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
Date of Report (Date of earliest event reported)
OCTOBER 6, 2005
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.)
100 ROSECREST LANE, COLUMBUS, MISSISSIPPI 39701
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(Address of principal executive offices)
Registrant's telephone number, including area code: (662) 329-1047
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2.below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act
TABLE OF CONTENTS
PAGE
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Section 1. Registrant's Business and Operations
Item 1.01. Entry Into a Material Definitive Agreement 3
Section 3. Securities and Trading Markets
Item 3.02. Unregistered Sales of Equity Securities 4
Section 8. Other Events
Item 8.01. Other Events 5
Section 9. Financial Statements and Exhibits
Item 9.01. Financial Statements and Exhibits 9
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SECTION 1 - REGISTRANT'S BUSINESS AND OPERATIONS.
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On October 6, 2005, in connection with a proposed recapitalization of
our company, we entered into Recapitalization Agreements (the "Recapitalization
Agreements") with each of St. James Capital Partners, L.P. and SJMB, L.P.,
private investment partnerships (the "St. James Partnerships"), who hold an
aggregate of $34,306,173 principal amount and accrued interest (through
September 30, 2005) of our outstanding Convertible Subordinated Notes (the
"Convertible Notes") and 40,755,276 of our common stock purchase warrants (the
"Warrants") and with Charles E. Underbrink, a Director of our Company, and his
family affiliates, which include, Northgate, L.L.C., Hub, Inc., Charles E.
Underbrink IRA, and the Charles. E. Underbrink Irrevocable Trust dated 10/10/92
for the benefit of Piper Aurora Underbrink collectively, the "Underbrink Family
Entities"), who hold an aggregate of $3,082,604 principal amount and accrued
interest (through September 30, 2005) of Convertible Notes, and 11,938,409
Warrants.
The Recapitalization Agreements with the St. James Partnerships and the
Underbrink Family Entities provide that such entities will convert, at the
conversion price of $0.75 per share, the principal of and all accrued interest
on their Convertible Notes into shares of our Common Stock (the "Conversion
Shares") at the closing of an underwritten public offering of shares of our
Common Stock that we intend to undertake and sell to us those Conversion Shares
at the closing of a proposed underwritten public offering (see Item 8. Other
Events of this Current Report on Form 8-K). The price at which the shares are to
be purchased by us is the price per share equal to the net price per share we
receive in the underwritten offering, after deducting underwriting discounts and
the underwriters' expenses, provided the agreement of the St. James Partnerships
and the Underbrink Family Entities to sell the shares is subject to the net
price per share to be received by them for each Conversion Share being not less
than $0.75 per share (subject to adjustment for stock splits, divisions, reverse
stock splits or share combinations). In addition to the Conversion Shares
acquired by the St. James Partnerships and the Underbrink Family Entities, the
shares to be sold to us include 5,017,481 shares of Common Stock held by SJMB,
L.P. issued in December 2000 on conversion of principal and accrued interest on
the Convertible Notes it holds.
In the Recapitalization Agreement between the Company and the
Underbrink Family Entities, the Underbrink Family Entities agreed to exchange,
effective October 6, 2005, their 11,938,409 Warrants for 3,979,467 shares of
Common Stock (the "Exchange Shares"). The Underbrink Family Entities further
agreed to sell to us at the closing of the underwritten offering their Exchange
Shares at the price per share paid for one Conversion Share.
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The St. James Partnerships, as the holders of Warrants to purchase an
aggregate of 40,755,276 shares of Common Stock, agreed to sell all their
Warrants to us at the closing of the underwritten offering at a price for each
three Warrants sold equal to the price per share paid for one Conversion Share.
In the event we do not complete an underwritten public offering by June 30,
2006, the St. James Partnerships have agreed to exchange their Warrants for
shares of our Common Stock at an exchange rate of three Warrants for one share
of Common Stock.
The Recapitalization Agreements provide that promptly after the
expiration of the tender offer period relating to our presently pending tender
offer for our outstanding Warrants (see Item 8. Other Events of this Current
Report on Form 8-K), we will use our commercially reasonable efforts to complete
an underwritten public offering of shares of our Common Stock on such terms as
will yield net proceeds to us, after deducting such amount of net proceeds as we
retain for our corporate purposes, sufficient to enable us to repurchase all the
Conversion Shares, Exchange Shares and Warrants to be repurchased by us at the
closing of the underwritten public offering pursuant to the terms of the
Recapitalization Agreements.
