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)
JANUARY 23, 1998
BLACK WARRIOR WIRELINE CORP.
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(Exact name of registrant as specified in its charter)
DELAWARE 0-18754 11-2904094
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
3748 HIGHWAY 45 NORTH, COLUMBUS, MISSISSIPPI 39701
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(Address of principal executive offices)
Registrant's telephone number, including area code: (601) 329-1047
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(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS
Phoenix Acquisition - On January 23, 1998, the Company entered into an
agreement with Phoenix Drilling Services, Inc. ("Phoenix") to acquire the
domestic oil and gas well survey business and domestic directional drilling
business of Phoenix. The purchase price for the assets to be acquired is $19.0
million. The transaction is scheduled to be completed on or before March 16,
1998 with an effective date for the transaction of January 1, 1998. The
operations of the business to be acquired are conducted throughout the primary
oil and gas producing areas of the United States. The purchase price is intended
to be financed through secured borrowings and the private sale of securities.
St. James Transaction - On January 23, 1998, the Company entered into
an Agreement for Purchase and Sale (the "Note Purchase Agreement") with St.
James Capital Partners, L.P. ("St. James"), a Delaware limited partnership,
whereby St. James agreed to purchase and the Company agreed to sell up to $10.0
million principal amount of a convertible promissory note (the "Note") due on
July 23, 1999. On January 23, 1998, the Company borrowed $1.0 million under the
Note Purchase Agreement and the balance is intended to be borrowed primarily to
finance the payment of a portion of the purchase price for the assets to be
purchased from Phoenix described above and possibly to be used in connection
with other acquisitions. Payment of principal and interest on the Note is
collateralized by substantially all the assets of the Company. The Note is
convertible into shares of the Company's Common Stock at a conversion price of
$7.00 per share, subject to anti-dilution adjustment for certain issuances of
securities by the Company at prices per share of Common Stock less than the
conversion price then in effect. St. James has agreed to subordinate its
security interests and rights to the indebtedness and security interests of the
lenders providing up to $4.5 million pursuant to a term loan and $3.0 million
pursuant to a revolving credit facility, neither of which financings have yet
been arranged. Pursuant to the Note Purchase Agreement, the Company has agreed
to issue to St. James for nominal consideration warrants (the "Warrant") to
purchase shares of Common Stock exercisable at a price of $6.75 per share,
subject to anti-dilution adjustment for certain issuances of securities by the
Company at prices per share of Common Stock less than the exercise price then in
effect. St. James will be issued warrants to purchase 20,000 shares of Common
Stock for each $100,000 borrowed under the Note Purchase Agreement, or a maximum
aggregate of warrants to purchase 2,000,000 shares of which warrants to purchase
200,000 shares have been issued. The shares issuable on conversion of the Note
and exercise of the Warrant have demand and piggy-back registration rights under
the Securities Act of 1933. The Company agreed that one
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person designated by St. James will be nominated for election to the Company's
Board of Directors. Mr. John L. Thompson, currently a Director of the Company,
serves in this capacity. The Note Purchase Agreement grants St. James certain
preferential rights to provide future financings to the Company, subject to
certain exceptions. The Note contains various affirmative and negative
covenants, including a prohibition against the Company consolidating, merging or
entering into a share exchange with another person, with certain exceptions,
without the consent of St. James. Events of default under the Note include,
among other events, (i) a default in the payment of principal or interest on the
Note; (ii) a default under the 9% Convertible Promissory Note in the principal
amount of $2.0 million dated as of June 5, 1997 or on the 7% Convertible
Promissory Note in the principal amount of $2.9 million dated as of October 10,
1997 issued to St. James and the failure to cure such default for five days;
(iii) a breach of the Company's covenants, representations and warranties under
the Note Purchase Agreement or the Purchase and Sale Agreements entered into
with St. James dated June 7, 1997 and October 10, 1997; (iv) a breach under the
other agreements between the Company and St. James, subject to certain
exceptions; (v) any person or group of persons acquiring 40% or more of the
voting power of the Company's outstanding shares who was not the owner thereof
as of January 23, 1998, a merger of the Company with another person, its
dissolution or liquidation or a sale of all or substantially all its assets; and
(vi) certain events of bankruptcy. In the event of a default under the Note, St.
James could seek to foreclose against the collateral for the Note. In addition,
such default would be a default under the notes issued to St. James in the June
1997 and the October 1997 transactions. St. James received an origination fee of
$125,000 in connection with the transaction.
In the Agreement, St. James agreed to convert its $2.0 million
convertible note dated June 5, 1997 and its $2.9 million convertible note dated
October 10, 1997 into shares of the Company's Common Stock at such time as the
Company has filed a registration statement under the Securities Act of 1933
relating to the shares issuable on conversion of such notes, the Note, and on
exercise of the warrants issued in connection with the sale by the Company of
notes in the June 1997 and October 1997 transactions with St. James, and on
exercise of the Warrant and such registration statement has been declared
effective.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of business acquired.
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None required at this time.
(b) Pro forma financial information.
None required at this time.
(c) Exhibits
10.1 Asset Purchase Agreement dated as of January 1, 1998
between Black Warrior Wireline Corp. and Phoenix Drilling Services, Inc.
10.2 Agreement for Purchase and Sale dated January 23, 1998
between Black Warrior Wireline Corp. and St. James Capital Partners, L.P.
10.3 $10,000,000 Convertible Promissory Note dated January 23,
1998 issued to St. James Capital Partners, L.P.
10.4 Warrant dated January 23, 1998 to purchase 200,000 shares
of Common Stock issued to St. James Capital Partners, L.P.
10.5 Amendment No. 2 to Registration Rights Agreement between
Black Warrior Wireline Corp. and St. James Capital Partners, L.P. dated January
23, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
BLACK WARRIOR WIRELINE CORP.
Dated: February 6, 1997 By: /s/ William L. Jenkins
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William L. Jenkins, President
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