ASX Announcement. Notice of Meeting

Transcription

1 30 April 2010 ASX Announcement Notice of Meeting The enclosed Notice of Meeting and Proxy Form for Eastern Corporation Limited s Extraordinary General Meeting to be held on 1 June 2010 are being mailed to shareholders today. For further information contact: Sam Aarons Manager, Business Development & Corporate Relations Tel: info@easterncorp.com.au Website:

2 Notice of Extraordinary General Meeting and Explanatory Memorandum Eastern Corporation Limited ACN Date of Meeting: Tuesday, 1 June 2010 Time of Meeting: Place of Meeting: 10:00am (Brisbane time) HopgoodGanim Lawyers, Waterfront Place, Level 7, 1 Eagle Street, Brisbane, Queensland

3 Notice of Extraordinary General Meeting Notice is given that an Extraordinary General Meeting of shareholders of Eastern Corporation Limited ACN (Company) will be held at the offices of HopgoodGanim Lawyers, Level 7, Waterfront Place, 1 Eagle Street, Brisbane, Queensland, on Tuesday, 1 June 2010 at 10:00am (Brisbane time). Agenda Special Business 1. Issue of Shares to Galilee Energy Limited Shareholders To consider and, if thought fit, pass the following resolution as an ordinary resolution, with or without amendment: That in accordance with the provisions of Listing Rule 7.1 of the ASX Listing Rules, and for all other purposes, the Company be authorised to issue up to 41,939,951 ordinary shares in the Company to shareholders of Galilee Energy Limited ACN (GEL) (other than the Company and Storth Pty Ltd ACN , an entity associated with Mr Campbell Smith) (Recipient Shareholders), in consideration for the acquisition of their shares in GEL on the terms and conditions set out in the Explanatory Memorandum accompanying this Notice of Meeting (Consideration Shares). Notes The Company will disregard any votes cast on this Resolution by: any Recipient Shareholder; and any associate of any Recipient Shareholder. However, the Company need not disregard a vote if: it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with the direction on the proxy form to vote as the proxy decides. 2. Issue of Shares to Storth Pty Ltd To consider and, if thought fit, pass the following resolution, as an ordinary resolution, with or without amendment: That in accordance with the provisions of ASX Listing Rule and for all other purposes, the Company be authorised to issue up to 491,334 fully paid ordinary shares in the Company to Storth Pty Ltd ACN (Storth), an entity controlled by Mr Campbell Smith, Managing Director of the Company, in consideration for the acquisition of Storth s shares in GEL, on the terms and conditions as contained in this Notice of Meeting and attached Explanatory Memorandum (Storth Consideration Shares). Page 2 of 16

4 Notice of Extraordinary General Meeting Notes: The Company will disregard any votes cast on this Resolution by: Storth; and any associate of Storth. However, the Company need not disregard a vote if: it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with the direction on the proxy form to vote as the proxy decides. 3. Change of Company Name to Galilee Energy Limited To consider and, if thought fit, pass the following resolution, as a special resolution, with or without amendment: That in accordance with section 157 of the Corporations Act 2001 (Cth) and for all other purposes, and subject to: (a) (b) the conditions of the Offer (as defined in the Explanatory Memorandum) being satisfied or waived by the Company and the Offer proceeding; and Galilee Energy Limited ACN changing its name, in accordance with the Corporations Act 2001 (Cth) and its Constitution, the Company s name be changed to Galilee Energy Limited with effect on the date on which ASIC alters the details of the Company s registration. 4. Issue of Shares to Becamal Pty Ltd To consider and, if thought fit, pass the following resolution, as an ordinary resolution, with or without amendment: That in accordance with the provisions of ASX Listing Rule and Part 2E of the Corporations Act 2001 (Cth) and for all other purposes, the Company be authorised to issue up to 6,956,522 fully paid ordinary shares (Repayment Shares) at an issue price of 34.5 cents each to Becamal Pty Ltd ACN (Becamal), an entity controlled by Mr Campbell Smith, Managing Director of the Company, on the terms and conditions as contained in this Notice of Meeting and attached Explanatory Memorandum. Page 3 of 16

5 Notice of Extraordinary General Meeting Notes: A copy of this Notice and the Explanatory Memorandum which accompanies this Notice has been lodged with the Australian Securities & Investments Commission in accordance with Section 218 of the Corporations Act 2001 (Cth). The Company will disregard any votes cast on this Resolution by: Becamal; and any associate of Becamal. However, the Company need not disregard a vote if: it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with the direction on the proxy form to vote as the proxy decides. General business To consider any other business as may be lawfully put forward in accordance with the Constitution of the Company. By order of the board Bill Lyne Company Secretary 30 April 2010 Page 4 of 16