The Recapitalization Agreements contain representations and warranties
of the parties as to their due authorization to enter into the agreements and,
as to the St. James Partnerships and the Underbrink Family Entities, their
ownership of the securities that are the subject of the Recapitalization
Agreements and provisions restricting their sale of those securities to others
and entering into agreements that could impair the performance of their
obligations under the Recapitalization Agreements.
Mr. Underbrink, a Director of our company, is Chairman of St. James
Capital Corp. and SJMB, L.L.C. St. James Capital Corp. and SJMB, L.L.C. are the
general partners of St. James Capital Partners, L.P. and SJMB, L.P.,
respectively. Mr. James H. Harrison, also a Director of our company, is Chief
Financial Officer of St. James Capital Corp. and SJMB, L.L.C.
On October 7, 2005, we commenced a tender offer for all of our
outstanding Warrants by issuing a Letter to Note and Warrantholders. Please read
"Tender Offer" under Item 8.01 of this Current Report on Form 8-K.
The foregoing descriptions of the Recapitalization Agreements and
Letter to Note and Warrantholders do not purport to be complete and are
qualified in their entirety by reference to the full text of the letter and
agreements, which are filed as exhibits to this Current Report on Form 8-K and
incorporated by reference herein.
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SECTION 3 - SECURITIES AND TRADING MARKETS.
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES.
(a) Securities Sold. Pursuant to the terms of the Recapitalization
Agreement with the Underbrink Family Entities, we agreed to issue to such
persons an aggregate of 3,979,467 shares of Common Stock on October 6, 2005.
(c) Consideration. The consideration for the issuance of the shares is
the exchange and surrender to us for cancellation of the common stock purchase
warrants held by such persons at the rate of one (1) share of Common Stock
issued for each three (3) Warrants exchanged. An aggregate of 11,938,409
Warrants were surrendered in exchange for the 3,979,467 Exchange Shares we
issued.
(d) Exemption from registration claimed. The shares of Common Stock
were issued without registration under the Securities Act of 1933, as amended
(the "Securities Act"), in reliance upon the exemption contained in Section
3(a)(9) of the Securities Act. The Exchange Shares were exchanged by us with our
existing securityholders exclusively, and no commission or other remuneration
was paid or given directly or indirectly for soliciting such exchange.
SECTION 8 - OTHER EVENTS.
ITEM 8.01 OTHER EVENTS.
OUR PROPOSED RECAPITALIZATION PLANS.
October 6, 2005 Recapitalization Agreements. Commencing with the
Recapitalization Agreements we entered into on October 6, 2005 with the St.
James Partnerships and the Underbrink Family Entities, we are engaged in efforts
to recapitalize our company. Initially, these efforts include the elimination or
substantial reduction in the number of Convertible Notes and Warrants that we
have outstanding. In part, we are seeking to accomplish this pursuant to the
terms of the Recapitalization Agreements we entered into on October 6, 2005
through (i) the agreement of the Underbrink Family Entities to exchange their
Warrants for Exchange Shares at the rate of one Exchange Share for each three
Warrants, (ii) the agreements of the St. James Partnerships to sell to us at the
closing of an underwritten public offering of our shares of Common Stock, all
the Warrants they hold, and (iii) the completion of an underwritten public
offering of our Common Stock which, under the terms of the Recapitalization
Agreements, will result in the conversion of $37,388,777 principal amount of and
accrued interest, as of September 30, 2005, on the Convertible Notes into
Conversion Shares and our repurchase of the Conversion Shares using a portion of
the proceeds from the underwritten public offering.
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Tender Offer. Our efforts to recapitalize our company also include a
tender offer (the "Tender Offer") for our outstanding Warrants that we commenced
on October 7, 2005. Pursuant to the Tender Offer, we are seeking tenders by the
holders of 18,067,500 of our outstanding Warrants. We are offering in the Tender
Offer to exchange one share of our Common Stock for three Warrants. Each Warrant
represents the right to purchase one share of Common Stock at an exercise price
of $0.75 per share. The Tender Offer will remain open for acceptance during the
period commencing October 7, 2005 through 6:00 PM Central Time on November 7,
2005 (the "Exchange Period"). All acceptances of the Tender Offer and tenders of
Warrants duly and validly made are irrevocable, except that Warrants tendered
may be withdrawn prior to the expiration of the Exchange Period, and, unless
theretofore accepted for exchange as provided in the Tender Offer, may also be
withdrawn after 6:00 p.m., Central Time, on December 5, 2005.
Acceptance of the Tender Offer is effected by a Warrantholder tendering
his or her Warrants and entering into a recapitalization agreement with us. The
exchange, if accepted and not withdrawn prior to the end of the Exchange Period,
will be irrevocable. The Tender Offer is open to all holders of Warrants, is not
subject to any minimum acceptance and we are seeking tenders by all holders of
Warrants. There is no trading market for the Warrants. All Warrants tendered to
us and accepted will be retired.
