CYGNUS OIL & GAS CORP

CYGNUS OIL & GAS CORP deregistered its securities, ending its obligation to file reports with the SEC.

listing compliance notice

Cygnus obtained a $3 million debtor-in-possession loan from Kings Road Holdings - the same fund whose default notice had helped trigger the bankruptcy - to fund what the company described as a liquidation of its assets; it warned shareholders would likely receive nothing and that it faced delisting from the OTC Bulletin Board if it could not file its overdue 10-K by May 4, 2007.

listing compliance notice

Cygnus and eight subsidiaries filed for Chapter 11 bankruptcy in Houston after all four holders of its $22 million convertible notes demanded redemption for a combined $27.5 million (125% of principal) plus about $1.1 million in accrued interest. CEO R. Gerald Bennett stepped down (remaining Chairman) and turnaround specialist H. Malcolm Lovett was installed as President and Chief Restructuring Officer.

bankruptcy or receivership

A third noteholder, RHP, also demanded redemption of its $3 million note for $3.75 million; with all noteholders now demanding redemption, Cygnus owed over $22.5 million against the original $22 million note pool - a bill it could not pay.

debt financing

A second convertible-note holder, Capital Ventures, also demanded redemption following Cygnus's default, seeking $5 million - 125% of its $4 million note - plus accrued interest.

debt financing

Cygnus missed the $412,500 interest payment due December 31, 2006 on its $22 million convertible notes, triggering default and a jump in the interest rate to 12%; noteholder Kings Road Holdings demanded Cygnus redeem its note for $13.75 million, 125% of principal, plus accrued interest.

debt financing

Touchstone closed a $22 million offering of 7.5% senior convertible notes due April 2009, netting about $20.3 million used partly to pay off older notes - debt that would trigger the company's default and Chapter 11 filing less than a year later.

capital raising announcement

Newly-renamed Touchstone bought a string of small oil and gas working interests - Knox Gas/Knox Miss in Mississippi's Black Warrior Basin, stakes in New Zealand's Taranaki Basin and a Texas gas play, and a Louisiana exploration interest - financed mostly with notes payable back to the seller, Endeavour International, on a tight repayment schedule.

asset acquisition disposition

The shell company, renamed Touchstone Resources USA, bought a real oil and gas exploration business (Touchstone Resources USA, focused on the Permian Basin, East Texas Basin and Gulf Coast) from Touchstone Resources Ltd. of Canada for 7 million shares, plus small working interests in three other ventures - the transaction that turned the shell into an operating company, with Stephen Harrington becoming CEO.

asset acquisition disposition