6 1. Introduction This Explanatory Memorandum is provided to shareholders of Eastern Corporation Limited ACN (Company) to explain the Resolutions to be put to Shareholders at the Extraordinary General Meeting to be held at the offices of HopgoodGanim Lawyers, Level 7, Waterfront Place, 1 Eagle Street, Brisbane, Queensland, on Tuesday, 1 June 2010 at 10:00am (Brisbane time). The Directors recommend shareholders read the accompanying Notice of Meeting and this Explanatory Memorandum in full before making any decision in relation to the Resolutions. Terms used in this Explanatory Memorandum are defined in Section Background to Resolutions 1 3 Acquisition of remaining shares in Galilee Energy Limited 2.1 Background The Company currently holds approximately 68% of the issued capital in Galilee Energy Limited ACN (GEL), an unlisted public company. The development of ECU in recent times has seen the Company wanting to expand its operations and the Directors considered the next logical step was to proceed with an offer to acquire the remaining 32% shareholding in GEL. On 10 February 2010 the Company made an offer to all GEL Shareholders to acquire the shares in GEL which the Company did not then hold on the basis of 1 Share for every 9 ordinary shares in GEL (Previous Offer). The Previous Offer lapsed on 19 April 2010 and did not proceed, as the conditions of the Previous Offer were not satisfied or waived in accordance with the terms of the Previous Offer. On 20 April 2010 the Company made a new offer to all GEL Shareholders to acquire the shares in GEL which the Company does not currently hold on the basis of 1 Share for every 7 ordinary shares in GEL (Offer). At an extraordinary general meeting of the Company held on 23 March 2010 (Previous Meeting), the Company obtained Shareholder approvals for: (a) (b) the issue a total of up to 33,002,114 Shares as consideration to GEL Shareholders for acquiring their GEL Shares pursuant to the Previous Offer (refer to resolutions 1 and 2 of the notice of meeting in respect of the Previous Meeting; and the change of name of the Company to Galilee Energy Limited (refer to resolution 3 of the notice of meeting in respect of Previous Meeting), (Previous Approvals). As the Previous Offer has now lapsed and is not proceeding, the Previous Approvals are no longer of any effect. No Shares were or will be issued under the Previous Offer. Accordingly, pursuant to Resolutions 1, 2 and 3 the Company is seeking Shareholder approval for the issue of up to 42,431,285 Shares to GEL Shareholders as consideration for acquiring their GEL Shares under the Offer and to change the name of the Company to Galilee Energy Limited. 2.2 Key Terms of the Offer The Company has offered 1 Share for every 7 ordinary shares in GEL (with entitlements being rounded up). There are currently 927,782,562 GEL Shares on issue, of which 297,018,895 are held by GEL Shareholders other than the Company. Accordingly, if the Offer is successful, and all GEL Shareholders accept the Offer the Company would issue 42,431,285 Shares to acquire all of these GEL Shares. Page 5 of 16

7 The Shares issued as consideration under the Offer will have a deemed issue price of 34 cents, being the closing price of Shares on Friday, 16 April The Offer was dated 20 April 2010 and will close on 28 May 2010 unless extended or withdrawn. The Offer is subject to a number of conditions which may only be waived by the Company. These conditions, together with the full terms of the Offer are set out in the Offer Document issued by the Company on 20 April The Company has entered agreements with a number of GEL Shareholders (Accepting Shareholders) who together hold 243,509,194 GEL Shares (representing 26.25% of all GEL Shares) (Accepting Shares), pursuant to which the Accepting Shareholders have agreed, subject to various conditions, to accept the Offer with respect to the Accepting Shares. 2.3 Intentions If the Company acquires 90% or more of the GEL Shares and it is entitled to proceed to compulsory acquisition of the outstanding GEL Shares, it is the Company s intention to: (a) (b) (c) proceed with compulsory acquisition of the outstanding GEL Shares in accordance with the provisions of Chapter 6A of the Corporations Act; take steps to convert GEL to a proprietary company; and restructure the Boards of the Company and GEL. The Company may reduce the size of the GEL Board to be consistent with other subsidiaries of the Company. The Company intends to restructure the Company s Board by appointing two additional directors who are currently GEL directors, namely: (1) Rino Camarri; and (2) Cam Rathie. Details of each of these directors are set out below. Each of these directors will be appointed as additional directors pursuant to clause 56 of the Company s Constitution and as such each of Mr Camarri and Mr Rathie would hold office until the 2010 annual general meeting at which time they may offer themselves for reelection. A condition of the Accepting Shareholders accepting the Offer with respect to the Accepting Shares is the appointment of Rino Camarri and Cam Rathie as directors of the Company. Other than as set out above, the Company currently expects that the business and operations of GEL and the Company will remain largely unchanged, save for any efficiencies that can be created through the integration of administrative matters. 2.4 Information on New Directors Rino Camarri Mr Camarri joined the board of GEL on 27 July 2000 and was appointed as chairman on 26 June He resigned as chairman in January 2009 and at that time became a non-executive director. Mr Camarri has extensive experience in banking, funds management and general finance with specialised banking experience concentrated on commercial business and property portfolio management. Mr Camarri is currently Financial Controller of Ekco Investments Pty Ltd. Cam Rathie Mr Rathie joined the board of GEL on 20 January He has extensive experience in the development and operational aspects of conventional hydrocarbons and coal seam gas. He spent a Page 6 of 16

