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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: December 9, 1998
VENTURE SEISMIC LTD.
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(Exact name of registrant as specified in charter)
ALBERTA, CANADA 0-27070 N/A
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3110 - 80th Avenue S.E. Calgary, Alberta T2C 1J3
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(Address of principal executive offices) (Zip code)
(403) 777-9070
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(Registrant's telephone number including area code)
Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. Other events
On December 9, 1998, Venture Seismic Ltd. ("Venture") announced that it
has obtained a $3 million bridge loan (the "Loan") pursuant to a loan agreement
(the "Loan Agreement") between Venture and three institutional lenders (the
"Lenders"). The Loan, which resulted in net proceeds of approximately $2.7
million, after deducting fees and expenses paid to the placement agent ("Agent")
will provide Venture with working capital and funds expected to be applied
primarily to Venture's marine seismic operations conducted by its wholly-owned
subsidiary Continental Holdings Ltd. ("Continental"). As security for the Loan,
Venture has pledged all of its capital stock of Continental to the Lenders. The
terms of the Loan require the repayment of promissory notes (the "Notes") in the
aggregate principal amount of $3.3 million on the earlier of April 30, 1999 or
the completion of a take-out financing in excess of $5 million. Notwithstanding
the foregoing, in the event that Venture receives any payment on account of the
early termination of any contract between Venture and any third party ("Early
Termination Consideration"), Venture has agreed to pay such Early Termination
Consideration to the Lenders to be applied on account and to the extent of the
then outstanding obligations under the Notes. Upon written notice, Venture has
the option of extending the maturity date of the Notes until April 30, 1999, if
it: (i) pays the Lenders (a) $1,750,000 on or before April 30, 1999; (b)
$750,000 on or before May 31, 1999; (c) $800,000 on or before June 30, 1999, and
(ii) issues an aggregate of 30,000 common shares of Venture, no par value (the
"Shares"), to the Lenders for each additional 30 days the maturity date is
extended (the "Extension Shares"). The unpaid principal of the Loan will bear
interest at the rate of 2% per month during the period from May 1, 1999 until
the Notes are repaid in full. As a condition of closing, Venture was required to
obtain a take-out financing proposal with an institution acceptable to the
Lenders. This condition has been met; however, there can be no assurance Venture
will obtain a commitment from such institution or any other institution
sufficient to repay the Loan.
Venture also granted five year warrants (the "Warrants") to the Lenders
and Agent to purchase an aggregate of 495,000 Shares at prices ranging from
$1.91 to $5.00 per Share, subject to adjustment against dilution under certain
circumstances, including below market issuances of securities by Venture.
Venture has agreed to several affirmative and negative covenants, the failure of
which to perform would result in an event of default under the Loan Agreement.
Upon an Event of Default (as defined in the Loan Agreement), (i) the unpaid
principal amount of the Loan (a) shall accrue interest at the rate
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of 24% per annum and (b) become payable in twelve equal monthly installments;
and (ii) Venture must issue to the Lenders an aggregate of 500,000 Shares (the
"Penalty Shares"), and register such Shares within 60 days of such Event of
Default; provided, however, that if the registration does not occur within such
60 day period, Venture shall pay a fee in the amount of $45,000 for the first 30
day period thereafter and $75,000 for each subsequent 30 day period during which
the Shares are not covered by an effective registration statement. Venture is
prohibited from issuing Shares to the Lenders in excess of a number which would
require approval of Venture's shareholders without first obtaining such
approval.
Venture has agreed to register for resale all Shares issuable to the Lenders
either pursuant to the Warrants or as Penalty Shares or Extension Shares (the
"Registrable Securities"), and has agreed to file a registration statement for
the resale of at least the 495,000 Shares issuable upon exercise of the Warrants
by February 21, 1999 and to use all commercially reasonable efforts to have it
declared effective by April 21, 1999. In the event that the registration
statement is not declared effective by April 21, 1999, Venture has agreed to pay
the Lenders an amount equal to: the aggregate cash amount paid by the Lenders
for the Notes and Warrants (or the market value of any Penalty Shares or
Extension Shares), multiplied by: (x) the number of days of delay and (y) a
percentage equal to (I) .015 for the first 30 day period and (II) .025 for all
other periods. Venture has also granted the Lenders certain "piggyback"
registration rights. Venture has agreed to keep the registration statement
effective until all Registrable Securities have been sold or until the
Registrable Securities may be sold to the public without volume restrictions.
Venture also announced the following: (i) the formation by Venture's Board of
Directors of a Special Committee of independent, outside directors to assist and
work closely with management in the completion of the bridge loan and
contemplated take-out financing, the integration of recently acquired businesses
and the management of related growth; (ii) estimated losses and revenues for the
quarter ended September 30, 1998; and (iii) Venture has been named as a
defendant in a lawsuit arising out of a work related injury incurred by a former
employee of Boone Geophysical, Inc., a wholly-owned subsidiary of Venture. The
claimants are seeking damages of an aggregate of $30 million.
Reference is made to Venture's press release dated December 9, 1998, which is
attached hereto as Exhibit 99.1 and incorporated by reference herein.
Item 7. Financial Statements and Exhibits
(c) Exhibits
99.1 Press release dated December 9, 1998
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VENTURE SEISMIC LTD.
