TXCO...PP looks to be @ $14.48 per share. The stock is currently trading @ $11.65?? Am I missing something...
TXCO Resources Announces Private Placement of Preferred Stock Wednesday November 21, 9:41 am ET
SAN ANTONIO--(BUSINESS WIRE)--TXCO Resources Inc. (Nasdaq:TXCO - News) today announced that it has entered into agreements related to the private placement of $55 million, or 55,000 shares, of its Series C Perpetual Convertible Preferred Stock (Preferred Stock), convertible into TXCO common stock at $14.48 per share. Closing and funding are expected to occur on or before November 26, 2007.
“TXCO has multiple, high-potential growth catalysts and this placement will help us expand our development plans,” said Chairman and CEO James E. Sigmon. “We expect to accelerate activity in 2008 on our Pearsall shale gas resource play, San Miguel tar sand project and Glen Rose Porosity oil play in the Maverick Basin, as well as expedite drilling on the Glen Rose gas shoals in our Fort Trinidad Field of East Texas. Because we are confident that we will be successful in one or more of these prospects, we have included a call spread overlay to reduce dilution to our current shareholders.”
The Company intends to use the net proceeds from the sale of the Preferred Stock to complement funding of its 2008 CAPEX drilling program. In addition, TXCO may use the proceeds in the short term to repay certain outstanding indebtedness, and to pay expenses of the offering and the costs of the call spread transactions discussed below, as well as other general corporate and working capital purposes.
Under the private placement transaction documents, purchasers of the Preferred Stock are entitled to, among other things, dividends of 6.5 percent per annum. The conversion premium is 20 percent to the volume weighted average price of TXCO common stock on November 20, 2007, of $12.07 per share, or $14.48 per share. Subject to certain terms and conditions, the buyers may purchase up to an additional $25 million of the Preferred Stock by delivering notice to the Company within 120 days (or, at the Company’s option, 180 days) from the date of the initial closing. In connection with the private placement, the Company will register the shares of common stock issuable on conversion of the Preferred Stock with the Securities and Exchange Commission at a specified future date.
In connection with the private placement, TXCO also entered into call spread transactions with a buyer of Preferred Stock. These transactions are intended to give the Company the ability to reduce the potential dilution to TXCO shareholders upon any conversion of the Preferred Stock by effectively increasing the conversion premium by as much as 50 percent, or $18.10 per share. These transactions include a purchased call option and sold call option. The Company will pay for the call spread using a portion of the net proceeds of the Preferred Stock offering.
In accordance with applicable law and the NASDAQ Global Select Market’s rules and regulations regarding shareholder approval of certain stock issuances, TXCO intends to request its stockholders approve the issuance of securities in connection with the private placement at its next annual meeting.
Details regarding the private placement, the terms of the Preferred Stock, and the call spread transactions are more fully discussed in the Form 8-K that the Company is filing with the Securities and Exchange Commission today.
This news release is not an offer to purchase, nor a solicitation of an offer to sell, with respect to any securities. TXCO will make requisite filings as regulated by the Securities and Exchange Commission. All of TXCO’s SEC filings may be obtained at no charge from TXCO’s web site, www.txco.com, or the SEC web site at www.sec.gov.
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