8 significant period internationally in geological and well services, and was previously with BHP Petroleum where he managed a number of offshore oilfields in Australia and internationally. Mr Rathie more recently was Managing Director of Upstream Petroleum and CEO of AGR Asia Pacific. He acted as Operations Manager for Sunshine Gas in its initial conventional gas and CSG exploration in the Surat and Bowen Basins, providing the engineering and field teams for these projects. Since 2008 he has become an independent advisor in the hydrocarbons industry, based in Brisbane. 2.5 Effect on Capital Structure Annexure A sets out in detail the effect of the Offer on the issued capital of the Company. 3. Resolution 1 - Issue of Shares to Galilee Energy Limited Shareholders 3.1 Listing Rule 7.1 In accordance with Listing Rule 7.1, Shareholder approval is sought to the issue of up to 41,939,951 Shares (Consideration Shares) to the GEL Shareholders (other than Storth Pty Ltd) (Recipient Shareholders). Listing Rule 7.1 prohibits a company, except in certain cases, from issuing new equity securities equivalent in number to more than 15% of its capital in any 12 month period without the prior approval of its shareholders. The Company does not currently have an ability to issue the Consideration Shares pursuant to Listing Rule 7.1 unless Shareholder approval is obtained. The effect of the Shareholders approving the issue of the Consideration Shares will be to permit the issue of the Consideration Shares for the purpose of Listing Rule 7.1 and that the issue will not be counted as part of the Company s 15% limit under Listing Rule 7.1 (with the Company therefore retaining a greater proportion of the 15% limit for any subsequent requirements that may arise). The issue of the Consideration Shares is subject to the Recipient Shareholders accepting the Offer and all conditions of the Offer being satisfied or waived by the Company in accordance with the terms of the Offer. The Offer is not conditional upon 100% acceptance of the Offer by GEL Shareholders, therefore it is possible that some but not all of the Consideration Shares may be issued. For the purposes of Listing Rule 7.3 the Company provides the following information (in addition to information contained in the Notice and elsewhere in this Explanatory Memorandum): (a) (b) (c) (d) Subject to all conditions of the Offer being satisfied or waived by the Company in accordance with the terms of the Offer, the Consideration Shares will be issued in consideration for the Recipient Shareholders transferring their GEL Shares to the Company. Accordingly no funds will be raised from the issue of the Consideration Shares. The Consideration Shares will rank pari passu with the existing Shares on issue in the Company and the rights attaching to the Consideration Shares will be identical in all respects to the existing Shares on issue in the Company. Subject to the terms of the Offer, the Company intends to issue the Consideration Shares as soon as practicable following the Meeting and completion of the Offer and in any event no later than three (3) months from the date of the Meeting. Each of the Recipient Shareholders fall within one or more of the classes of exemptions specified in Section 708 of the Corporations Act, and none of the Recipient Shareholders are related parties of the Company (within the meaning of the Corporations Act and the Listing Rules). 3.2 Effect on Capital Structure The overall effect of the Offer on the current capital structure of the Company is set out in section 2.5 above. Page 7 of 16