By: /s/ Brian Kozun
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Brian W. Kozun
President and Chief Executive Officer
Dated: December 11, 1998
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Exhibit 99.1
VENTURE SEISMIC ANNOUNCES $3 MILLION BRIDGE LOAN; FORMATION OF SPECIAL DIRECTOR
COMMITTEE; PRELIMINARY 4TH QUARTER FINANCIAL RESULTS; LAWSUIT
CALGARY, ALBERTA, DECEMBER 9, 1998 - VENTURE SEISMIC LTD. (NASDAQ NMS: VSEIF)
announced today that it has obtained a $3 million bridge loan. The financing,
which resulted in net proceeds of approximately $2.7 million, will provide
Venture Seismic Ltd. ("Venture") with working capital and funds expected to be
applied primarily to Venture's marine seismic operations conducted by
Continental Holdings Ltd. ("Continental"). As security for the loan, Venture has
pledged all of its capital stock of Continental to the lenders. The terms of the
loan require $3.3 million to be repaid on the earlier of April 30, 1999 or the
completion of a take-out financing in excess of $5 million. Venture has the
option of extending the maturity date of the financing until June 30, 1999 if it
issues 30,000 additional common shares to the lenders for each additional 30
days the loan is outstanding. Venture also granted warrants to the lenders and
placement agent to purchase 495,000 common shares at prices ranging from $1.91
to $5.00 per share. Under certain circumstances, Venture may be required to make
penalty payments, pay increased interest and/or issue additional common shares
to the lenders. As a condition of closing, Venture was required to obtain a
take-out financing proposal with an institution acceptable to the lenders. This
condition has been met; however, there can be no assurance Venture will obtain a
commitment from such institution or any other institution sufficient to repay
the bridge loan. Venture has agreed to register for resale all common shares
issuable in the transaction.
Continental currently operates two seismic marine vessels, the Pacific Titan and
the SV Calgary. The Pacific Titan is testing equipment and systems prior to
commencing a survey for Western Geophysical, a division of Baker Hughes. The SV
Calgary is mobilizing to undertake a project scheduled to commence in late
December 1998.
Venture also announced that, although final results are not yet available, it
expects for the quarter ended September 30, 1998 ("1998 fourth quarter") to
report revenue of approximately $7 million and a loss between $0.10 and $0.15
per share on a fully diluted basis, compared to revenue of approximately $5.8
million and earnings of $0.04 per share on a fully diluted basis for the same
period last year. The loss results primarily from the loss incurred by
Continental on a 3,000 kilometer 2D survey conducted in the Gulf of Mexico from
September to November (the "Inlet Survey") and decreased land-based operations.
With the commitment of the Pacific Titan to the 3D survey contract with Western
Geophysical, it was necessary for Continental to subcontract, on a temporary
basis, a third marine seismic vessel to meet its contractual commitment for the
Inlet Survey. As a result of abnormally strong tropical storm and hurricane
activity in the Gulf of Mexico during the fall, Continental experienced
significant down time and reduced production levels, resulting in a loss on the
Inlet Survey. The Inlet Survey was completed in November, however the loss from
this contract will be fully recognized in the 1998 fourth quarter in accordance
with Venture's policy of recording full provision for losses in the reporting
period they are first determined.
Venture also announced that its Board of Directors has formed a Special
Committee of independent, outside directors to assist and work closely with
management in the completion of the bridge loan and contemplated take-out
financing, the integration of recently acquired businesses and the management of
related growth. The Special Committee consists of Mr. Joseph Ciavarra (Chairman)
and Mr. Michael Beninger, each of whom will be compensated on a per diem basis.
Mr. Beninger is working with management on a full-time basis during this period
of integration and transition and senior management is reporting to the Special
Committee on a periodic basis.
Venture also announced it recently had been named as a defendant in a lawsuit
arising out of a work related injury incurred by a former employee of Boone
Geophysical, Inc. The claimants, including the former employee and his spouse,
are seeking damages of an aggregate of $30 million. Venture intends to
vigorously defend the lawsuit and the matter has been turned over to its
insurers and legal counsel.
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VENTURE SEISMIC LTD. is traded on the Nasdaq National Market and is engaged
primarily in the acquisition of land, wetlands and marine seismic data for use
in the exploration for and development and field management of oil and gas
reserves. Venture acquires seismic data on possible oil and gas reserves for its
customers, which range from junior exploration companies to fully-integrated
multi-national corporations. Venture's wholly-owned subsidiaries include
Continental Holdings Ltd., an Alberta based company engaged in the acquisition
of marine seismic data, Boone Geophysical, Inc., a Texas based company engaged
in the acquisition of land and wetlands seismic data in the Southern United
States, and Hydrokinetic Surveys of Canada Inc., a company based in Western
Canada which provides shallow marine airgun and survey services.
This news release contains certain forward-looking statements within the meaning
of section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These statements involve risks and uncertainties as
detailed from time to time in Venture's SEC filings under "Risk Factors" and
elsewhere including but not limited to the capital intensive nature of Venture's
business, risks associated with the repayment of the bridge loan, its need for
additional funds for operations and debt service requirements, seasonal
fluctuations in operating results and weather-related risks, dependence upon
principal customers, its ability to perform under existing contracts (including,
without limitation, the contract with Western Geophysical), activity in the oil
and gas industry, risks associated with international operations and regulatory,
competitive and contractual risks.
FOR FURTHER INFORMATION CONTACT:
Mr. Brian Kozun, President & CEO
Mr. Greg Wiebe, Chief Financial Officer
Venture Seismic Ltd.
(403) 777-9070
