UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 7)
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INLAND RESOURCES INC.
(Name of Issuer)
COMMON STOCK, PAR VALUE $.001
(Title of Class of Securities)
90336P100
(CUSIP Number)
DAVID A. PERSING
885 THIRD AVENUE
NEW YORK, NEW YORK 10022
TEL. NO.: (212) 888-5500
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
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SEPTEMBER 8, 1998
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 1(f) or 1(g), check the following box [ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-1(a) for other
parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
90336P100 Page 2 of 14 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Pengo Industries Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [X]
(B) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
N.A.
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Texas
7 SOLE VOTING POWER
NUMBER OF 4,129,269
SHARES
BENEFICIALLY OWNED 8 SHARED VOTING POWER
BY EACH REPORTING
PERSON -0-
WITH
9 SOLE DISPOSITIVE POWER
4,129,269
10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,129,269
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
49.4%
14 TYPE OF REPORTING PERSON
CO
<PAGE>
90336P100 Page 3 of 14 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Pengo Securities Corp.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [X]
(B) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
7 SOLE VOTING POWER
NUMBER OF 4,129,269
SHARES
BENEFICIALLY OWNED 8 SHARED VOTING POWER
BY EACH REPORTING
PERSON -0-
WITH
9 SOLE DISPOSITIVE POWER
4,129,269
10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,129,269
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
49.4%
14 TYPE OF REPORTING PERSON
CO
<PAGE>
90336P100 Page 4 of 14 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Randall D. Smith
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [X]
(B) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
PF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
7 SOLE VOTING POWER
NUMBER OF 982,410
SHARES
BENEFICIALLY OWNED 8 SHARED VOTING POWER
BY EACH REPORTING
PERSON -0-
WITH
9 SOLE DISPOSITIVE POWER
982,410
10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
982,410
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.8%
14 TYPE OF REPORTING PERSON
IN
<PAGE>
90336P100 Page 5 of 14 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
John W. Adams
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [X]
(B) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
PF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New Jersey
7 SOLE VOTING POWER
NUMBER OF 163,735
SHARES
BENEFICIALLY OWNED 8 SHARED VOTING POWER
BY EACH REPORTING
PERSON -0-
WITH
9 SOLE DISPOSITIVE POWER
163,735
10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
163,735
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.0%
14 TYPE OF REPORTING PERSON
IN
<PAGE>
90336P100 Page 6 of 14 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Jeffrey A. Smith
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (A) [X]
(B) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
PF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Texas
7 SOLE VOTING POWER
NUMBER OF 163,735
SHARES
BENEFICIALLY OWNED 8 SHARED VOTING POWER
BY EACH REPORTING
PERSON -0-
WITH
9 SOLE DISPOSITIVE POWER
163,735
10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
163,735
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.0%
14 TYPE OF REPORTING PERSON
IN
<PAGE>
90336P100 Page 7 of 14 Pages
AMENDMENT NO. 7 TO SCHEDULE 13D
-------------------------------
This Amendment No. 7 to Schedule 13D is filed by the undersigned to
amend Amendment No. 6, filed on January 17, 1997.
Item 3. Source and Amount of Funds or Other Consideration.
All of the shares of Common Stock acquired by Mr. Randall Smith
(982,410 shares), Mr. Adams (163,735 shares) and Mr. Jeffrey Smith (163,735)
(collectively, the "Farmout Shareholders") were beneficially acquired on June
12, 1996 pursuant to an agreement filed as Exhibit 6 to Amendment 5 to this
Schedule 13D in consideration of which the Issuer purchased the shares of each
of these persons in Farmout, Inc.
All of the 4,129,269 shares of Common Stock beneficially owned by Pengo
Securities Inc. ("Pengo Securities") were paid for out of Pengo Securities
working capital. The aggregate purchase price paid by Pengo Securities for the
4,129,269 shares of Common Stock beneficially owned was $20,754,122.95.
Item 4. Purpose of Transaction.