9 3.3 Foreign Shareholders Recipient Shareholders who are a resident of a jurisdiction other than Australia and its external territories or whose address shown in GEL s register of members is a place outside Australia and its external territories will not, unless GEL determines otherwise, be entitled to receive Consideration Shares as part of the consideration for their GEL Shares by reason of their acceptance of the Offer. In such circumstances, the Company will arrange for the allotment of the relevant Consideration Shares to a nominee for all accepting foreign GEL Shareholders and cause those Consideration Shares so allotted to be offered for sale on ASX within 30 days after the end of the Offer Period and pay the proceeds of sale to those accepting foreign GEL Shareholders in accordance with the formula set out in the Offer document. 3.4 Other information Save as set out in the Notice and this Explanatory Memorandum, the Directors are not aware of any other information that will be reasonably required by Shareholders to make a decision in relation to the proposed Resolution Recommendation The Board, with Mr Campbell Smith (who is a director of GEL) and Mr Steven Koroknay (who is a director of GEL) abstaining due to their association with GEL, recommends that Shareholders vote in favour of Resolution Resolution 2 - Issue of Shares to Storth Pty Ltd 4.1 Introduction Storth Pty Ltd ACN (Storth), currently holds 3,439,333 GEL Shares (Storth Shares). Accordingly, pursuant to the Offer, the Company has offered to acquire the Storth Shares in consideration for the issue of 491,344 Shares (Storth Consideration Shares) in accordance with the terms of the Offer. Storth is an entity controlled by Mr Campbell Smith, the Managing Director of the Company, and as such is a related party of the Company for the purposes of the Listing Rules. The Company now seeks Shareholder approval for the issue of Storth Consideration Shares to Storth pursuant to the Offer for the purposes of Listing Rule Effect on Capital Structure 4.3 Annexure A sets out in detail the effect of the issue of the Repayment Shares on the issued capital of the Company. ASX Listing Rule Listing Rule provides that unless prior approval is obtained, a company must not issue or agree to issue equity securities to a related party. A related party for the purposes of the Listing Rules has the meaning ascribed to that term in the Corporations Act. A related party for the purposes of the Corporations Act is defined widely and it includes a director of the public company. The definition of related party is also extended to include an entity controlled by a related party. Storth is controlled by Mr Campbell Smith, currently the Managing Director of the Company. The issue of the Storth Consideration Shares is subject to Storth accepting the Offer and all conditions of the Offer being satisfied or waived by the Company in accordance with the terms of the Offer. For the purposes of Listing Rule the Company provides the following information (in addition to information contained in the Notice and elsewhere in this Explanatory Memorandum): Page 8 of 16

10 (a) (b) (c) (d) Subject to all conditions of the Offer being satisfied or waived by the Company in accordance with the terms of the Offer, the Storth Consideration Shares will be issued in consideration for Storth transferring its GEL Shares to the Company. Accordingly no funds will be raised from the issue of the Storth Consideration Shares. The Storth Consideration Shares will rank pari passu with the existing Shares on issue in the Company and the rights attaching to the Storth Consideration Shares will be identical in all respects to the existing Shares on issue in the Company. Subject to the terms of the Offer, the Company intends to issue the Storth Consideration Shares as soon as practicable following the Meeting and completion of the Offer and in any event no later than one (1) month from the date of the Meeting. Storth falls within one or more of the classes of exemptions specified in Section 708 of the Corporations Act. In accordance with Listing Rule 7.2, as approval is being sought under Listing Rule 10.11, approval is not required to be obtained under Listing Rule Dilutionary effect Annexure B sets out a table summarising the interests of Mr Campbell Smith and his associates if the Storth Consideration Shares are issued and assuming that the Company acquires 100% of the GEL Shares. 4.5 Other information Save as set out in the Notice and this Explanatory Memorandum, the Directors are not aware of any other information that will be reasonably required by Shareholders to make a decision in relation to the proposed Resolution Recommendation The Board, with Mr Campbell Smith (who is a director of GEL and controls Storth) and Mr Steven Koroknay (who is a director of GEL) abstaining due to their association with GEL, recommends that Shareholders vote in favour of Resolution Resolution 3 - Change of Company Name to Galilee Energy Limited 5.1 Introduction In the event that the Offer is successful, the Company proposes to change its name to Galilee Energy Limited. The Board believes that this name will more accurately reflect the major activities of the Company upon completion of the Offer. Resolution 3 seeks Shareholder approval to this change pursuant to section 157 of the Corporations Act, which provides that if a company wants to change its name it must pass a special resolution adopting a new name and lodge an application in the prescribed form with ASIC. The approval to change the Company s name is subject to the following conditions being satisfied: (a) (b) the conditions of the Offer being satisfied or waived by the Company and the Offer proceeding; and Galilee Energy Limited ACN changing its name in accordance with the Corporations Act and its constitution. If these conditions are not satisfied, the Resolution to change the Company s name will not be effective and the Company s name will not be changed to Galilee Energy Limited. Page 9 of 16

