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Gold/Mining/Energy : Harken Energy Corporation (HEC) -- Ignore unavailable to you. Want to Upgrade?

To: Razorbak who wrote (4388)	5/20/1999 10:57:00 AM
From: SDR-SI	Read Replies (1) \| Respond to of 5504

It is a bit unsettling. The S-3 apparently is a shelf registration for about 1.9MM shares now belonging to Sidro resulting from their April, 1999 voluntary conversion of their net profit interest in 3 of HEC's Columbian prospects to stock. Sidro's net profit interest resulted from their $3MM development financing to Harken, which included the voluntary conversion in its terms. Detail is included in the following excerpt from Page 11 of the S-3: * * * * * * * * INFORMATION ABOUT SIDRO This prospectus covers the offer and sale of 1,908,639 shares of common stock by Sidro, S.A. The 1,908,639 shares of common stock were issued to Sidro when Sidro converted a net profits interest it held in three of Harken's Colombian prospects. In December 1997, Harken and Sidro entered into a Development Finance Agreement. Under the Development Finance Agreement, Sidro initially provided $3 million to Harken in exchange for the net profits interest. The Development Finance Agreement gave Sidro the right to convert the net profits interest into shares of Harken common stock. In April 1999, Sidro elected to convert the net profits interest into 1,908,639 shares of Harken common stock. Harken has agreed to file a "shelf" registration statement with the SEC pursuant to Rule 415 under the Securities Act covering the sale of shares of common stock held by Sidro, and to use its reasonable best efforts to maintain the effectiveness of any such registration statement for no less than one year from the date of effectiveness of such registration statement. In addition, Harken has agreed to bear certain expenses of registration of the shares of common stock under the federal and state securities laws (currently estimated to be $7,000). Harken has also agreed to indemnify Sidro, or their transferees or assigns, against liabilities under the Securities Act, or to contribute to payments Sidro may be required to make. Other than the net profits interest Sidro held, Sidro has not had any position, office or other material relationship with Harken in the last three years. The chart below describes the number of shares of common stock owned by Sidro, the number of shares of common stock which may be offered for sale by Sidro, and the number of shares of common stock Sidro will own if all of the shares of common stock held by Sidro are sold. Any or all of the shares listed below may be offered for sale by Sidro from time to time. Percent of Common Shares Shares Stock Owned Prior Shares Owned Owned After to the Offered After the the Selling Stockholder Offering Hereby Offering(1) Offering(1) ------------------- ----------- --------- ----------- ----------- Sidro S.A. 1,908,639 1,908,639 -0- -0- ----------- (1) Assumes no other disposition or acquisition of common stock and all shares of common stock are sold. * * * * * * * * Apparently Sidro would rather own HEC stock than the net profit interest. Is this bullish for the stock or bearish for their evaluation of the profit expectations for the three prospects?? I haven't had time to see which 3 prospects were involved, but such information will, no doubt, give us some additional data on which to try to draw a conclusion. The other consideration is, of course, that this is a "shelf registration" and is filed to allow Sidro to sell if and when they later so decide. It does not mean they have decided to sell their shares ... yet. Steve