Exhibit 99(1)
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") PURSUANT TO AN
EXEMPTION FROM SUCH REGISTRATION AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED EXCEPT PURUSANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR AN EXEMPTION FROM SUCH REGISTRATION. SEE PARAGRAPH 2
"OFFERING" HEREIN.
CANARGO ENERGY CORPORATION
TERM SHEET
PRIVATE PLACEMENT OF UP TO 50 MILLION SHARES IN CANARGO ENERGY CORPORATION
27 JUNE 2000
1 ISSUER
CanArgo Energy Corporation, a Delaware corporation (the "Company") with its
principal offices at 1580, 272- 7th Avenue SW Calgary, Alberta, Canada,
telephone no. 00 1 403 777 1185, telefax no. 00 1 403 777 1578, whose shares are
listed on the Oslo Stock Exchange (main) list and in the U.S. NASDAQ Over the
Counter Bulletin Board ("Bulletin Board"). The Company is an oil and gas
exploration and production company that owns interests in oil and gas properties
located in the Republic of Georgia and elsewhere in Eastern Europe. The
Company's principal activities involve the rehabilitation and development of oil
and gas fields with productive histories that indicate potential for increased
production through the application of modern production techniques. See
Paragraph 5 "Available Information" and Paragraph 6 "Risk Factors" herein.
2 OFFERING
The Company is offering up to 50 million shares (the "Shares") of its common
stock, par value $ 0,1 per share ("Common Stock") in a private placement (the
"Offering") to qualified investors who are knowledgeable, sophisticated and
experienced in making, and are qualified to make, decisions with respect to
investments in restricted securities (such as this Shares) and whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or who
it is reasonable to expect will acquire the Shares for investment and not for
distribution in a restricted period and have sufficient resources to hold such
shares indefinitely and can suffer a loss of their entire investment, through
Orkla Enskilda Securities ASA, Den norske Bank ASA - DnB Markets, and Sundal
Collier & Co ASA as placement agents (collectively, the "Agents"), at NOK 9.00
per Share during an offering period closing on June 27, 2000. No offering
memorandum or prospectus has been prepared for use in connection with the
Offering. The Offering will prior to the listing of the Shares require a
prospectus under the Stock Exchange Regulations, Chapter 18 (offering of more
than 10 % of the share capital). The Offering will not require a prospectus
under the Securities Trade Act of 1997, Chapter 5 as the Offer is in compliance
with the exemptions from the obligation to prepare a prospectus in connection
with offers made to professional investors (the Offering is being made to
registered professional investors or securities issued in minimum lots of EURO
40.000 in terms of nominal value or subscription price)
The Shares are being offered in a transaction intended to qualify for an
exemption from the registration requirements of the United States Securities Act
of 1933, as amended (the "Securities Act") afforded by Regulation S promulgated
thereunder ("Regulation S"). Pursuant to Regulation S the Shares are deemed
'restricted securities" and may not be sold in the United States or to a "U.S.
person" (as defined in Schedule 2 attached to the Subscription Agreement and
made a part thereof) until after the first anniversary of the effective date of
the sale of the Shares ("Closing Date") or unless they have been registered
under the Securities Act or pursuant to an exemption from such registration.
Subscribers must also represent, among other things, that they also are not U.S.
persons, and that the Shares will not be resold by the subscribers to U.S.
