Kerm, would you mind providing an opinion on Big Bear, on the news it seems to me Belco is getting 80% of the company for between $1.016-1.20, it was trading at $1.30, traded up and I sold at $1.49...Im out of this one, can you explain why it traded up or it just a case of exuberence?Scott
Big Bear Exploration Ltd -
$200-million equity financing with Belco
Big Bear Exploration Ltd BDXShares issued 384887191998-04-29 close $1.3Thursday Apr 30 1998Mr. A. Jeffery Tonken reports Big Bear Exploration has entered into an equity financing arrangement with Belco Oil & Gas Corp., whereby Belco will subscribe for $15-million of 5 per cent convertible redeemable voting preferred shares at $1.20 per share and up to $172-million of special acquisition warrants at $1.016. In addition Belco will have an option for a period of 135 days to purchase a further $15-million, 5 per cent convertible redeemable voting preferred shares at $1.20. Each special acquisition warrant is exercisable into one common share of Big Bear. The proceeds of the special acquisition warrants will be used to finance acquisitions by Big Bear which are acceptable to Belco. Big Bear has also given notice of a proposed private placement of an additional 13 million special warrants at $1.016. Belco is an independent U.S. energy company that trades on the NYSE under the symbol BOG. Belco has a current market capitalization of common and preferred stock totalling approximately $900-million (Canadian). The issuance of the convertible preferred shares will be closed promptly following approval of the transactions at Big Bear's special shareholders' meeting to be held on June 9, 1998. The proceeds will initially be applied to the reduction of Big Bear's bank indebtedness. The completion of these transactions is subject to obtaining approval from the Big Bear's shareholders and from the TSE on terms satisfactory to Big Bear and Belco. The issuance of special acquisition warrants will also be closed following shareholder approval at which time an irrevocable letter of credit in the principal amount of $86.26-million and Belco common shares valued at $86.26-million will be deposited with a bank as escrow agent. The proceeds will only be released to Big Bear at the time of the completion of acquisition transactions developed by Big Bear and approved by Belco and will be used by Big Bear to finance the acquisition price of such acquisitions and retirement of assumed indebtedness. There can be no assurance that any such acquisition transaction will occur. While the executive management of Big Bear will remain unchanged as a result of Belco's subscription, four of Belco's nominees will join Big Bear's board of directors, which will be comprised of eight directors. This equity financing arrangement with Belco provides Big Bear with a strong platform from which it can aggressively grow through strategic acquisitions. It is the company's view that industry factors such as continuing low crude oil prices, lower than expected cash flows, increased industry debt, shrinking capital expenditure programs and substantially weakened equity markets have created a unique situation where Big Bear, with significant cash in hand, may be able to successfully complete a number of acquisitions at attractive prices. This access to equity capital should provide Big Bear's shareholders with the opportunity for significant returns and upside potential. Griffiths McBurney & Partners and Peters and Co. acted as financial advisers to Big Bear in connection with these transactions. On Apr. 28, 1998 the shares of Big Bear commenced trading on the TSE. On Mar. 27, 1998 Big Bear filed a final prospectus to qualify for distribution 8,462,000 common shares that were issued upon the exercise of an equal number of special warrants that were issued in January 1998. After giving effect to that issue, Big Bear currently has 38,488,719 common shares outstanding. (c) Copyright 1998 Canjex Publishing Ltd. canada-stockwatch.com
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