SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: (Date of earliest event reported) October 6, 1998
SABA PETROLEUM COMPANY
(Exact name of registrant as specified in charter)
Delaware 1-12322 47-0617589
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(State or (Commission (IRS Employer
other jurisdiction File Number) Identification No.)
of incorporation)
3201 Airpark Drive Suite 201, Santa Maria, CA 93455
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (805) 347-8700
(Former name or former address, if changed since last report) Not Applicable
Item 1 Changes in Control of Registrant
Not Applicable
Item 2 Acquisition or Disposition of Assets
Not Applicable
Item 3 Bankruptcy or Receivership
Not Applicable
Item 4 Changes in Registrant's Certifying Accountant
Not Applicable
Item No. 5. Other Material Events.
Series A Preferred Stock Transfer Agreement.
By an agreement dated October 6, 1998, Horizontal Ventures, Inc., a
company the shares of which are listed on the NASDAQ, acquired the right to
purchase from RGL International Investors, LDC ("RGC") all of the Company's
Series A Preferred Stock, save such amount not to exceed 1,000 shares as may be
necessary to permit RGL to cover its short position in the Common Stock of the
Company. On execution of the agreement, Horizontal Ventures acquired 690 shares
of the Preferred Stock for a consideration of $750,000. Horizontal Ventures has
until November 6, 1998 to complete the acquisition, but may extend that date to
December 6, 1998 by paying a $500,000 deposit which will be applied to the
purchase price should the transaction be consummated. The Preferred Stock is
subject to certain transfer restrictions. The Company consented to the transfer
to Horizontal Ventures, which agreed to convert all of the Preferred Stock into
Common Stock should it complete the acquisition at a conversion price of $2.50
per share. On conversion of the Preferred Stock, Horizontal Ventures will be
entitled to name one director to the Company's five man Board of Directors.
Common Stock Purchase Agreement.
By a Common Stock Purchase Agreement dated October 8, 1998, Horizontal
Ventures agreed to purchase and the Company agreed to sell to Horizontal
Ventures an aggregate of 2.5 million shares of the Common Stock of the Company
at a price of $3 per share. On or before November 6, 1998, Horizontal Ventures
is to purchase 333,333 shares of the Common Stock at a price of $3 and the
balance on December 4, 1998. Proceeds of the sale of the Common Stock,
aggregating $7.5 million, are to be employed to repay an indebtedness to Omimex
Resources, Inc. (approximately $4.5 million) and the balance for working
capital. On October 8, 1998, Randeep S. Grewall was appointed to the Board of
Directors which now stands at six. Should the transaction be consummated,
Horizontal Ventures will be entitled to name an additional member to the
Company's Board of Directors which will be reduced to five members, including
Mr.
Grewal..
The Common Stock Purchase Agreement prohibits the Company from taking
various actions without the consent of Horizontal Ventures, which it may not
unreasonably withhold. Basically, the prohibited actions include all actions
outside of the customary course of business of the Company. Thus, the Company is
precluded from acquiring debt, issuing securities, disposing of properties or
doing things which would alter the status of the Company. Closing of the
transaction is subject to various conditions, including the accuracy of the
warranties and representations made by the Company, the filing of a registration
statement covering the Company's Preferred Stock and a Proxy Statement
soliciting approval of the Company's shareholders for the conversion for the
conversion of the Preferred Stock.
The Company has received a copy of a Form 13 D filed by Horizontal
Ventures, Inc. during October 1998, indicating that Horizontal Ventures and an
affiliate have acquired over five percent of the outstanding Common Stock of the
Company. The stock so acquired is in addition to that which may be acquired
under the above mentioned agreements.
Potential Change of Control - Requisite Financing
Should Horizontal Ventures complete the acquisition and conversion of
the Series A Preferred Stock and the purchase of 2.5 million shares of the
Common Stock, it will be entitled to three members of the Company's five man
Board of Directors and will then be in control of the Company.
The Company understands that Horizontal Ventures has engaged an
investment banking firm to assist Horizontal Ventures in securing the financing
necessary to complete both the acquisition of the Series A Preferred Stock and
the Common Stock. Based solely upon a review of the public reports of Horizontal
Ventures, it would appear that Horizontal Ventures does not presently possess
the cash resources necessary to complete the transactions and that financing
will be required. The Company is not in a position to determine whether the
financing will be forthcoming.
Item No. 6. Resignation of Registrant's Directors
Not Applicable
Item No. 7. Financial Statements and Exhibits
Exhibits to 8-K
10.1 Preferred Stock Transfer Agreement dated October 5, 1998, by and between
RGC International Investors, LDC and Horizontal Ventures, Inc., and
consented to by the Company and filed as Exhibit 7.1 to a Schedule 13D
filed for Horizontal Ventures, Inc., and incorporated herein by reference.
10.2 Common Stock Purchase Agreement dated October 8, 1998 between Saba
Petroleum Company and Horizontal Ventures, Inc., and filed as Exhibit 7.2
to a Schedule 13D filed for Horizontal Ventures, Inc., and incorporated
herein by reference.
10.2(A) Schedules to Exhibit 10.2 Common Stock Purchase Agreement.
10.2(B) Exhibit "A" to Exhibit 10.2 Common Stock Purchase Agreement.
10.3 Letter Agreement dated October 8, 1998 by and between Horizontal Ventures,
Inc. and Saba Petroleum Company.
10.4 Press Release announcing Saba Petroleum Company's agreement on a $7.5
million private placement and conversion of its Preferred shares.
Item No. 8. Changes in Fiscal Year
Not Applicable
Item No. 9. Sales of Equity Securities Pursuant to Regulation S
Not Applicable
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SABA PETROLEUM COMPANY
Date: October 22, 1998
By:_____________________________
/s/Ilyas Chaudhary, Chief Executive Officer
Date: October 22, 1998
By: _____________________________
/s/Imran Jattala, Executive Vice President and Chief Operating Officer