Merger
biz.yahoo.com
sec.gov
Item 5. OTHER MATERIAL EVENTS.
On May 27, 1999 the Registrant entered into a nonbinding letter of intent with Carpatsky Petroleum, Inc. ("Carpatsky"), a publicly-held company traded on the Alberta Stock Exchange under the symbol "KPY.AL." Under the terms of the proposed transaction, Carpatsky would be merged into a subsidiary corporation of the Registrant in exchange for approximately 40.0 million shares of common stock of the Registrant to be issued to the Carpatsky shareholders. The Registrant would also assume approximately $7.5 million of Carpatsky debt.
In addition, effective upon completion of the merger transaction, all of the Registrant's currently outstanding Series B Convertible Preferred Stock would be exchanged for approximately 8.0 million shares of common stock. The transaction is conditioned upon, among other things, the completion of a reserve report for the Carpatsky oil and natural gas assets showing at least $45 million in discounted future net revenue, preparation and approval of a definitive merger agreement, regulatory and shareholder approvals, including authorization of additional common stock under Registrant's corporate charter.
The holders of Registrant's Series B Convertible Preferred Stock have agreed not to convert outstanding Series B Preferred into common stock or to purchase or sell common stock or preferred stock of the Registrant pending completion of the proposed transaction or until November 15, 1999.
RISK FACTORS
The transaction may not close.
The proposed merger transaction with Carpatsky is subject to a number of conditions, including preparation and signing of a definitive merger agreement and obtaining approval of our stockholders. Registrant or Carpatsky may be unable to meet the applicable conditions or the transaction could be abandoned for other reasons. In any event, the transaction will not be completed until the fall of 1999.
Carpatsky shareholders would control Registrant
If the proposed merger transaction is completed, the former Carpatsky shareholders would own approximately 40 million shares of stock, the former Series B Preferred holders would hold approximately 8 million shares of common stock and the common stockholders of the Registrant would own approximately 1.7 million shares. As a result, the present holders of Registrant's common stock would not be in a position to effect any control of the registrant after the transaction. |