All of the shares of Common Stock owned by Pengo Securities and the
Farmout Shareholders were acquired for investment purposes. Pengo Securities and
the Farmout Shareholders intend to review their investment in the Issuer on a
continuing basis and will take such actions as they deem appropriate to preserve
and enhance the value of their investment. Depending upon Pengo Securities' and
the Farmout Shareholders' evaluation of a variety of factors and future
developments (including, without limitation, the Issuer's business and
prospects, market prices of the Common Stock, availability and alternative uses
of funds, as well as general and economic conditions), Pengo Securities and the
Farmout Shareholders reserve the right to acquire additional shares of Common
Stock, to dispose of some or all of their shares of Common Stock or to formulate
other purposes, plans or proposals regarding the Issuer to the extent they deem
advisable.
Pursuant to the Subscription Agreement between the Issuer and Smith
Management dated May 12, 1994, Smith Management has the right to appoint two
representatives to the Issuer's Board of Directors. Three members of the
Issuer's Board of Directors are employees of Smith Management or its affiliates.
Pengo Securities and the Farmout Shareholders entered into a letter
agreement dated September 8, 1998 (filed as Exhibit 8 to this Amendment No. 7)
with KRM Acquisition Corp. ("KRM") granting KRM the exclusive right until
October 15, 1998 (extendible upon certain payments being made by KRM to Pengo
Securities and the Farmout Shareholders until October 31, 1998) to act as
placement
<PAGE>
90336P100 Page 8 of 14 Pages
agent for the purpose of finding a person or persons (which may include KRM) to
purchase all of the shares of Common Stock held by Pengo Securities and the
Farmout Shareholders. Subject to conditions set forth in the letter agreement,
Pengo Securities and the Farmout Shareholders are obligated to execute a
definitive purchase agreement with a purchaser identified by KRM.
Except as set forth above, Pengo Securities has no present plans or
proposals which relate to or would result in any matter of the type described in
clauses (a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a) The 4,129,269 shares of Common Stock beneficially owned by Pengo
Securities, constituting approximately 49.4% of the outstanding shares of Common
Stock, may be deemed beneficially owned by each of Pengo Securities and Pengo
Industries.
The shares of Common Stock owned by Mr. Randall Smith, 982,410 shares,
constitute 11.8% of the outstanding shares of Common Stock; the shares of Common
Stock owned by Mr. Adams, 163,735 shares, constitute 2.0% of the outstanding
shares of Common Stock; and the shares of Common Stock owned by Mr. Jeffrey
Smith, 163,735 shares, constitute 2.0% of the outstanding shares of Common
Stock.
Collectively, Pengo Securities, Mr. Randall Smith, Mr. Adams and Mr.
Jeffrey Smith beneficially own 5,439,149 shares of Common Stock constituting
65.2% of the outstanding shares of the Issuer.
(b) Each of Pengo Securities and Pengo Industries may be regarded as
having the sole power to vote or to direct the vote to dispose or to direct the
disposition of the shares of Common Stock reported in Item 5(a) above
beneficially owned by Pengo Securities. Each of the Farmout Shareholders have
the sole power to vote or direct the vote and to dispose or direct the
disposition of the shares of Common Stock reported in Item 5(a).
(c) Except as described in Item 4, there have been no transactions by
Pengo Securities, Pengo Industries or the Farmout Shareholders in the Common
Stock during the sixty days ending September 8, 1998 or at any subsequent date
until the date of this report.
(d) Not applicable.
(e) Not applicable.
<PAGE>
90336P100 Page 9 of 14 Pages
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
There are no contracts, arrangements, understandings, or relationships
(legal or otherwise) among the reporting persons or between the reporting
persons and any person with respect to any securities of the Issuer other than
the agreements filed as Exhibits pursuant to Item 7 below.
Item 7. Material to be Filed as Exhibits.
1. Subscription Agreement dated May 12, 1994 between Smith Management
Company and the Issuer. (Previously filed.)
2. Amendment to Subscription Agreement dated September 16, 1994 between
Smith Management Company and the Issuer. (Previously filed.)
