Pinnacle Gas Resources, Inc.

Pinnacle Gas Resources, Inc. terminated the registration of a class of securities, ending its reporting obligation for them.

listing compliance notice

Pinnacle Gas Resources, Inc.'s exchange filed to remove a class of its securities from listing.

listing compliance notice

On September 28, 2010 Pinnacle, Powder Holdings and Powder Acquisition Co. amended the merger agreement to move the outside date from August 23, 2010 to October 29, 2010. The press release says this gives the parties more time to satisfy the closing conditions. The deal is therefore still alive but has not closed past its original deadline. The filing does not state a change to the $0.34 price or say what conditions remain open. Shareholders are not yet bought out.

business combination

Nasdaq notified Pinnacle on September 15, 2010 that its shares would be delisted from the Nasdaq Stock Market at the open on September 16, 2010, because the extra time granted by the hearings panel to lift the price above $1.00 had expired. From September 16 the shares trade on the OTCQB Marketplace under the same symbol, PINN. This resolves the delisting appeal thread begun in March 2010, which ended in delisting. The press release still refers to the pending merger with Powder Holdings, which has not closed.

listing compliance notice

Pinnacle's lender told it on July 8, 2010 that it missed the July 1 principal and interest payments, which are events of default. Pinnacle says it will not pay the roughly $5,100,000 outstanding when it falls due by July 15, 2010. The lender has not yet demanded early payment, but Pinnacle says it could foreclose on the properties pledged as security if waivers are not obtained. This continues the June default: the new missed payments add to it, and Pinnacle has now said it will not pay the full balance. Scotia can terminate the merger because of the default and says it will not waive it, but has not done so. The parties are proceeding and the shareholder meeting remains set for August 9, 2010. Pinnacle has asked for more waivers with no assurance of getting them, and cannot borrow more.

debt financing

Pinnacle filed the definitive proxy statement (Amendment No. 3) for the $0.34 per share cash merger with Powder Holdings. It sets a special meeting for August 9, 2010 in Denver, a June 17, 2010 record date, and first mailing around July 6, 2010. This fills in the meeting date that was blank in the earlier preliminary proxy. The board still unanimously recommends approval, 43.8% of shares are committed by voting agreement, and approval needs a majority of all shares plus a majority of shares unaffiliated with DLJ, the CEO and the CFO. Not voting counts as a vote against. The fee table shows a deal value of $10,305,703.28. The excerpt does not show how the June credit default is treated. The merger is still pending, so no shareholder is bought out yet.

business combination

Pinnacle disclosed that the lender waivers expired June 15, 2010 without the merger closing, so it is in default under its credit agreement and all of it is due by July 15, 2010: $5,100,000 of principal plus $51,600 of interest. The lender has not demanded payment early, and Pinnacle plans to ask for more waivers but says there is no assurance it will get them. The default is also a default under the merger agreement, and Scotia has said it will not waive it, though it has not terminated the merger. This puts the pending $0.34 deal at risk, and it continues the covenant and waiver thread from late 2009 and January 2010.

business combination

Pinnacle filed a preliminary proxy statement asking shareholders to vote on the $0.34 per share cash merger with Powder Holdings. The board unanimously recommends approval. It needs a majority of all shares and a majority of shares not held by DLJ, the CEO or the CFO. The 43.8% already committed by voting agreement counts toward the first threshold. If it closes, Pinnacle will no longer be publicly traded and holders will not share in future growth. Dissenting holders can seek appraisal under Delaware law. The meeting date is still blank, and the aggregate deal value stated for the fee calculation is $10,308,979.

business combination

Nasdaq told Pinnacle on March 16, 2010 that its stock would be delisted because the share price stayed under $1.00 through the 180-day grace period that began in the Sept 2009 notice. Pinnacle appealed on March 22, which delays delisting until the Nasdaq hearings panel decides; the panel can grant up to 180 more days, with no assurance it will. This continues the open listing thread, and the pending $0.34 merger would end public trading anyway.

