As filed with the Securities and Exchange Commission on May 23, 1997
Registration No. 333-
==========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------------
KESTREL ENERGY, INC.
(Exact name of registrant as specified in its charter)
Colorado 84-0772451
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
999 18th Street, Suite 1100
Denver, Colorado 80202
(303) 295-0344
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
-------------------
With copies to:
TIMOTHY L. HOOPS S. LEE TERRY, JR., Esq.
President Gorsuch Kirgis L.L.C.
Kestrel Energy, Inc. 1401 17th Street, Suite 1100
999 18th Street, Suite 1100 Denver, Colorado 80202
Denver, Colorado 80202 (303) 299-8900
(303) 295-0344 (303) 298-0215 Fax
(Names, addresses, including zip codes, and telephone numbers, including
area codes, of agents for service)
-------------------
Approximate date of commencement of proposed sale of the securities
to the public: From time to time after this registration statement
becomes effective when warranted by market conditions and other factors.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check
the following box. / /
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box.
/X/
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check
the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same
offering. / /
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box./ /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed
Title of Each Maximum Proposed
Class of Offering Maximum
Securities Amount Price Aggregate Amount of
to be to be per Offering Registration
Registered Registered Share(1) Price(11) Fee
<S> <C> <C> <C> <C>
Common Stock, 2,502,000 $2.25 $5,629,500 $1,705.91
without par shares
value
</TABLE>
==========================================================================
(1) Estimated solely for purposes of calculating the registration fee.
The price of $2.25 per share is the last sale price reported by The
Nasdaq SmallCap Stock Market on May 21, 1997.
------------------
The registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
=====================================================================
SUBJECT TO COMPLETION, DATED MAY 23, 1997
KESTREL ENERGY, INC.
2,502,000 shares of Common Stock, without par value
------------------
All 2,502,000 shares (the "Shares") of the Common Stock of Kestrel
Energy, Inc. (the "Company") offered hereby are being sold by holders of
shares of the Company's Common Stock purchased in the Company's recent
Regulation S offering, which offering is described in the Company's Form
8-K dated April 30, 1997 (the "Selling Shareholders"). The Shares will be
offered by the Selling Shareholders from time to time (i) at market prices
prevailing on the Nasdaq SmallCap Market at the time of offer and sale or
at prices related to such prevailing market prices, (ii) in negotiated
transactions, or (iii) in a combination of such methods of sale. The
Selling Shareholders may effect such transactions by offering and selling
the Shares directly to or through securities broker-dealers, and such
broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Shareholders and/or the
purchasers of the Shares for whom such broker-dealers may act as agent or
to whom the Selling Shareholders may sell as principal, or both (which
compensation as to a particular broker-dealer might be in excess of
customary commissions). See "The Selling Shareholders" and "Sale of
Shares." The last reported sale price of the Common Stock reported on the
Nasdaq SmallCap Market on May 22, 1997 was $2.25.
None of the proceeds from the sale of the Shares by the Selling
Shareholders will be received by the Company. The Company has agreed to
bear all expenses in connection with the registration and sale of the
shares being offered by the Selling Shareholders, other than compensation
payable to securities broker-dealers by the Selling Shareholders and/or
the purchasers of the Shares, any securities broker-dealer expense
allowances and fees and expenses of counsel and other advisors to the
Selling Shareholders and transfer taxes.
THESE ARE SPECULATIVE SECURITIES.
SUCH SECURITIES INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" AT PAGE 4.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
No persons have been authorized to give any information or to make
any representation not contained in this Prospectus in connection with the
offering of securities made hereby and, if given or made, such information
or representation must not be relied upon as having been authorized by the
Company or any other person. This Prospectus does not constitute an offer
to sell, or a solicitation of an offer to buy, any securities by any
person in any jurisdiction in which it is unlawful to make any such offer
or solicitation of an offer. Neither the delivery of this Prospectus nor
any distribution of securities offered hereby shall, under any
circumstances, create an implication that there has been no change in the
affairs of the Company since the date hereof or that the information
herein is correct as of any time subsequent to its date.
