9 Aug 2007capital raising announcement▼ BadMajor
On August 3, 2007 the company agreed with Longview (holder of about 66.6% of its stock) to acquire Sonterra Resources, Inc., an oil and gas business that had just bought assets from Cinco Natural Resources and has a pending purchase from Flash Gas & Oil Southwest. Longview would receive 218,465,578 shares (intended as 85% of the stock, before a 1-for-5 to 1-for-20 reverse split) plus a warrant, lifting its stake to about 90%. The company would also have a right to borrow up to $10,000,000 from Longview in secured notes at 3-month Libor plus 8.25% due August 31, 2010. It must divest the insurance subsidiaries as soon as practicable, with Sonterra's executives to become its CEO, VP-Operations and CFO. This moves the company from reinsurance into oil and gas and heavily dilutes other shareholders.