3. Registration Rights Agreement dated September 21, 1994 between
Energy Management Corporation and the Issuer. (Previously filed.)
4. Subscription Agreement between Inland Resources Inc. and Pengo
Securities Corp. dated October 23, 1995. (Previously filed.)
5. Registration Rights Agreement dated as of November 6, 1995 between
Inland Resources, Inc. and Pengo Securities Corp. (Previously filed.)
6. Agreement dated June 12, 1996 by and between Smith Management,
Farmout Inc., Randall D. Smith, Jeffrey A. Smith, John W. Adams, the Issuer and
Inland Production Company. (Previously filed.)
7. Registration Rights Agreement dated as of June 12, 1996 by and
between the Issuer, Smith Management, Randall D. Smith, Jeffrey A. Smith and
John W. Adams. (Previously filed.)
8. Letter Agreement dated September 8, 1998 by and among Pengo
Securities Corp., Randall D. Smith, Jeffrey A. Smith, John W. Adams and KRM
Acquisition Corp.
<PAGE>
90336P100 Page 10 of 14 Pages
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated as of September 9, 1998.
PENGO INDUSTRIES, INC.
By: /s/ David A. Persing
------------------------
Name: David A. Persing
Title: Senior Vice President
PENGO SECURITIES CORP.
By: /s/ David A. Persing
------------------------
Name: David A. Persing
Title: Senior Vice President
/s/ Randall D. Smith
--------------------
Randall D. Smith
/s/ John W. Adams
-----------------
John W. Adams
/s/ Jeffrey A. Smith
--------------------
Jeffrey A. Smith
90336P100 Page 11 of 14 Pages
Exhibit 8
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PENGO SECURITIES CORP.
885 THIRD AVENUE, 34TH FLOOR
NEW YORK, NEW YORK 10022
September 8, 1998
KRM Acquisition Corp.
c/o Kyle R. Miller
410 17th Street
Suite 700
Denver, CO 80202
Gentlemen:
1. Designation as Placement Agent. Pengo Securities Corp. ("Pengo"),
together with Randall D. Smith, Jeffrey A. Smith, John W. Adams, (collectively
with Pengo, the "Sellers"), hereby grant KRM Acquisition Corp. ("KRM") the
exclusive right until the Expiration Date (defined below) to act as placement
agent for the purpose of finding a person or persons (which may include KRM)
(the "Purchaser") to purchase all of the Common Stock, par value $.001 per share
(the "Common Stock"), of Inland Resources Inc., a Washington corporation
("Inland"), now owned by the Sellers. During such time, each of the Sellers
agrees not to transfer, sell or otherwise dispose of any shares of Common Stock
other than pursuant to a definitive purchase agreement entered into by the
Sellers and the Purchaser.
2. Term. This letter agreement will terminate on October 19, 1998
(subject to extension, the "Expiration Date"); provided, however, that the
Expiration Date may be extended by KRM until November 3, 1998 upon the payment
on or before November 3, 1998 to Pengo, on behalf of all the Sellers, of
$100,000 in cash.
3. Obligation of the Sellers to Sell. The Sellers shall only be
obligated to sell their shares of Common Stock to the Purchaser pursuant to a
definitive purchase agreement to be executed by each of the Sellers and the
Purchaser prior the Expiration Date ("Definitive Purchase Agreement"). Each of
the Sellers hereby covenants and agrees to enter into a Definitive Purchase
Agreement if the following conditions are met: (i) the terms and conditions
(other than those referred to in the following clauses (ii), (iii) and (iv) of
this paragraph 3) of the Definitive Purchase Agreement shall be satisfactory to
each of the Sellers, (ii) the Definitive Purchase Agreement shall provide that
the purchase price per share of Common Stock is not less than $12.00, (iii) the
Definitive Purchase Agreement shall provide that if
<PAGE>
90336P100 Page 12 of 14 Pages
the Purchaser resells any shares of Common Stock purchased from the Sellers
within one year of the consummation of the sale of shares of Common Stock to the
Purchaser at a price per share (the "Resale Price") greater than that received
by the Sellers from the Purchaser (the "Sale Price") the Purchaser shall
promptly pay to Pengo, on behalf of all the Sellers, one-half of the difference
between the Resale Price and the Sale Price (the Definitive Purchase Agreement
to include appropriate provisions to cover a Resale Price that may not be
entirely in cash or in one installment), and (iv) the Definitive Purchase
Agreement shall have been approved by the board of directors of Inland (the
"Board") prior to its execution by the Sellers and the Purchaser. Each of the
Sellers further covenants and agrees to use its or his reasonable efforts to
cause the Board to approve the Definitive Purchase Agreement that meets the
conditions specified in the previous sentence.