11 In the event that Resolution 3 is passed as a special resolution and the above conditions are satisfied, the Company s name will be changed to Galilee Energy Limited with effect on the date on which ASIC alters the details of Company s registration. As this Resolution is a special resolution, it must be passed by at least 75% of the votes cast by members entitled to vote on the Resolution. 5.2 Recommendation The Board, with Mr Campbell Smith (who is a director of GEL) and Mr Steven Koroknay (who is a director of GEL) abstaining due to their association with GEL, recommends that Shareholders vote in favour of this Ordinary Resolution. 6. Resolution 4 Issue of Shares to Becamal Pty Ltd 6.1 Introduction In November 2008, the Company obtained a loan from Becamal Pty Ltd ACN (Becamal) (a company associated with Mr Campbell Smith, Managing Director of the Company) (Becamal Loan). Under the Becamal Loan, the Company was provided with a loan in the amount of $2,600,000 (Becamal Loan Amount). The Becamal Loan Amount was used by the Company in subscribing for shares in Galilee Energy Limited as part of a rights issue undertaken by Galilee Energy Limited in Under the terms and conditions of the Becamal Loan the Becamal Loan Amount or part thereof may be repaid by either cash or, subject to Shareholder approval the issue of Shares. The Company and Becamal have agreed that, subject to shareholder approval and compliance with the Corporations Act and the ASX Listing Rules, an amount of up to $2,400,000 (the Conversion Amount) be repaid in full by the issue of Shares. If the entire Conversion Amount is to be repaid by the issue of Shares (subject to shareholder approval being obtained and compliance with the Corporations Act and the ASX Listing Rules), Becamal will be issued with up to 6,956,522 Shares at an issue price of 34.5 cents each (Repayment Shares).The issue price for the Repayment Shares has been determined on the basis of the volume weighted average price of Shares calculated over 15 days prior to Friday, 16 April In the event that the issue of the Repayment Shares are approved, the Company and Becamal have agreed that the Company will only be required to issue such number of Repayment Shares (and therefore repay such part of the Conversion Amount by way of issue of Repayment Shares) as it is able to without the Company or Becamal breaching the Corporations Act or the ASX Listing Rules, including without limitation, the takeover prohibitions in Chapter 6 of the Corporations Act. In this regard, in the event that the Company is not able to issue all Repayment Shares, an amount equal to the number of Repayment Shares issued multiplied by 34.5 cents will be deemed to have been repaid and deducted from the Becamal Loan Amount. The Company and Becamal have agreed that the balance of the Becamal Loan Amount after issue of the Repayment Shares (together with accrued interest) will be repayable in cash on demand by Becamal or in such other manner as the Company and Becamal may agree. Alternatively, if the issue of the Repayment Shares is not approved the Company will be required to repay the Becamal Loan Amount (together with accrued interest) in cash on demand by Becamal or in such other manner as the Company and Becamal may agree. 6.2 Resolution Resolution 4 seeks Shareholder approval to issue the Repayment Shares to Becamal. 6.3 ASX Listing Rule ASX Listing Rule provides that unless prior approval is obtained, a company must not issue or agree to issue equity securities to a related party. Page 10 of 16

12 A related party for the purposes of the ASX Listing Rules has the meaning ascribed to that term in the Corporations Act. A related party for the purposes of the Corporations Act is defined widely and it includes a director of the public company. The definition of related party is also extended to include an entity controlled by a related party. Becamal is controlled by Mr Campbell Smith, currently the Managing Director of the Company, and as such is a related party of the Company. For the purposes of Listing Rule the Company provides the following information (in addition to information contained in the Notice and elsewhere in this Explanatory Memorandum): (a) (b) (c) (d) the Repayment Shares will be issued in repayment of all or part of the Conversion Amount. Accordingly no funds will be raised from the issue of the Repayment Shares. The Repayment Shares will rank pari passu with the existing Shares on issue in the Company and the rights attaching to the Repayment Shares will be identical in all respects to the existing Shares on issue in the Company. The Company intends to issue the Repayment Shares as soon as practicable following the Meeting and completion of the Offer and in any event no later than one (1) month from the date of the Meeting. Becamal falls within one or more of the classes of exemptions specified in Section 708 of the Corporations Act. In accordance with ASX Listing Rule 7.2, as approval is being sought under ASX Listing Rule 10.11, approval is not required to be obtained under ASX Listing Rule Chapter 2E Corporations Act Chapter 2E of the Corporations Act prohibits a public company from giving a financial benefit to a related party of a public company unless the benefit falls within one of various exceptions to the general prohibition. One of the exceptions includes where the company first obtains the approval of its shareholders in general meeting in circumstances where the requirements of Chapter 2E in relation to the convening of that meeting have been met. As noted above, Becamal is controlled by Mr Campbell Smith, currently the Managing Director of the Company, and as such is a related party of the Company. A financial benefit for the purposes of the Corporations Act has a very wide meaning. It includes the public company paying money or issuing securities to the related party. In determining whether or not a financial benefit is being given, it is necessary to look to the economic and commercial substance and effect of what the public company is doing (rather than just the legal form). Any consideration which is given for the financial benefit is to be disregarded, even if it is full or adequate. This proposed resolution, if passed, will confer financial benefits to Becamal (an entity controlled by Mr Campbell Smith) and the Company seeks to obtain Shareholder approval in accordance with the requirements of Chapter 2E of the Corporations Act and for this reason and for all other purposes the following information is provided to shareholders. (a) The related party to whom Resolution 4 would permit the financial benefit to be given Becamal is an entity associated with Mr Campbell Smith who is a director of the Company. (b) The nature of the financial benefit The nature of the proposed financial benefit to be given is the issue of up to 6,956,522 Shares to Becamal as referred to in Resolution 4. (c) Directors recommendation With respect to Resolution 4, the Directors (with Mr Campbell Smith abstaining) recommend that Shareholders vote in favour of this resolution as the issue of the Repayment Shares Page 11 of 16