listing compliance notice

Pinnacle filed the terms of the merger agreement signed Feb 23, 2010 with Powder Holdings, LLC, a Scotia Waterous subsidiary. Each share converts to $0.34 cash, and options and restricted stock are cashed out. Closing needs a majority vote of shares excluding those held by DLJ and the CEO and CFO, a lender waiver of change of control for 60 days after closing, and no material adverse effect. Holders of 43.8% of shares have agreed to vote in favour. Either side can terminate if the deal is not done by Aug 23, 2010, and Pinnacle may owe a $1,000,000 termination fee (reduced to $500,000 in some cases) plus up to $600,000 of expenses in specified circumstances. The deal is pending, so shareholders are not yet bought out.

business combination

Pinnacle announced it has agreed to be bought by an investor group led by Scotia Waterous (USA) Inc., which includes some Pinnacle managers, for $0.34 cash per share, about 28% above the $0.265 close on Feb 23, 2010. If completed, the stock stops being publicly traded; the deal needs shareholder approval and, unless waived, acceptable changes to the credit facility, and is expected to close in the second quarter of 2010. The press release says a special committee formed in October 2009 reviewed options to address the company's liquidity constraints, which ties back to the earlier month-by-month lender waivers.

business combination

A month later, another waiver on the same terms from the same lenders. Month-by-month extensions from RBS are the clearest sign in this record that Pinnacle could not meet its covenants on its own.

debt default or forbearance

Royal Bank of Scotland and the other lenders granted Pinnacle another short waiver under a credit agreement that had already been amended six times in under three years. The company was being kept going a few weeks at a time.

debt default or forbearance

On Sept 15, 2009 NASDAQ told Pinnacle its stock had traded below $1.00 for 30 straight business days, breaching the minimum bid rule. The company has a 180-day grace period to get back above the minimum or face delisting. The CFO said the notice does not affect its financial position or daily operations, and that the company is working with its board on a plan to regain compliance. This is a new risk to the listing; the stock was sold at $9.00 in the 2007 IPO.

listing compliance notice

Effective Aug 4, 2008, Pinnacle signed a Second Amendment to its Feb 2007 credit agreement with Royal Bank of Scotland and the other lenders. It raises the allowed senior debt to EBITDA ratio, raises LIBOR interest rates, changes how utilization is calculated, and requires an amendment fee. At June 30, 2008 the borrowing base was $17.8 million with about $5.0 million drawn, and a letter agreement from April 2008 was already stepping the base down from $18.5 million to $16.5 million by Oct 1, 2008. The availability figures in this filing were later corrected.

material agreement

On May 16, 2008 Quest gave notice terminating the amended merger agreement, which either side could do if the deal had not closed by that date. The planned acquisition by Quest is therefore off, and Pinnacle continues as a standalone listed company. The filing gives no reason for the termination and mentions no fee.

material agreement termination

Pinnacle and Quest restated the merger agreement on Feb 6, 2008, cutting the exchange ratio from 0.6584 to 0.5278 Quest shares per Pinnacle share (about 15.5 million Quest shares in total, down from about 19.1 million). This is a less favourable ratio for Pinnacle holders than the original terms. The new terms also drop the Quest Energy Partners IPO condition listed in the original, set two Pinnacle nominees on a six-member board, and add a $5 million fee payable by Quest if its board changes its recommendation; the May 16, 2008 outside date is unchanged.

material agreement

Five months after the IPO, Pinnacle agreed on Oct 15, 2007 to be acquired by Quest Resource Corporation in an all-stock deal: each Pinnacle share would convert into 0.6584 of a Quest share, about 19.1 million Quest shares or roughly $207 million at Oct 15 prices. Closing needed approval from both companies' stockholders and completion of the planned Quest Energy Partners IPO; Pinnacle would owe Quest a $3 million fee if terminated in specified circumstances, and either side could end the deal if not completed by May 16, 2008.

business combination

Pinnacle closed its initial public offering on May 18, 2007: 3,750,000 new shares sold at $9.00 each ($8.37 net of underwriting discounts) through an underwriting agreement with Friedman, Billings, Ramsey & Co. and other underwriters. Selling stockholders also gave the underwriters a 30-day option on up to 562,500 more shares; the shares are listed on NASDAQ as PINN.

material agreement