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) February 25, 1997
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AMERICAN INTERNATIONAL PETROLEUM CORPORATION
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(Exact name of registrant as specified in its charter)
Nevada No. 0-14905 13-3130236
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation
or organization)
444 MADISON AVENUE, SUITE 3203, NEW YORK, NEW YORK 10022
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(Address of principal executive offices) (Zip Code)
(212)688-3333
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(Registrant's telephone number, including area code)
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(Former name or former address if changed from last report)
Item 2. Acquisition or Disposition of Assets
On February 25, 1997, the Registrant sold all of the issued and
outstanding shares of common stock of its wholly-owned subsidiaries,
American International Petroleum Corporation of Colombia ("AIPCC") and
Pan American International Petroleum Corporation ("PAIPC") (the
"Purchased Shares") in an arms length transaction to Mercantile
International Petroleum Inc. ("MIP").
(i) The assets of AIPCC and PAIPC consisted of oil and gas
properties and equipment in South America with an aggregate
net book value of approximately $17.9 million.
(ii) The total aggregate purchase price payable by MIP for the
Purchased Shares was valued at up to approximately $20.2
million, determined as follows:
(a) Cash payments of approximately $3.9 million, of which
approximately $2.2 million was paid simultaneously
with the closing to retire Registrant's 12% Secured
Debentures due December 31, 1997, which were secured
by the Registrant's shares of AIPCC.
(b) Assumption of AIPCC and PAIPC debt of an aggregate
amount of $634,000.
(c) 4,384,375 shares of MIP Common Stock with a trading
price of approximately $2.00 on the date the parties
agreed in principle to the sale.
(d) A two-year $3 million 5% exchangeable subordinated
debenture of AIPCC, exchangeable into shares of
common stock of MIP on the basis of $3 principal
amount of such debenture for one share of MIP on
or after February 25, 1998; or Registrant may
demand payment on that date of $1.5 million of the
principal balance thereof in cash.
(e) A $1.4 million "performance earn-out" from future
production in Colombia, plus interest at 8% per
annum.
(f) Up to $2.5 million (reduced proportionately to the
extent the Net Operating Loss and Deferred Cost
Deductions accrued by AIPCC through December 31, 1996
("Accrued Tax Benefit Deductions") is less than $50
million but more than $20 million) payable from 25%
of AIPCC's future tax savings related to any Accrued
Tax Benefit Deductions available to AIPCC on future
tax filings in Colombia.
(iii) As a result of this disposition, the Registrant now owns
approximately 11.3% of MIP's outstanding share capital on a
fully-diluted basis (47,720,867 shares). MIP is traded in U.S.
Dollars on the Toronto
Stock Exchange under the symbol MPT.U. On March 6, 1997, the
closing price of MIP's common stock was $1.95 per share.
(iv) The Registrant intends to utilize the proceeds to repay
certain debts, expand its refinery and for general corporate
use.
Item 7. Financial Statements, Pro-forma Financial Information and
Exhibits
Exhibits:
Exhibit No. Description
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99.1 Share Purchase Agreement dated February 25,
1997, among the Registrant, AIPCC, PAIPC and
MIP.
99.2 $3 million 5% exchangeable debenture,
granted by AIPCC to the Registrant, due
February 25, 1999.
99.3 Pledge Agreement dated February 25, 1997
among the Registrant, MIP and MG Trade
Finance Corp.
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.
Date: March 12, 1997
AMERICAN INTERNATIONAL
PETROLEUM CORPORATION
By: /s/ Denis J. Fitzpatrick
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Denis J. Fitzpatrick
Chief Financial Officer
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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99.1 Share Purchase Agreement dated February 25,
1997, among the Registrant, AIPCC, PAIPC and
MIP.
99.2 $3 million 5% exchangeable debenture,
granted by AIPCC to the Registrant, due
February 25, 1999.
99.3 Pledge Agreement dated February 25, 1997
among the Registrant, MIP and MG Trade
Finance Corp.