Among its other provisions, the Recapitalization Agreement proposed to
be entered into with holders tendering their Warrants contains representations
and warranties by the holders as to their authority to enter into the
recapitalization agreements and tender their Warrants and their ownership of the
Warrants and includes a provision amending a registration rights agreement
entered into on December 17, 1999 (the "Registration Rights Agreement") with
such persons whereby the Exchange Shares issued to such persons if they accept
the Tender Offer will have certain registration rights under the Securities Act.
See the copy of our Letter to Note and Warrantholders dated October 7,
2005 making the Tender Offer filed as Exhibit 99.1 to this Current Report on
Form 8-K for additional information regarding the Tender Offer.
Proposed Underwritten Public Offering. Promptly after the expiration of
the Exchange Period, we intend to undertake to complete an underwritten public
offering of shares of our Common Stock. We intend to use the net proceeds of the
offering primarily for the following purposes:
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o to repurchase the Conversion Shares held by the Underbrink Family
Entities and the St. James Partnerships, including the 5,017,481 shares
held by SJMB, L.P., conditioned on the net sales price per share being
no less than $0.75 per share (before reflecting stock splits,
divisions, reverse stock splits or share combinations). This net sales
price per share will be after deducting all underwriting or selling
commissions and underwriters' expenses but before deducting our other
offering expenses,
o to repurchase the Exchange Shares held by the Underbrink Family
Entities and the Warrants held by the St. James Partnerships, subject
to sufficient net proceeds being available for such purpose and
conditioned on the net sales price, as applicable, being no less than
$0.75 per Exchange Share and each three Warrants (before reflecting
stock splits, divisions, reverse stock splits or share combinations),
o to repay all principal and accrued interest on any Convertible Notes
not previously converted into shares of Common Stock,
o to repay outstanding senior secured indebtedness, including, if the
transaction is completed, a portion of the indebtedness incurred in
connection with our proposed acquisition of Bobcat Pressure Control,
Inc. discussed below, and
o for other general corporate purposes, including working capital
purposes.
The terms of the underwritten public offering, including the amount and price of
the shares of Common Stock, have not been determined at this time.
Under the terms of the Registration Rights Agreement, the holders of
$5,089,125 principal amount of and accrued interest (as of September 30, 2005)
on our outstanding Convertible Notes will have the right, subject to certain
limitations, to include in the registration statement for the public offering
the shares issuable on conversion of the principal and interest on their
Convertible Notes, as well as the shares of Common Stock issued in exchange for
their Warrants in the Tender Offer if the Tender Offer is accepted. The managing
underwriter of the public offering has the right, if it concludes that the
amount of shares included in the offering for the account of selling
stockholders must be reduced, to reduce the number of shares to be included in
the registration statement for the account of the selling stockholders.
If the managing underwriter concludes that the amount of shares
included in the registration statement for the account of selling stockholders
must be reduced, our Recapitalization Agreements with the Underbrink Family
Entities and the St. James Partnerships provide that the Underbrink Family
Entities have agreed that the first shares to be cut back out of the number of
shares to be sold to us and required to be purchased by us out of the net
proceeds of the underwritten public offering, are the shares held by the
Underbrink Family Entities (including Conversion Shares, Exchange Shares and any
other shares).
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If the managing underwriter is of the view that a larger cutback is to
be made in the number of shares included in the underwritten offering for the
account of selling stockholders, the second classification of shares to be cut
back out of shares required to be purchased by us out of the net proceeds of the
underwritten public offering will be the 5,017,481 shares held by SJMB, L.P.
prior to commencement of the Tender Offer.
Thereafter, if the managing underwriter is of the view that a larger
cutback is to be made in the number of shares included for the account of
selling stockholders, both the Warrants held by the St. James Partnerships to be
purchased by us at the closing of the underwritten offering and the Exchange
Shares held by selling stockholders included in the underwritten offering will
be cut back prorata based on the number of Warrants and Exchange Shares proposed
to be sold collectively by all such persons. For these purposes and the prorata
calculations required, each three Warrants would be treated as the equivalent of
one Exchange Share.
Other Plans In Connection With the Recapitalization. In conjunction
with these recapitalization plans, we intend, following the Exchange Period, to
effect a reverse split of our shares of Common Stock on the basis of one share
for each ten shares and, subject to meeting all listing requirements, to seek to
list our shares of Common Stock on the Nasdaq Stock Market and to elect
additional members to our Board of Directors so that a majority of the Board
members will be independent directors, as defined under the Nasdaq Stock Market
rules.
