From the yahoo board....terms of the new finance offering...
Bond Financing part 1talus1000
Aug 10 1998
5:33PM EDTSUMMARY OF OFFERING
AMERICAN INTERNATIONAL PETROLEUM CORPORATION
$50,000,000 12% Secured Debentures due 2005
and
2,500,000 Common Stock Purchase Warrants
August 5, 1998
Securities Offered $50,000,000 principle amount of the Company's 12% Secured
Debentures due 2005 (the "Debentures") and 2,500,000 Common
Stock Purchase Warrants (the "Warrants"). Investors will receive
5,000 Warrants for each $100,000 principal amount of Debentures.
Subscription Price 100% of the principal amount of Debentures purchased.
Terms of Debentures:
Maturity August 31, 2005.
Interest Rate 12% per annum, payable on the last day of February and August of
each calendar year, commencing February 29, 1999.
Prepayment At the Company's option, at any time or from time to time,
commencing on the second anniversary of the initial closing, at
102% of the principal amount prior to the third anniversary of the
initial closing and thereafter at prices declining annually to 100%
on and after the sixth anniversary of the initial closing.
Security Secured by a first priority lien on the machinery, equipment and
other fixed assets of the Company's wholly owned subsidiary,
American International Refinery, Inc., which has an independently
appraised replacement value of $86 million.
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part 2talus1000
Aug 10 1998
5:34PM EDTTerms of Warrants:
Exercise price $1.50 per share, subject to adjustment in certain events.
Exercise period August 31, 2001
Redemption Redeemable by the Company at a price of $.01 per Warrant upon
not less than 20 business days prior written notice to the
registered holders of the Warrants, provided the average of the
closing sales prices of the Common stock on the Nasdaq National
Market as reported by Bloomberg, L.P., has been at least $4.00
per share Exercise Price for five consecutive trading days ending at
the third trading day preceding the notice of redemption.
Common Stock Outstanding
Prior to and After
Offering 54,137,120 shares.
Minimum Investment $100,000, although the Company reserves the right in its sole and
absolute discretion to accept subscriptions for lesser amounts.
Use of Proceeds The net proceeds of the Offering will be use for (i) the acquisition
of terminals, barges, capital equipment and crude oil feedstock for
the Company's refinery in Lake Charles, Louisianan; (ii) seismic
studies, drilling and working capital for the Company's exploration
activities in Kazakstan and Russia and (iii) repayment of outstand-
ing convertible notes.
Risk Factors An investment in the Company's securities is highly speculative
and involves substantial risks. Prospective investors should care-
fully review and consider the investment considerations described
in the related Confidential Private Placement Memorandum under
the caption "Risk Factors." Only investors who can bear the risk
of their entire investment should invest.
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part 3talus1000
Aug 10 1998
5:35PM EDTNasdaq National
Market Common
Stock Symbol AIPN
Plan of Distribution The Debentures and Warrants are being offered directly by the
Company through its directors, officers and employees to
"accredited investors" and a limited number of non-accredited
investors who satisfy certain suitability standards. The Company
also may offer and sell the Debentures and Warrants through
broker-dealers registered with the NASD, and others legally per-
mitted to offer and sell the Debentures and Warrants under the
laws of those jurisdictions in which such offers and sales are
made (collectively, "Sales Agents") or to investors who are
introduced to the Company by finders ("Finders"). The Company
reserves the right to pay Sales Agents and Finders up to an
aggregate of 5% of the gross proceeds of such sales in cash
and/or warrants. The offering will terminate on October 31, 1998
(or such earlier date upon which an aggregate of $50,000,000
principal amount of Debentures have been sold), unless extended
by the Company for successive 30 day periods, to a date not
later than January 31, 1999.
USE OF PROCEEDS
American International Petroleum Corporation
$50,000,000 12% Secured Debentures due 2005
and
2,500,000 Common Stock Purchase Warrants
August 7, 1998
(in $millions)
The net proceeds of the Offering (assuming gross proceeds of $50,000,000) are estimated to be approximately $47,500,000, after deducting expenses of the Offering (estimated at 5% of the gross proceeds of the Offering). The Company intends to utilize the net proceeds of the Offering as follows:
Approximate Amount Percentage
Lake Charles, Louisiana Refinery 1 $18,500,000 39.0%
Kazakstan 2 12,500,000 25.0%
Repayment of Convertible Notes 3 16,500,000 35.0%
Total $47,500,000 100.0%
The foregoing represents the Company's best estimates of its allocation of the net proceeds from the sale of the Debentures and Warrants based upon the current state of its business operations, its current plans and current economic and industry conditions and is subject to reallocation among the categories listed above. The amounts and timing of actual expenditures will ultimately depend on market conditions, as well as the availability of
terminals, seismic and drilling crews and equipment.
The net proceeds of this Offering will be invested in short-term money market obligations or similar securities until applied as described.
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1 Includes the acquisition of terminals and barges, capital equipment and crude oil
feedback.
2 Includes seismic acquisition and processing, drilling and working capital.
3 The Company is required to use the initial proceeds to retire 100% of the Company's 14%
Convertible Notes due October 15, 1998 (the "1997 Convertible Notes") to the extent not previously converted and at least 75% of the proceeds in excess thereof to retire the Company's 14% Convertible Notes due April 21, 2000 (the "1998 Convertible Notes") then outstanding. As of August 6, 1998, $2.2 million principal amount of the 1997 Convertible Notes and $12 million principal amount of the 1998 Convertible Notes were outstanding.
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