UNITED STATES 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 April 22, 1999 Date of Report (Date of earliest event reported) SGI International (Exact name of registrant as specified in its charter) Utah 2-93124 33-0119035 State or other jurisdiction of (Commission IRS Employer incorporation or organization File Number) Identification No. 1200 Prospect Street, Suite 325, La Jolla, California 92037 (Address of principal executive offices) (Zip Code) 619/551-1090 Registrants telephone number including area code Item 2. Acquisition or Disposition of Assets. On April 22, 1999, SGI International (the "Company") executed an agreement with Bluegrass Coal Development Company ("Bluegrass"), Wyoming Coal Technology, Inc. and Americoal Development Company ("Americoal"), wholly owned subsidiaries of AEI Resources ("AEI"), to purchase Bluegrass' 50% interest in the Liquids From Coal ("LFC") Technology; the ENCOAL corporation, which owns the ENCOAL LFC demonstration plant; certain existing permits necessary to build an LFC plant near Gillette, Wyoming; and all other tangible and intangible LFC assets. The consideration paid by the Company for the acquisition of the above described assets consists of a $2 million dollar promissory note with interest thereon at the prime rate due in five years, the waiver by Mitsubishi Heavy Industries of a $1.13 million invoice due from Bluegrass and the assumption of obligations attendant to ownership of the ENCOAL Corporation. The acquisition also calls for a release of all claims between the parties and finalizes the dissolution of the TEK-KOL Partnership. The total consideration to be paid was determined through arms length negotiations between representatives of the Company and AEI. Neither the Company, AEI, nor any of their affiliates had, nor to the knowledge of Company or AEI did any director or officer or any associate of any such director or officer of Company, have, any material relationship with AEI prior to the Sale. The closing of the transaction is conditioned upon, among other things, the financing of certain improvements to the ENCOAL plant, the completion of both fuel supply and product sale agreements, the assumption or waiver of certain bond obligations, the waiver Mitsubishi Heavy Industries of the $1.13 million invoice due from Bluegrass and certain other conditions specified in the agreement. The assets to be acquired by the Company have been used to provide upgraded coal and coal liquids to various utilities and industrial customers. The Company intends to obtain financing from the upgrading of the facilities and to use the assets to produce upgraded coal for sale to utilities and produce coal liquids for sale to manufacturers and chemical producers. Item 7. Financial Statements and Exhibits. (a) Financial statements of businesses acquired. The financial statements required by this item will be filed at a later date by an amendment to on this Form 8-K within 60 days after the date the initial report was required. (b) Pro forma financial information The Pro forma financial statements required by this item will be filed at a later date by an amendment on this Form 8-K within 60 days after the date the initial report was required. (c) Exhibits EXHIBIT NO. DESCRIPTION - ----------- ----------- 2.1 Acquisition Agreement among SGI International, Bluegrass Coal Development Company, and Wyoming Coal Technology, Inc. * This exhibit is being, filed with the Securities and Exchange Commission under a claim of confidentiality. 2 SIGNATURES Pursuant to the requirements of the Securities Exchnage Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. SGI International By /s/ Joseph A. Savoca - --------------------------- Joseph A. Savoca Chairman/CEO Dated: May 7, 1999 3