Each one in plain English, with the numbers worked through for a shareholder.
18 July 2008asset acquisition disposition● NeutralMajor
On July 14, 2008 the company closed the Harvest Oil and Harvest Group acquisitions after a fourth amendment reinstated the agreements and reset the price to cash plus 4.9 million shares. It paid $105,683,000 in cash and issued 4.9 million shares (3.3 million to Macquarie), for about 33,000 gross acres across 11 fields in Louisiana state waters. It was funded by a $97.5 million Wayzata second-lien loan at 20% interest due July 14, 2011 (plus a warrant for 805,515 shares at $0.01) and a Macquarie first-lien revolver of up to $25 million, with $12,528,878 drawn. The deal resolves the pending purchases but adds substantial debt and new shares for existing holders.
On February 18, 2008 a third amendment moved closing on both Harvest deals from February 14 to February 29, 2008, with a right to extend to March 7, 2008 if the company shows it has secured financing. The extension is conditioned on financing, which the filing indicates was not yet shown as secured. The filing's date reference reads 'February 29, 2009', which appears to be a typo (inference).
On January 18, 2008 a second amendment to both Harvest purchase agreements pushed closing from January 21 to February 14, 2008 and adjusted seller tax-distribution terms. The deals remain unclosed.
On December 14, 2007 the company amended both Harvest purchase agreements, moving the closing date from December 14, 2007 to January 21, 2008. It also gained the option to pay the seller-financed portions (about $28 million and about $7 million) in cash at a 10% discount, cutting the prices from $116 million to $113.2 million and from $29 million to $28.3 million.
On December 4, 2007 the company sold 100,000 restricted shares to Andy Clifford, its President, for $100,000. The money is to pay professional fees and expenses for the pending Harvest acquisitions. This adds shares and thus dilutes other holders (inference).
On October 24, 2007 the company agreed to buy The Harvest Group, LLC, a companion to the Harvest Oil deal with overlapping owners, for $29 million: $22,000,009 in cash and the balance in an 8% subordinated note on the same terms. Closing is subject to diligence and release of Macquarie debt, and is not assured.
On October 18, 2007 the company agreed to buy all of Harvest Oil & Gas, LLC (South Louisiana onshore and state-waters Gulf of Mexico) for $116 million less an amount to release a Macquarie net profits interest. About $88 million less that amount is payable in cash and the rest in an 8% subordinated note due in 36 months, with a 12% annualized equity participation bonus. Closing depends on due diligence, release of Macquarie debt and other conditions.
This amendment corrects the October 8 auditor-change report: Robnett's 2006 and 2005 audit reports were in fact modified for uncertainty about the company's ability to continue as a going concern. The original filing had left that out. The auditor change itself is unchanged.
On October 8, 2007 the company dismissed Robnett & Co. as auditor and appointed Malone & Bailey, PC. The filing says there were no disagreements and the prior reports had no adverse opinion; the board approved the change.
On January 30, 2006 the board adopted two share plans: a 2006 Stock Option Plan reserving 1,200,000 shares, and a 2006 Employee and Consultant Stock Plan reserving 1,200,000 shares. The option plan needs shareholder approval within twelve months. If used, these shares would dilute existing holders (inference).
Filed in July 2005, this report discloses auditor changes: the board decided in March 2000 not to re-appoint Ernst & Young (no disagreements reported), and in September 2004 it appointed Robnett & Company, LLP as its principal independent accountant. This formally reports the 2000 auditor decision that the earlier late-filing notice sat alongside.