persons or into the United States except pursuant to an exemption from
registration under the Securities Act or until the earlier of the first
anniversary of the Closing Date or the Shares have been registered for resale
under the Securities Act, as further detailed in Schedules 1 and 2 to the
Subscription Agreement. The Company has agreed, as soon as practicable after
the Closing Date, to prepare and file with the United States Securities and
Exchange Commission ("SEC") a registration statement registering the Shares on
Form S-3 (the "Registration Statement"), if available, for resale. The Company
has also agreed to pay subscribers a cash fee of 3.33% of the purchase price of
their Shares (or a prorated portion thereof) for each 30 days after the Closing
Date until the SEC has declared such registration statement effective, up to a
maximum of 10 % of the purchase price. The Company's obligation to register the
Shares of any selling stockholder is contingent upon its receiving all such
information regarding such stockholder as may be required to be included in the
prospectus included in the Registration Statement by applicable SEC rules and
regulations. (See Schedule 3 to the Subscription Agreement)
THE SHARES OF COMMON STOCK BEING SOLD PURSUANT TO THE OFFERING HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY OTHER SECURITIES LAWS, AND HAVE BEEN ISSUED IN RELIANCE UPON THE
EXEMPTION FROM REGISTRATION UNDER THE ACT CONTAINED IN REGULATION S UNDER THE
ACT. PRIOR TO 27 JUNE, 2001, NO OFFER, SALE, TRANSFER, PLEDGE OR OTHER
DISPOSITION (COLLECTIVELY A DISPOSAL) OF THE COMMON STOCK SOLD PURSUANT TO THE
OFFERING MAY BE MADE: A) IN THE UNITED STATES OR TO, FOR THE ACCOUNT OR BENEFIT
OF, ANY "US PERSON" (AS DEFINED IN REGULATION S) UNLESS (I) REGISTERED UNDER THE
ACT AND ANY APPLICABLE STATE SECURITIES OR BLUE SKY LAWS OR (II) EXEMPTIONS FROM
THE REGISTRATION REQUIREMENTS OF SUCH LAWS ARE AVAILABLE AND CANARGO ENERGY
CORPORATION (THE "COMPANY") RECEIVES A WRITTEN OPINION OF UNITED STATES LEGAL
COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO IT TO THE EFFECT THAT SUCH
DISPOSAL IS EXEMPT FROM SUCH REGISTRATION REQUIREMENTS; AND (B) OUTSIDE THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF A PERSON WHO IS NOT A "US
PERSON" (AS DEFINED IN REGULATION S) UNLESS (I) THE BENEFICIAL OWNER OF SUCH
SHARES AND THE PROPOSED TRANSFEREE SUBMIT CERTAIN CERTIFICATIONS TO THE COMPANY
AND (II) THE COMPANY RECEIVES A WRITTEN OPINION OF UNITED STATES LEGAL COUNSEL
IN FORM AND SUBSTANCE SATISFACTORY TO IT TO THE EFFECT THAT SUCH DISPOSAL IS
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT.
3 USE OF PROCEEDS
The purpose of the offering is to provide working capital for the Company in
order to:
I. Continue growth and development of CanArgo in Georgia
Capitalize on available opportunities in Georgia to develop CanArgo
in to the dominant oil & gas company in the Central Caucasus
II. Expand activities in the Caucasus/Caspian region
Exploit CanArgo's existing assets and opportunities in the Caspian
Build on the Company's contacts and reputation in the area to acquire
further projects in the region either through project development
or corporate acquisitions
Under the mandate to place the Offering, the placement agents each receive a fee
of 6.5 % of gross placement consideration under the Offering. The Company will
also reimburse the placement agents their out of pocket expenses, legal fees,
etc.
4 TERMS OF THE SHARES
The Shares are common shares, with all the rights and privileges accorded the
Company's outstanding common shares. The Shares will be registered
electronically on a special VPS-account established for each subscriber, which
will indicate that the shares are restricted securities. At such time as the
resale of the Shares has been registered under the Securities Act, the Shares
will be transferred to a regular VPS-account. Until then the Shares will be
restricted and will not be available for trading on the Bulletin Board or listed
for trading on the Oslo Stock Exchange. At such time as the Registration
Statement becomes effective and a prospectus under the Stock Exchange Regulation
Chapter 18 has been approved by the Oslo Stock Exchange and made public by the
Company the Shares will be freely tradable on the Oslo Stock Exchange and in the
United States on the Bulletin Board and may be sold to U.S. persons, provided,
however, each selling stockholder (and any broker-dealer through whom such
stockholder sells its Shares) will be required, until the expiration of the
first anniversary of the Closing Date, to deliver a current prospectus together
with each confirmation of the sale of the Shares. Each subscriber shall be
required to make the representations and warranties in Schedule 1 to the
Subscription Agreement regarding its status as a non-U.S. person and its
agreement to abide by the restrictions on resales into the United States and to
U.S. persons. Reference is made to the complete text of Schedule 1 to the
Subscription Agreement, which is incorporated by reference herein.
5 AVAILABLE INFORMATION
No prospectus or offering memorandum has been prepared in connection with the
Offering. However, subscribers should review the following materials regarding
the Company (which are considered information furnished to investors and which
are incorporated by reference herein): the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1999 filed with the SEC on in 2000; the
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2000 filed
with the SEC in 2000; the definitive proxy statement for CanArgo's annual
general meeting of shareholders held 14 June in 2000 filed with the SEC on 9 May
2000, and the prospectuses (S-I/A and addenda POS-AM filed 7 June 1999 and 29
July and 24 August, respectively) all of which may be obtained at the following
internet site: http://www.sec.gov] 2000; Form POSAM filed 7-29-1999 and
08-24-1999 and S-1/A filed 06-07-1999, Form 10K filed [] 2000 and Def 14A filed
9 May, 2000. before electing to subscribe for Shares. Copies of these documents
can also be obtained from the Agents.