13 reduce the total amount repayable under the Becamal Loan by way of equity rather than cash. As Mr Campbell Smith is interested in the outcome of Resolution 4, he accordingly makes no recommendation to Shareholders in respect of this Resolution. (d) Directors interest Mr Campbell Smith has a material personal interest in the outcome of Resolution 4, as it is proposed that the Repayment Shares be granted to an entity controlled by him as set out in Resolution 4. Annexure B sets out a table summarising the interests of Mr Campbell Smith and his associates if the Storth Consideration Shares are issued, assuming that the Company acquires 100% of the GEL Shares and if the Repayment Shares are issued. Other than the Repayment Shares to be issued to Becamal pursuant to Resolution 4, Mr Smith currently receives director's remuneration of approximately $220,000 per annum from the Company for his services as Managing Director. (e) Any other information that is reasonably required by shareholders to make a decision and that is known to the Company or any of its Directors There is no other information known to the Company or any of its Directors save and except as follows: (1) Opportunity costs The opportunity costs and benefits foregone by the Company issuing the Repayment Shares is the potentially dilutionary impact on the issued share capital of the Company. To the extent that the dilutionary impact caused by the issue of the Repayment Shares will be detrimental to the Company, this is more than offset by the advantages accruing from the Company in repaying some or all of the Becamal Loan Amount by way of equity rather than cash. (2) Taxation consequences No stamp duty will be payable in respect of the grant of the Repayment Shares. No GST will be payable by the Company in respect of the issue of the Repayment Shares (or if it is then it will be recoverable as an input credit). Save as set out in this Explanatory Memorandum, the Directors are not aware of any other information that will be reasonably required by Shareholders to make a decision in relation to benefits contemplated by the proposed Resolution Voting Entitlement Voting entitlement For the purposes of determining voting entitlements at the Meeting, shares will be taken to be held by the persons who are registered as holding the shares at 7.00pm (Sydney time) on 30 May Accordingly, transactions registered after that time will be disregarded in determining entitlements to attend and vote at the Meeting. 8. Interpretation ASIC means the Australian Securities & Investments Commission; ASX means the ASX Limited; Board means the board of directors of the Company; Page 12 of 16

14 Company means Eastern Corporation Limited ACN ; Constitution means the constitution of the Company; Corporations Act means the Corporations Act 2001 (Cth) as amended from time to time; Directors means the directors of the Company; GEL means Galilee Energy Limited ACN ; GEL Shareholder means a holder of GEL Shares, other than the Company; GEL Shares means the issued fully paid ordinary shares in the capital of GEL and includes all rights attaching to them and the term GEL Share shall have a corresponding meaning; Meeting means this extraordinary general meeting to be held on Tuesday, 1 June 2010; Notice means the Notice issued convening the Meeting; Offer means the Company s offer to GEL Shareholders to acquire all GEL Shares it does not hold dated 20 April 2010 on the basis of 1 ECU Share for every 7 GEL Shares; Offer Date means the date on which the Offer was first made to GEL Shareholders, being 20 April 2010; Offer Period means the period during which the Offer will remain open for acceptance; Previous Approvals means the Shareholder approvals obtained at the Previous Meeting; Previous Meeting means the extraordinary general meeting of the Company held on 23 March 2010; Previous Offer means the offer made by ECU on 10 February 2010 to all GEL Shareholders to acquire the shares in GEL which the Company did not then hold on the basis of 1 Share for every 9 GEL Shares; Resolution means a resolution proposed at the Meeting; Share means ordinary fully paid shares in the issued capital of the Company; and Shareholder means a holder of Shares in the Company. Any inquiries in relation to the Resolutions, Notice or the Explanatory Memorandum should be directed to Bill Lyne (Company Secretary): Level 2, 895 Ann Street, Fortitude Valley, QLD 4006 Phone +61 (0) or mobile +61 (0) Page 13 of 16

