PRNewswire-FirstCall/ Arabian American Development Co. (NASDAQ:ARSD) , a leader in the specialty chemical area, today announced that it has reached a binding agreement resolving prior discussions surrounding the Al Masane Al Kobra Mining Company (AMAK) corporate documentation. Under the Agreement, the Company is released from any future financial obligations and will have no further liability to AMAK or the mine property. The specifics of the Agreement dated August 25, 2009, are:
-- The Company will convey 9%, or 4,050,000, shares of AMAK stock to the other AMAK shareholders pro rata.
-- The Articles of Association and By-Laws of AMAK will be amended to reflect that the Company has fully and completely paid the subscription price for the 18,450,000 shares of AMAK stock (41% of the issued and outstanding shares), and that neither AMAK nor the other AMAK shareholders may require the Company to make an additional capital contribution to AMAK without the Company's written consent, and that the Company shall retain seats on the AMAK Board equal in number to that of the Saudi Arabian shareholders for a three year period beginning August 25, 2009.
-- AMAK will assume the $11 million Promissory Note from the Saudi Arabian Ministry of Finance & National Economy Loan to the Company, dated January 24, 1979, and will fully indemnify and defend Company against any and all claims related to the Promissory Note.
-- For a three year period commencing August 25, 2009, the Company has the option to repurchase from the Saudi Arabian shareholders the 4,050,000 shares of AMAK stock at a price equal to the then fair market value of these shares less 10%; and -- The two Memoranda of Understanding dated May 21, 2006 and June 10, 2006, respectively, as well as the Partnership Agreement dated August 6, 2006, are terminated for all purposes.
Nick Carter, President and Chief Executive Officer, Arabian American Development Co., commented, "The timely resolution of the issues that were raised now allows all parties to focus on completing mine development and starting production in late 2010 as planned. This agreement eliminates the stipulation in the original agreement which required Arabian American Development Co. to provide $30 million in capital from other sources should the Board of AMAK make a call for payment.
The original plan called for AMAK to assist in the supporting the additional capital contribution, and when it became apparent that the financing sources would not be available, other alternatives were sought. Our Board conducted an intensive study of the ramifications of the options open to the Company, and we believe we have made the best choice. In addition, this agreement resolves concerns raised by a Saudi director, who is also an AMAK shareholder, regarding the validity of the Partnership Agreement between the Company and several of the Saudi investors. We are pleased to have come to an agreement which is in the best interests of Arabian American Development Co. shareholders and allow the project to move forward in a positive fashion."