now resolved their differences and entered into the agreement.

Terms of the agreement

Pursuant to the terms of the agreement, Cloudbreak has agreed to, among other things: (i) accept payment from the company and G2 TX1 in the sums set forth herein; (ii) reinstate the loan documents to the same extent as if no default had occurred; (iii) withdrawal the foreclosure proceedings; and (ii) renegotiate (with the assistance of a mediator) certain terms of the loan documents relating to working capital requirements and governing jurisdiction.

Furthermore, pursuant to the terms of the agreement, the company and G2 TX1 shall, subject to receipt of any required regulatory approvals, pay to Cloudbreak: (a) the sum of $61,332.10 (U.S.) cash representing the past due fourth quarter end 2022 payment on the debenture of $60,000.00 (U.S.) plus non-default interest in the amount of $1,332.10 (U.S.) cash through Feb. 22, 2023; (b) part of Cloudbreak's attorneys' fees in the amount of $20,000.00 (U.S.) cash; (c) the remaining part of Cloudbreak's attorney's fees in the amount of $13,311.74 (U.S.) by way of transferring or issuing to Cloudbreak 907,000 common shares in the capital of the company; (d) the first quarter end 2012 payment on the debenture of $60,000.00 (U.S.) plus a $15,000 (U.S.) bonus by way of transferring or issuing to Cloudbreak 5.11 million common shares; (e) 4,769,000 common shares transferred or issued to Cloudbreak in escrow by May 31, 2023; and (f) the second quarter 2023 payment on the debenture of $60,000.00 plus a $15,000 (U.S.) by way of transferring or issuing 5.11 million common shares.

Additionally, the company and G2 TX1 have agreed to release, remise, acquit and forever discharge Cloudbreak and Cloudbreak's employees, agents, representatives, consultants, attorneys, fiduciaries, servants, officers, directors, partners, predecessors, heirs, successors and assigns, subsidiary corporations, parent corporations, and elated corporate divisions from all released matters (as defined in the agreement).

Slawek Smulewicz commented, "The company and G2 TX1 are pleased to have resolved these disagreements, and look forward to further building a mutually beneficial business relationship with Cloudbreak."

Mortgaged property sales agreement compliance

The company and G2 TX1 further announce that it has cured all claimed defaults under its agreements with the sellers of the mortgaged property, and look forward to further building a mutually beneficial business relationship with such parties.

About G2 Energy Corp.

G2 Energy is a junior oil and gas producer listed on the CSE (Canadian Security Exchange) exchange. Its primary focus is to acquire and develop additional overlooked, low-risk, high-return opportunities in the oil and gas sector. G2's strategy is to obtain a portfolio of risk-managed production and development opportunities onshore United States. In May, 2022, G2 acquired the Masten unit in the Permian basin, Texas. The Masten unit is the company's first producing asset. G2 is targeting top tier projects with operating netbacks and infrastructure facilities which will fast track overall oil and gas production growth.

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