Blast Energy Services to Emerge From Chapter 11 Bankruptcy
28 February 2008 - 12:43AM
PR Newswire (US)
HOUSTON, Feb. 27 /PRNewswire-FirstCall/ -- Blast Energy Services
(OTC:BESV) (BULLETIN BOARD: BESV) today reported that the
Bankruptcy Court has entered an order confirming its Second Amended
Plan of Reorganization (the "Plan"). This ruling allows the Company
to emerge from Chapter 11 bankruptcy in the next few days. The
overall impact of the confirmed Plan is for Blast to emerge with
unsecured creditors fully paid, have no debt service scheduled for
at least two years, and keep equity shareholders' interests intact.
The major components of the Plan, which was overwhelmingly approved
by creditors and shareholders, are detailed in the following
paragraphs. Under the terms of this confirmed Plan, the Company has
raised $4.0 million in cash proceeds from selling convertible
preferred securities to Clyde Berg and McAfee Capital, two parties
related to the Company's largest shareholder, Berg McAfee
Companies. Upon receipt by the escrow agent of the written
confirmation order, these funds will be released to the Company and
will be used to pay 100% of the unsecured creditor claims, all
administrative claims, and all statutory priority claims for a
total amount of approximately $2.4 million. The remaining $1.6
million will be used to execute an operational plan, including but
not limited to, reinvesting in the Satellite Services and Down-hole
Solutions businesses and pursuing an emerging Digital Oilfield
business. This Plan also preserves the equity interests of our
existing shareholders. Further, the Company will continue to
prosecute the litigation against Quicksilver Resources and Hallwood
Petroleum/Hallwood Energy. Blast has previously estimated these
legal recoveries to be in the range of $15 million to $45 million
(gross). Trial dates have been set for April 14, 2008 and September
15, 2008 for Hallwood and Quicksilver respectively. Under the terms
of the Plan, the Company will carry the following three secured
notes - none of which are due and payable for at least two years.
-- A $2.1 million interest-free senior note with Laurus Master Fund
is secured by the assets of the company and payable from a 65%
portion of the proceeds that may be received for the customer
litigation lawsuits or asset sales; -- A $125,000 note to McClain
County, Oklahoma for property taxes will also be paid from the
receipt of litigation proceeds, or otherwise, it converts to a
six-percent interest bearing note in February 2010; -- A
pre-existing secured $1.1 million eight-percent note with Berg
McAfee Companies has been extended for an additional three years
and contains an option to be convertible into company stock at
$0.20 per share. No other claims exist on the future operating cash
flows of the Company. The convertible preferred security issued
under the terms of the Plan carries a cumulative dividend rate of
eight percent and is convertible into common stock at $0.50 per
share. The offering includes 25% warrant coverage with an exercise
price of $0.10 over a three-year term and is subject to certain
mandatory conversion provisions. Certain other liabilities,
including $800,000 in financing obtained during the bankruptcy
period, will be converted into common stock at $0.20 per share now
that the Plan has been confirmed. As a result, the Company expects
to have approximately 64 million shares issued and outstanding on a
going forward basis including the preferred shares issued under the
Plan. The equivalent fully diluted number of shares is expected to
be approximately 88 million, which includes the impact from all
unexercised stock option and warrants and the conversion option of
the Berg McAfee secured note. Also, as a part of its Plan, the
Company will be implementing certain other corporate matters,
including: -- Changing its corporate domicile from the State of
California to the State of Texas; -- Increasing its authorized
shares from 100 million to 200 million, including 20 million shares
of preferred stock; -- Reducing membership of its Board of
Directors - O. James Woodward III, Fred Ruiz, and Scott Johnson
will be retiring and current Vice Chairman, H. Roger "Pat" Herbert,
has agreed to serve as Chairman of the new Board. For further
details on our reorganization plan, agreements contained therein,
corporate governance changes and any impact that potential
conversions of preferred securities or secured debt may have on our
capitalization, please refer to the filing of a Form 8-K that the
Company expects to submit in the next few days. Safe Harbor
Statement Any statements made in this news release other than those
of historical fact, about an action, event or development, are
forward looking statements. Forward looking statements involve
known and unknown risks and uncertainties, which may cause the
Company's actual results in future periods to be materially
different from any future performance that may be suggested in this
release. Such factors may include risk factors including but not
limited to: the likelihood that the customer lawsuits result in
meaningful proceeds, the ability to raise necessary capital to fund
growth, adequate liquidity to manage operations and debt
obligations, the introduction of new services, commercial
acceptance and viability of new services, fluctuations in customer
demand and commitments, pricing and competition, reliance upon
lenders, contractors and vendors, the ability of Blast Energy
Services' customers to pay for our services, together with such
other risk factors as may be included in the Company's filings on
its periodic filings on Form 10-KSB, 10-QSB, and other current
reports. DATASOURCE: Blast Energy Services, Inc. CONTACT: John
MacDonald of Blast Energy Services, Inc., +1-281-453-2888,
+1-713-725-9244, Web site: http://www.blastenergyservices.com/
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