Without limitation of the foregoing, a merger, recapitalization or
other transaction involving Inland, which is entered into simultaneously with or
following the purchase of Common Stock pursuant to a Definitive Purchase
Agreement, in which the holders of Common Stock and Class C Preferred Stock of
Inland other than the Sellers receive consideration in excess of the Sale Price,
shall be covered by clause (iii) of this Paragraph 3.
4. Obligations of the Placement Agent.
(a) KRM will use reasonable efforts to find a Purchaser, to
engage McDonald & Company and ING Barings, as investment bankers to aid in such
efforts, and to negotiate the terms of a Definitive Purchase Agreement meeting
the conditions set forth in Paragraph 3.
(b) The sale of the Common Stock pursuant to a Definitive
Purchase Agreement is to be effected pursuant to the exemption from the
registration requirements of the Securities Act of 1933, as amended (the "Act"),
provided by Section 4(2) thereof. Accordingly, KRM agrees that:
(i) Any offers of the Common Stock will be made only
to corporate and institutional investors, each of which has such knowledge and
experience in financial and business matters so as to render it capable of
evaluating the merits and risks of its prospective investment in the Common
Stock and who has assets or other indicia of financial stability sufficient to
enable it to bear the economic risk of investing in and holding the Common
Stock; provided, however, such offer may be to an entity, such as KRM, formed
for the purpose of acquiring the Common Stock, if all of the shareholders,
members or partners of such entity are corporate or institutional investors of
the type described above ("Purchasing Entity"). No Common Stock will be offered
to natural persons, except for members of senior management of Inland, who also
may be included as shareholders, members or partners of a Purchasing Entity.
<PAGE>
90336P100 Page 13 of 14 Pages
(ii) The Common Stock will be offered only by
approaching prospective Purchasers on an individual basis. The Common Stock will
not be offered or sold by any means of general solicitation or general
advertising.
(iii) Any private placement memorandum or other
materials supplied to a prospective Purchaser will contain a statement expressly
offering an opportunity for each prospective Purchaser to ask questions of, and
receive answers from, Inland concerning the offering of the Common Stock and to
obtain additional relevant information that is not confidential or non-public
information (or, if confidential, that is subject to an appropriate
confidentiality letter) that Inland or KRM possesses or can acquire without
unreasonable effort or expense.
5. Miscellaneous. This letter agreement (a) may be modified or amended
only by a written agreement executed and delivered by each of the Sellers and
KRM, (b) may be executed in one or more counterparts, each such counterpart
being deemed an original instrument and all such counterparts together
constituting the same agreement and (c) shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements to be
performed entirely within such state.
If the foregoing correctly sets forth our agreement, please so indicate
in the space provided below and return one copy to each of the undersigned. This
letter will not be effective unless and until it is countersigned by KRM.
PENGO SECURITIES CORP.
By: /s/ David A. Persing
------------------------
Name: David A. Persing
Title: Senior Vice President
<PAGE>
90336P100 Page 14 of 14 Pages
/s/ Randall D. Smith
--------------------
Randall D. Smith
/s/ Jeffrey A. Smith
--------------------
Jeffrey A. Smith
/s/ John W. Adams
-----------------
John W. Adams
Accepted and agreed to:
KRM ACQUISITION CORP.
By: /s/ Kyle R. Miller
- ----------------------