LETTER OF INTENT TO ACQUIRE OUTSTANDING EQUITY SECURITIES OF BOBCAT
PRESSURE CONTROL, INC.
On September 19, 2005, we entered into a letter of intent to purchase
all of the outstanding equity securities of Bobcat Pressure Control, Inc.
("Bobcat"). The purchase price is $51.5 million, less the amount of long-term
debt, including current maturities, payable in cash at the closing of the
transaction. Together with its wholly-owned subsidiary, The Bobby Joe Cudd Co.,
Bobcat provides snubbing services to oil and natural gas well operators in the
Mid-Continent area of the United States. Using a series of high pressure
blow-out preventers, a snubbing unit makes it possible to remove and replace
down-hole equipment in a well (such as drill pipe, casing or tubing) in a
pressurized environment, allowing an operator to service a well without using
other more disruptive means to control the pressure in the well. Bobcat also
provides other oil field services, including freezing, hot tap services, well
control, fishing, rental tool services and drillouts.
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The closing of the acquisition is subject to our completion of due
diligence inquiries into Bobcat, the negotiation and execution of a definitive
purchase agreement, our completion of financing for the transaction and
fulfillment of customary closing conditions contained in the definitive purchase
agreement.
We intend that the purchase price for the Bobcat securities will be
financed with the proceeds of additional senior secured borrowings, a portion of
which, if the acquisition is completed, we expect will be repaid using a portion
of the proceeds from the proposed underwritten offering.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995.
With the exception of historical matters, the matters discussed in this
Current Report on Form 8-K are "forward-looking statements" as defined under the
Securities Exchange Act of 1934, as amended, that involve risks and
uncertainties. We intend that the forward-looking statements in this Current
Report be covered by the safe-harbor provisions for forward-looking statements
contained in the Securities Exchange Act of 1934, as amended, and this statement
is included for the purpose of complying with these safe-harbor provisions.
Forward-looking statements include, but are not limited to, our ability to
generate improved revenues and attain and maintain profitability and cash flow
which in turn are based on the stability and level of prices for oil and natural
gas, predictions and expectations as to the fluctuations in the levels of oil
and natural gas prices, pricing in the oil and natural gas services industry and
the willingness of customers to commit for oil and natural gas well services,
our ability to complete the proposed recapitalization discussed in this Current
Report, our ability to complete the BobCat acquisition and obtain financing for
that acquisition, our ability to complete the underwritten public offering, the
adequacy of the net proceeds from the underwritten public offering to meet our
requirements, our ability to effect a one for ten reverse split of our shares of
Common Stock, our ability to meet the requirements to have our shares of Common
Stock listed on the Nasdaq Stock Market, our ability to raise debt or equity
capital to recapitalize or restructure our balance sheet and to obtain
additional financing when and if required, our ability to maintain compliance
with the covenants of our various loan documents and other agreements pursuant
to which our securities, including debt instruments, have been issued and obtain
waivers of violations that occur and consents to amendments as required, our
ability to compete in the premium oil and natural gas services market, our
ability to re-deploy our equipment among regional operations as required, and
our ability to provide services using state of the art tooling. Our inability to
meet these objectives or requirements or the consequences resulting from adverse
developments in general economic conditions, changes in capital markets, adverse
developments in the oil and natural gas industry, developments in international
relations and the commencement or expansion of hostilities by the United States
or other governments and events of terrorism, declines and fluctuations in the
prices for oil and natural gas, and other factors could have a material adverse
effect on us. Material declines in the prices for oil and natural gas can be
expected to adversely affect our revenues. Various risk factors could cause our
operating results and financial condition to differ materially from those
expressed in any forward-looking statements made by us and could adversely
affect our financial condition and our ability to pursue our recapitalization,
business strategy and other plans. Readers should refer to our Annual Report on
Form 10-K and the risk factors disclosed therein.
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SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits:
10.1 Recapitalization Agreement dated October 6, 2005 between the
Company and Charles E. Underbrink, Northgate, L.L.C., Hub, Inc.,
Charles E. Underbrink IRA, and the Charles. E. Underbrink
Irrevocable Trust dated 10/10/92 for the benefit of Piper Aurora
Underbrink.
10.2 Recapitalization Agreement dated October 6, 2005 between the
Company and St. James Capital Partners, L.P.
10.3 Recapitalization Agreement dated October 6, 2005 between the
Company and SJMB, L.P.
99.1 Letter dated October 7, 2005 to Note and Warrantholders.
99.2 Press release dated October 7, 2005.
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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: October 12, 2005 By: /s/ William L. Jenkins
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William L. Jenkins, President
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