15 Proxies and representatives Shareholders are entitled to appoint a proxy to attend and vote on their behalf. Where a shareholder is entitled to cast two or more votes at the meeting, they may appoint two proxies. Where more than one proxy is appointed, each proxy may be appointed to represent a specific proportion or number of votes the shareholder may exercise. If the appointment does not specify the proportion or number of votes each proxy may exercise, each proxy may exercise half of the votes. The proxy may, but need not, be a shareholder of the Company. Shareholders who are a body corporate are able to appoint representatives to attend and vote at the meeting under Section 250D of the Corporations Act. The proxy form must be signed by the shareholder or his/her attorney duly authorised in writing or, if the shareholder is a corporation, in a manner permitted by the Corporations Act. The proxy form (and the power of attorney or other authority, if any, under which the proxy form is signed) or a copy or facsimile which appears on its face to be an authentic copy of the proxy form (and the power of attorney or other authority) must be posted to, or sent by facsimile transmission to, the Share Registry, at the address/fax number(s) shown below not less than 48 hours before the time for holding the meeting, or adjourned meeting as the case may be, at which the individual named in the proxy form proposes to vote. Computershare Investor Services Pty Limited GPO Box 242 Melbourne Victoria 3001 Australia Fax Numbers: (within Australia) (outside Australia) If a representative of the corporation is to attend the meeting the appropriate Certificate of Appointment of Corporate Representative should be produced prior to admission. A form of the certificate may be obtained from the Company s share registry. A proxy form is attached to this Notice. Signing instructions You must sign the proxy form as follows in the spaces provided: Individual: Where the holding is in one name, the holder must sign. Joint Holding: Where the holding is in more than one name, all of the security holders should sign. Power of Attorney: To sign under Power of Attorney, you must have already lodged this document with the registry. If you have not previously lodged this document for notation, please attach a certified photocopy of the Power of Attorney to this form when you return it. Companies: Where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please indicate the office held by signing in the appropriate place. Page 14 of 16

16 ANNEXURE A ISSUED CAPITAL OF THE COMPANY Assuming that the Company acquires 100 percent of the shares in GEL, the following table shows the issued capital of the Company as at the date of the Notice and as it will be immediately following completion of the Offer, also assuming that all of the Repayment Shares are issued to Becamal (as contemplated by Resolution 4). Table A Current Share Capital of the Company CAPITAL STRUCTURE No. of Securities Shares on issue 102,752,659 Options 9,000,000 Table B Share Capital of the Company upon completion of the Offer (assuming ECU acquires 100% of GEL Shares) and Issue of the Repayment Shares CAPITAL STRUCTURE No. of Securities % Shares on issue 1 Current ECU Shares Consideration Shares & Storth Consideration Shares Repayment Shares 102,752,659 42,431,285 6,956, % 27.89% 4.57% Total 152,140, % Options 9,000,000 Notes: 1. Assumes that the Consideration Shares, the Storth Consideration Shares and all Repayment Shares are issued, but that no other shares are issued by the Company. Page 15 of 16

17 ANNEXURE B SHAREHOLDING INTERESTS OF MR CAMPBELL SMITH Set out below is a table summarising the interests of Mr Campbell Smith and his associates (including Storth and Becamal) if: (a) the Storth Consideration Shares are issued and assuming that the Company acquires 100% of the GEL Shares (as contemplated by Resolutions 1 and 2); (b) all of the Repayment Shares are issued (as contemplated by Resolution 4). Shareholders Current Share Capital Share Capital Upon issue of Storth Consideration Shares 2 Share Capital Upon issue of Storth Consideration Shares and Repayment Shares 3 No. % No. % No. % Current Shareholders 79,842, % 79,842, % 79,842, % Mr Campbell Smith 1 22,909, % 23,401, % 30,357, % 4 Former GEL Shareholders 4 41,939, % 41,939, % Total 102,752, % 145,183, % 152,140, % Notes: 1. Includes all direct and indirect holdings, including holdings of Storth and Becamal. 2. Assumes that the Consideration Shares and the Storth Consideration Shares are issued, but that no other shares are issued by the Company. 3. Assumes that the Consideration Shares, the Storth Consideration Shares and all Repayment Shares are issued, but that no other Shares are issued by the Company. 4. This does not include any existing Shares that GEL Shareholders may hold and excludes Storth _1.DOC Page 16 of 16

