SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 9, 2001
SEVEN SEAS PETROLEUM INC.
(Exact Name of registrant as Specified in its Charter)
Cayman Islands 0-22483 73-468669
(State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer
Incorporation or Organization) Identification Number)
5555 SAN FELIPE, SUITE 1700, HOUSTON, TEXAS 77056
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (713) 622-8218
The filing of this amended Form 8-K is necessitated to correct
typographical errors reflected in the press release attached as Exhibit 10(c) to
our Form 8-K filing of July 11, 2001.
Item 5. Other Events
Chesapeake Energy Corporation, a public oil and gas company traded on the
New York Stock Exchange, has agreed to purchase $22.5 million of senior secured
notes with detachable warrants to purchase 12,612,140 shares of Seven Seas
common stock at approximately $1.78 per share. After all the transactions
contemplated in this financing are completed, Chesapeake will have warrants to
purchase 20% of the Company's common stock. These notes will bear interest at
12% per annum, compounded quarterly, and interest will be accrued for the first
two years. Principal and accrued interest will be due at maturity on November 7,
2004.
A group of qualified investors led by Robert A. Hefner III, the Company's
Chairman and Chief Executive Officer, will agree to purchase $22.5 million of
short-term secured notes. Mr. Hefner will purchase $15 million of these notes,
and two of the Company's independent directors will participate as well. A
limited liability company controlled by the father of a third independent
director will also participate.
As soon as possible after the closing of the senior secured notes and the
short-term secured notes, Seven Seas will offer to current shareholders, in the
form of a rights offering, $22.5 million of senior secured notes with detachable
warrants to purchase 12,612,140 shares at approximately $1.78 per share. The
terms of these notes will be substantially similar to those offered to
Chesapeake. If shareholders take up all their rights to purchase these notes,
they will receive warrants to purchase 20% of the Company's common stock.
Proceeds from the rights offering will be used to redeem the short-term
secured notes sold to Mr. Hefner and the qualified investors. Any senior secured
notes with warrants not purchased in the rights offering will be exchanged for
the remaining short-term secured notes owned by Mr. Hefner and the other
qualified investors. If shareholders exercise none of their rights, and all the
warrants are then issued to Chesapeake and the qualified investors, upon
exercise of all the warrants, Chesapeake will own 20%, the qualified investors
will own 20% and current shareholders will own 60% of the Company. In this case,
for his $15 million commitment, Mr. Hefner will be issued warrants to purchase
13.33% of the Company.
If after closing of the rights offering Mr. Hefner has purchased less than
$10 million of notes, he has granted Chesapeake an option that could require Mr.
Hefner to purchase from Chesapeake an amount of notes and a proportionate share
of the warrants equal to the difference between $10 million and the amount of
notes Mr. Hefner acquired through the rights offering. If Mr. Hefner purchases
$10 million of notes in the aggregate, he would acquire warrants to purchase
5,605,397 shares or 8.89% of the Company.
Pursuant to the agreement with Chesapeake, $15 million will be escrowed for
the drilling of an exploration well to test the Subthrust Dindal Prospect,
located below the Guaduas Oil Field. Additionally, for the first two years, the
Company will escrow 1/6 of its semi-annual $6.9 interest payment on its $110
million senior notes on a monthly basis to provide greater security that such
payments will be made.
Closing is set for July 23, 2001. Closing of this financing is subject to
CIBC World Markets Corp. (CIBC), an independent investment banking firm and the
Company's financial advisor, rendering an opinion that the planned transactions
are fair to the Company from a financial point of view. CIBC is expected to
provide its written opinion on the fairness of the transactions following a
review of the final documents.
The American Stock Exchange (AMEX) would normally require that the Company
seek shareholder approval prior to closing this financing. However, pursuant to
the Company's request, the AMEX has granted the Company an exception from the
shareholder approval requirement based on the Company's representation that the
time required to seek shareholder approval would seriously jeopardize the
financial viability of the Company. This filing does not constitute an offer of
any securities for sale.
Item 7. Financial Statements and Exhibits
(c) Exhibits
10(a) Note Purchase and Loan Agreement dated July 9, 2001.
10(b) Letter to shareholders concerning financing dated July 9, 2001.
10(c) Press release dated July 9, 2001.
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.
SEVEN SEAS PETROLEUM INC.
By: LARRY A. RAY
Name: Larry A. Ray
Title: President
Date: July 18, 2001
INDEX TO EXHIBITS
Exhibit
No. Description Method of Filing
- ------- ----------- ----------------
10(a) Note Purchase and Loan Agreement Filed herewith electronically
dated July 9, 2001.
10(b) Letter to shareholders concerning Filed herewith electronically
financing dated July 9, 2001.
10(c) Press release dated July 9, 2001. Filed herewith electronically