Aviva Petroleum Inc - Further Re Merger Proposal
15 Maggio 1998 - 4:01PM
UK Regulatory
RNS No 5103c
AVIVA PETROLEUM INC.
15th May 1998
AVIVA UPDATE ON GARNET MERGER PROPOSAL
Aviva Petroleum Inc. ("AVP") on April 16, 1998 signed a letter of intent to
merge with Garnet Resources Corporation (OTC BB: "GARN"), pursuant to which
Garnet's $15 million of subordinated debentures will be canceled and its bank
debt, along with Aviva's existing bank debt, will be refinanced through a
proposed $15 million credit facility that the Company has requested ING
Capital to provide. In addition to refinancing the existing bank debt, this
proposed new credit facility is expected to supplement the Company's working
capital and, to the extent not funded by cash flow from operations, fund the
Company's remaining estimated capital expenditures for 1998.
The two companies are currently finalizing documentation of the merger,
including completion of negotiations, execution and delivery of the definitive
Agreement and Plan of Merger, Debenture Purchase Agreement, Limited
Partnership Interest Purchase Agreement and the proposed new credit facility
with ING Capital. Approval by shareholders of both Aviva and Garnet is
required to consummate the merger, and a Proxy Statement is expected to be
filed soon with the Securities and Exchange Commission.
While it is expected that the merger will be completed substantially as
planned, there are no assurances that this will be the case. Should the
parties be unable to complete the merger, then, in the absence of another
business transaction or debt restructuring, Garnet may have to seek bankruptcy
protection or pursue other alternatives, any of which could have a material
adverse effect on Aviva's consolidated financial condition. If Garnet cannot
fund its obligations, Aviva may be required to accept an assignment of its
Colombian interests and assume those funding obligations. Aviva itself has
experienced significant losses which have resulted in recurring noncompliance
with the minimum consolidated tangible net worth covenant and debt repayment
schedule under its existing credit agreement with ING Capital. In the past,
ING Capital has amended or waived compliance when the Company has been unable
to meet such covenants. There is no assurance that ING Capital will continue
to make similar concessions in the future.
Aviva is engaged in exploration for and development and production of oil and
gas in Colombia and offshore in the United States. In addition to its London
Stock Exchange listing, the Company's Depositary Receipts (one of which equals
five common shares) are traded on the American Stock Exchange under the ticker
symbol "AVV".
Safe Harbor for Forward-Looking Statements: Except for historical information
contained herein, the statements in this press release are forward-looking
statements that are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements involve
known and unknown risks and uncertainties which may cause the Company's actual
results in future periods to differ materially from forecasted results. These
risks and uncertainties include, among other things, general economic
conditions, volatility of oil and gas prices, the impact of possible
geopolitical occurrences world-wide, imprecision of reserve estimates, changes
in laws and regulations, unforeseen engineering and mechanical or
technological difficulties in drilling or working-over wells, and other risks
described in the Company's Annual Report on Form 10-K and other filings with
the Securities and Exchange Commission.
Further Information:
Ron Suttill Andrew Edwards
Aviva Petroleum Inc. Henderson Crosthwaite Corporate
Dallas, Texas Finance Limited
001 214 691 3464 0171 772 7081
George Collie
George Collie and Company
0171 603 7765
END
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