18 Lodge your vote: By Mail: Computershare Investor Services Pty Limited GPO Box 242 Melbourne Victoria 3001 Australia ECU MR SAM SAMPLE FLAT SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030 Alternatively you can fax your form to (within Australia) (outside Australia) For Intermediary Online subscribers only (custodians) For all enquiries call: (within Australia) (outside Australia) Proxy Form For your vote to be effective it must be received by 10.00am (Brisbane time) Sunday 30 May 2010 How to Vote on Items of Business All your securities will be voted in accordance with your directions. Appointment of Proxy Voting 100% of your holding: Direct your proxy how to vote by marking one of the boxes opposite each item of business. If you do not mark a box your proxy may vote as they choose. If you mark more than one box on an item your vote will be invalid on that item. Voting a portion of your holding: Indicate a portion of your voting rights by inserting the percentage or number of securities you wish to vote in the For, Against or Abstain box or boxes. The sum of the votes cast must not exceed your voting entitlement or 100%. Appointing a second proxy: You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you appoint two proxies you must specify the percentage of votes or number of securities for each proxy, otherwise each proxy may exercise half of the votes. When appointing a second proxy write both names and the percentage of votes or number of securities for each in Step 1 overleaf. A proxy need not be a securityholder of the Company. Signing Instructions Individual: Where the holding is in one name, the securityholder must sign. Joint Holding: Where the holding is in more than one name, all of the securityholders should sign. Power of Attorney: If you have not already lodged the Power of Attorney with the registry, please attach a certified photocopy of the Power of Attorney to this form when you return it. Companies: Where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please sign in the appropriate place to indicate the office held. Attending the Meeting Bring this form to assist registration. If a representative of a corporate securityholder or proxy is to attend the meeting you will need to provide the appropriate Certificate of Appointment of Corporate Representative prior to admission. A form of the certificate may be obtained from Computershare or online at under the information tab, "Downloadable Forms". Comments & Questions: If you have any comments or questions for the company, please write them on a separate sheet of paper and return with this form. Turn over to complete the form View your securityholder information, 24 hours a day, 7 days a week: Review your securityholding Update your securityholding Your secure access information is: SRN/HIN: I PLEASE NOTE: For security reasons it is important that you keep your SRN/HIN confidential. 916CR_0_Sample_Proxy/000001/000001/i

19 MR SAM SAMPLE FLAT SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030 Change of address. If incorrect, mark this box and make the correction in the space to the left. Securityholders sponsored by a broker (reference number commences with X ) should advise your broker of any changes. *I * I I ND Proxy Form Please mark to indicate your directions Appoint a Proxy to Vote on Your Behalf I/We being a member/s of Eastern Corporation Limited hereby appoint the Chairman of the Meeting OR PLEASE NOTE: Leave this box blank if you have selected the Chairman of the Meeting. Do not insert your own name(s). or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy to act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, as the proxy sees fit) at the Extraordinary General Meeting of Eastern Corporation Limited to be held at the offices of HopgoodGanim Lawyers, Level 7, Waterfront Place, 1 Eagle Street, Brisbane Queensland on Tuesday, 1 June 2010 at 10.00am and at any adjournment of that meeting. Important for Items 2 and 4: If the Chairman of the Meeting is your proxy and you have not directed him/her how to vote on Items 2 and 4 below, please mark the box in this section. If you do not mark this box and you have not directed your proxy how to vote and the Chairman is a person whose vote would be disregarded under Listing Rule in respect of the relevant resolution, the Chairman of the Meeting will not cast your votes on the relevant resolution and your votes will not be counted in computing the required majority if a poll is called on the relevant resolution. The Chairman of the Meeting intends to vote undirected proxies in favour of Items 2 and 4 of business. I/We acknowledge that the Chairman of the Meeting may exercise my proxy even if he/she has an interest in the outcome of that Item and that votes cast by him/her, other than as proxy holder, would be disregarded because of that interest. XX Items of Business PLEASE NOTE: If you mark the Abstain box for an item, you are directing your proxy not to vote on your behalf on a show of hands or a poll and your votes will not be counted in computing the required majority. Special Business 1. Issue of Shares to Galilee Energy Limited Shareholders 2. Issue of Shares to Storth Pty Ltd 3. Change of Company Name to Galilee Energy Limited 4. Issue of Shares to Becamal Pty Ltd By signing this appointment you acknowledge that the proxy (whether voting in accordance with your directions or voting in their discretion under an undirected proxy) may exercise your proxy even if he/she has an interest in the outcome of the resolution and even if votes cast by him/her other than as proxy holder will be disregarded because of that interest. The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business. Signature of Securityholder(s) This section must be completed. Individual or Securityholder 1 Securityholder 2 Securityholder 3 Sole Director and Sole Company Secretary Director Director/Company Secretary Contact Name Contact Daytime Telephone Date / / E C U A