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Microcap & Penny Stocks : Benz Energy (BZG.V) -- Ignore unavailable to you. Want to Upgrade?

To: RSkarsten who wrote (217)	8/29/1999 9:27:00 PM
From: Ed Ajootian	Read Replies (1) \| Respond to of 272

RECENT DEVELOPMENTS On July 12, 1999 the Company conducted a meeting with its trade creditors to outline a proposed repayment plan for past due amounts. Such plan included proposed discounts, payment over an extended time and other payment terms. As of August 23, 1999, creditors approached regarding these arrangements elected to participate in the repayment plan representing 90% of past due amounts for an aggregate of $11.2 million. In July 1999, the Company closed an exchange offer and private placement with European holders of the Company?s 9% Debentures Series I. Approximately $15.1 million of the debenture?s principal amount was exchanged for $15.8 million principal amount of 8% Class A Convertible Preferred Stock Series II. The Company also raised $8 million of new equity through a private placement o the same preferred stock series in Europe. The $8 million of new equity includes $3.5 million of preferred stock issued to redeem the outstanding Old Ocean project bridge loan and to repurchase the net profits interest assigned to the lenders. A total of 238,201 shares of preferred stock were issued in the exchange and private placement. The preferred stock issued has a dividend rate of 8% payable semi-annually on September 30th and March 31st in cash or common stock of the Company at the election of the Company. The conversion price is Cdn. $0.35 per share. The Company has the right to redeem in cash at any time upon thirty days? notice at 105% of the principal amount. Also in July 1999, the Company entered into a letter of intent for the sale of 37.5% of its 61.5% interest in the Old Ocean unit and 69.25% interest outside the unit to Prime Natural Resources. In exchange, Prime will reimburse the Company $5.5 million for 37.5% of 3-D seismic and leasehold costs related to the Old Ocean unit. The sale proceeds will be used to pay the remaining costs associated with the Old Ocean 3-D seismic survey and general corporate purposes. In August 1999, the Company closed a new, long-term production financing with Aquila Energy Capital Corporation in the amount of $26.2 million. Such amount may be extended to $27.7 million based on near term production results in the Fortenberry well. The new facility also provides for the lender to fund additional development drilling at the Company?s Oakvale Dome Field in Mississippi to a maximum of $3.8 million. The new production financing is secured by the Company?s proven oil and gas properties and is repaid through a dedicated portion of the property income. Terms of the financing include a 12% interest rate and assignment of 1/16th of the Company?s interest in the proven properties following full repayment of the new production financing. Proceeds from the financing were used to retire existing senior secured debt and accrued interest. ********************************************************* Above is from the 2Q Form 61 that was filed on Friday @ SEDAR. Pretty good recap of the last couple of months activity. But here's where it gets ugly again: ******************************************************* OVERVIEW The following matters had a significant impact on the Company's results of operations and financial position for the six months ended June 30, 1999: Outstanding Debt At June 30, 1999, the Company had outstanding debt of $63.1 million comprised of the following:  $36.3 million principal amount of convertible debentures of which approximately $15.1 million was converted into Class A Series II preferred stock in July 1999;  $12.0 million principal amount outstanding under the EnCap Credit Facility;  $6.0 million principal amount outstanding under the BOCP Credit Facility;  $2.2 million principal amount outstanding under the Old Ocean loan. Repayment of the outstanding balance was made through the issuance of Class A Series II preferred stock in July 1999;  $5.5 million, net of discount, due Shell Capital, Inc.;  $1.1 million advanced by certain lenders who invested additional capital in the Company through the exchange offering in July 1999. The Company repaid the EnCap Credit Facility and the BOCP Credit Facility with funds obtained in connection with the Aquila production payment financing discussed above and a new note with EnCap in the amount of $2.5 million. Such note matures December 31, 2000 and accrues interest at a rate of 10% per annum. ******************************************************** For the second quarter they incurred a cash flow deficit of about $2.3 mm. That means even if they got revenues to double they would still be in the red, and that's not factoring in the additional interest expense they will incur in future quarters from the addtional debt they are taking on. IMO the acid test will be whether Prime Natural Resources decides to go forward with the purchase of an interest in the Old Ocean field. For Prime to do that they would have to be pretty confident that their partner is gonna be around to hold up their side of the bargain when the time comes to start drillin' holes. So far all Prime has done is sign a Letter of Intent to do the deal. That means its far from a done deal.