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): November 26, 1997 (November
14, 1997)
TEXOIL, INC.
(Exact name of registrant as specified in its charter)
NEVADA 0-12633 88-0177083
(STATE OF INCORPORATION) (COMMISSION FILE NUMBER) (IRS EMPLOYER
IDENTIFICATION NO.)
1600 SMITH STREET, SUITE 4000
HOUSTON, TEXAS 77002
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
713/652-5741
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
(NOT APPLICABLE)
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
ITEM 5. OTHER EVENTS.
On November 14, 1997, Texoil, Inc., a Nevada corporation (the "Company"),
entered into a Letter of Intent (the "Letter of Intent) with Cliffwood Oil & Gas
Corp., a Texas corporation ("Cliffwood"), whereby a newly formed subsidiary of
the Company would merge (the "Merger") into Cliffwood with Cliffwood as the
surviving entity. As consideration for the Merger, the stockholders of Cliffwood
would receive 6.74 shares of Texoil common stock (the "Common Stock") for each
share of currently outstanding Cliffwood Class A Common Stock or Class B Common
Stock. The Company will also assume the obligations of Cliffwood regarding
currently outstanding options and warrants of Cliffwood, adjusted as appropriate
to reflect the 6.74 to 1 exchange ratio. In connection with the Merger, all of
the following securities will be converted into or exchanged for Common Stock in
accordance with their terms: (i) the Company's Series A Preferred Stock, (ii)
$4.5 million principal amount of the Company's exchangeable notes issued to
Resource Investors Management Company or its affiliates ("RIMCO") and (iii)
$600,000 principal amount of the Company's convertible notes issued to T. W.
Hoehn, Jr., T. W. Hoehn, III and W. F. Seagle, current directors of the Company.
A total of $1.05 million principal amount of the Company's convertible notes
issued to T. W. Hoehn, Jr. and an affiliate will be paid in cash. As a result of
the Merger, Cliffwood stockholders will control approximately 70% of the
outstanding voting power of the Company following the Merger.
Following the Merger, Frank A. Lodzinski, the current Chairman of the
Board of Directors and Chief Executive Officer of Cliffwood, will serve as the
Chief Executive Officer of the Company and be nominated by the Company to serve
on the Board of Directors pursuant to an employment agreement with an initial
term of three years. The Board of Directors of the Company following the Merger
is expected to comprise Mr. Lodzinski, three directors designated by Cliffwood,
two directors designated by the Company and one director to be mutually agreed
upon by Cliffwood and the Company.
It is expected that the closing of the Merger will be conditioned upon,
among other conditions customary to transactions similar to the Merger: (i) the
approval of the Merger by Cliffwood's stockholders; (ii) the availability of at
least $3.0 million to Cliffwood in unrestricted cash or borrowing under its
credit facilities; (iii) the receipt by the Board of Directors of the Company of
a fairness opinion regarding the Merger from an investment bank that is mutually
agreeable to Cliffwood and the Company; and (iv) the availability to the Company
of at least $10 million of additional financing from RIMCO in the form of
convertible subordinated notes with terms satisfactory to RIMCO, Cliffwood and
the Company.
The Letter of Intent contains customary provisions (the "Standstill
Provisions") requiring that neither Cliffwood nor the Company commence or
continue negotiations with any third party regarding a business combination of
Cliffwood or the Company with any third party. The Letter of Intent also
contains provisions which require that (i) each of Cliffwood and the Company
will provide the other with full access to records and other documents regarding
its business; (ii) neither Cliffwood nor the Company will disclose the terms of
the Letter of Intent to third parties, except
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where such disclosure may be required to comply with the Securities Exchange Act
of 1934, as amended, or similar laws requiring such disclosure, which shall be
made only after review by the other party; and (iii) each of Cliffwood and the
Company will conduct its business in substantially the same manner as it is
currently conducted, except for specified transactions. The Letter of Intent
requires each of Cliffwood and the Company to pay its own costs incurred as a
result of the Letter of Intent.
The Letter of Intent may be terminated at any time by either Cliffwood or
the Company, with or without cause, and terminates automatically on December 31,
1997, unless extended by mutual agreement of Cliffwood and the Company. Under
certain circumstances, if Cliffwood or the Company breaches the Standstill
Provisions or terminates the Letter of Intent and enters into another letter of
intent or other agreement relating to a business combination with a third party
within 90 days of such termination, the terminating party must pay to the other
party a break-up fee of $400,000.
The foregoing summary of the terms of the Letter of Intent does not
purport to be complete and is qualified in its entirety by reference to the
Letter of Intent, which is attached hereto as Exhibit 99.1.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) EXHIBITS
99.1 Letter of Intent dated November 14, 1997 between Cliffwood and
the Company.
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SIGNATURE
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 thereunto duly authorized.
Date: November 25, 1997
TEXOIL, INC.
By: /S/ RUBEN MEDRANO
Ruben Medrano, President
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