The Agents have made available to the Subscribers paper copies of material used
in connection with presentations done by the Company related to the Offering
(Power Point presentation "Proposed Summer 2000 financing").
6 RISKS OF THE INVESTMENT
An investment in the Shares in the Offering constitutes a speculative investment
entailing a high degree of risk. Investors should review the attached
materials, and, in particular, the Company's Annual Report on Form 10-K (see
above), which set forth certain risks associated with the Company's business,
financial condition and prospects. This Term Sheet (and the materials
incorporated by reference herein) includes forward-looking statements within the
meaning of Section 27(a) of the Securities Act. All statements other than
statements of historical fact made herein, including without limitation, those
regarding the Company's financial position, business strategy, projected
financial results and plans and objectives of management for future operation,
are forward-looking statements. Although the Company believes that the
expectations reflected in such statements are reasonable, it can give no
assurance that such expectations will prove to be correct.
7 MISCELLANEOUS
THIS TERM SHEET HAS NOT BEEN FILED WITH OR REVIEWED BY THE SEC OR ANY OTHER
GOVERNMENTAL AGENCY OR OTHER BODY CHARGED WITH THE ADMINISTRATION OF ANY
SECURITIES LAWS OF ANY JURISDICTION; NEITHER HAS THE SEC OR ANY SUCH OTHER
AGENCY OR BODY PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
This Term Sheet has been prepared by the Company and is being furnished through
the Agents, solely for the use of prospective purchasers in connection with this
Offering. The Agents make no representation or warranty as to the accuracy or
completeness of the information contained herein. By accepting delivery of this
Term Sheet and any associated materials, the recipient agrees not to reproduce
or distribute this Term Sheet and such materials to any person other than its
professional advisers, without the prior written consent of the Company. No
Shares may be sold to any person without delivery to such person of a Term Sheet
and the execution and delivery by such person of a Subscription Agreement.
The Shares are being offered when, as and if issued, subject to prior sale or
withdrawal, cancellation or modification of the offer without notice. The
distribution of this Term Sheet and associated materials in certain
jurisdictions may be restricted by law. Persons into whose possession this Term
Sheet may come are required by the Company to inform themselves about and to
observe any such restrictions.
NO PERSON (OTHER THAN COMPANY REPRESENTATIVES) HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER AND SALE OF
THE SHARES OTHER THAN THOSE CONTAINED IN THE TERM SHEET (AND THE MATERIALS
INCORPORATED BY REFERENCE HEREIN) AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY OTHER PERSON. THIS TERM SHEET DOES NOT RELATE TO ANY SECURITIES
OTHER THAN THOSE DESCRIBED HEREIN OR CONSTITUTES AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO PURCHASE ANY OF THE SHARES IN ANY JURISDICTION TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION. THE DELIVERY OF THIS TERM SHEET AT ANY TIME DOES NOT IMPLY THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.
PURCHASE OF THE SHARES OFFERED HEREBY MAY RESULT IN TAX OR OTHER LEGAL
CONSEQUENCES NOT DISCUSSED HEREIN. PROSPECTIVE SUBSCRIBERS FOR SHARES ARE NOT
TO CONSTRUE THIS TERM SHEET AND ASSOCIATED MATERIALS OR ANY PRIOR OR SUBSEQUENT
COMMUNICATION FROM THE COMPANY OR THE AGENTS OR ANY OF THEIR RESPECTIVE
DIRECTORS, OFFICERS, AGENTS OR EMPLOYEES AS LEGAL OR INVESTMENT ADVICE. EACH
PROSPECTIVE SUBSCRIBER FOR SHARES SHOULD CONSULT WITH AND RELY ON THE
SUBSCRIBER'S OWN PROFESSIONAL ADVISERS, INCLUDING LEGAL COUNSEL AND TAX
ADVISERS, AS TO THE CONSEQUENCES OF ANY INVESTMENT BY THE SUBSCRIBER IN THE
SHARES.
In this Term Sheet, all references to "dollars" and "$" are to United States
dollars and all references to "NOK" are to Norwegian Kroner. On June 27, 2000
the exchange rate for dollars and Kroner, as reported in Nettavisen, was $1.00
equals NOK 8,74. All references to "subscribers" are to those investors who
purchase Shares pursuant to Subscription Agreements and all references to
"Subscription Agreements" are to an agreement between the Company and a
subscriber, each of which shall be substantially identical, in substantially the
form of Appendix A.
APPENDIX A: Subscription Agreement