The date of this Prospectus is May 23, 1997.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other
information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information filed
with the Commission may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's Regional Offices at
7 World Trade Center, New York, New York 10048, and Suite 1400 Citicorp
Center, 500 West Madison Street, Chicago, Illinois 60661. Copies of such
material also can be obtained from the Public Reference Section of the
Commission, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. The Commission also maintains a site on the World Wide
Web at http://www.sec.gov/edgarhp.htm that contains reports, proxy and
information statements and other information concerning registrants that
file electronically with the Commission. The Common Stock is traded on
the Nasdaq SmallCap Market. Information filed by the Company with Nasdaq
may be inspected at the offices of Nasdaq at 1735 K Street, N.W.,
Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on
Form S-3 (together with any amendments thereto, the "Registration
Statement") under the Securities Act of 1993, as amended (the "Securities
Act") with respect to the securities to be sold pursuant to this
Prospectus. This Prospectus does not contain all the information set
forth in the Registration Statement. Such additional information may be
inspected and copied at the Public Reference Section of the Commission,
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. Statements
contained in this Prospectus as to the contents of any contract or other
document referred to herein or therein are not necessarily complete, and
in each instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement, each such
statement being qualified in its entirety by such reference. All
references herein to the Company include the Company and its wholly-owned
subsidiary.
This Prospectus incorporates by reference documents which are not
presented herein or delivered herewith. Copies of these documents (other
than exhibits to such documents unless such exhibits are specifically
incorporated by reference) are available to any person, including any
beneficial owner, to whom this Prospectus is delivered, on written or oral
request, without charge, directed to Timothy L. Hoops, President, Kestrel
Energy, Inc., 999 18th Street, Suite 1100, Denver, Colorado 80202
(telephone number: (303) 295-0344).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission
pursuant to the Exchange Act are incorporated herein by reference
(Commission File No.0-9261):
1. Annual Report on Form 10-K for the year ended June 30, 1996,
filed September 30, 1996;
2. Quarterly Report on Form 10-Q for the quarter ended September
30, 1996, filed November 14, 1996;
3. Quarterly Report on Form 10-Q for the quarter ended December 31,
1996, filed February 14, 1997;
4. Quarterly Report on Form 10-Q for the quarter ended March 31,
1997, filed May 15, 1997;
5. The section entitled "Description of Securities to be
Registered" contained in the Company's registration statement on Form 8-A,
File No. 0-9261, filed on May 2, 1980 pursuant to Section 12(g) of the
Exchange Act, as amended by the Company's Form S-3, File No. 33-89716,
declared effective on May 12, 1995; and
6. Form 8-K dated April 30, 1997 filed May 8, 1997.
All documents and reports subsequently filed with the Commission by
the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act after the date of this Prospectus shall be deemed to be incorporated
by reference in this Prospectus and to be part hereof from the date of
filing such documents or reports. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein (or in any other subsequently
filed document which also is or is deemed to be incorporated by reference
herein) modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
A copy of the documents incorporated by reference other than exhibits
to such documents (unless such exhibits are specifically incorporated by
reference in the information contained in this Prospectus), may be
obtained upon request without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus has been delivered
upon the written or oral request of such person. Requests for such copies
should be made to Timothy L. Hoops, President, Kestrel Energy, Inc., 999
18th Street, Suite 1100, Denver, Colorado 80202 (telephone number:
(303)295-0344). In addition, such materials filed electronically by the
Company with the Commission are available at the Commission's World Wide
Web site at http://www.sec.gov/edgarhp.htm.
THE COMPANY
Kestrel was incorporated under the laws of the State of Colorado on
November 1, 1978 as Tanner Pruitt Exploration, Inc. In March 1995 the
Company changed its name to Kestrel Energy, Inc. The Company's principal
business at this time is exploration for oil and gas reserves, either
alone or with others in United States, Australia and surrounding areas.
Additionally the Company has non-operated working interests in proved
developed producing and proved undeveloped oil and gas leases, in several
areas in the United States. Normally the Company uses existing working
capital and cash flow in the development of its exploration and
development properties. However, the Company does expect to use debt and
equity financing in the future to fund its efforts.
The Company presently owns oil and gas interests in the states of
California, Colorado, Kansas, Louisiana, New Mexico, Oklahoma, South
Dakota, Texas and Wyoming and in Papua New Guinea and Australia.
The Company's offices are located at 999 18th Street, Suite 1100,
Denver, Colorado 80202. The Company's telephone number is (303) 295-0344.
RISK FACTORS
PROSPECTIVE PURCHASERS OF THE COMPANY'S COMMON STOCK SHOULD CAREFULLY
CONSIDER, TOGETHER WITH THE OTHER INFORMATION HEREIN, THE FOLLOWING
FACTORS THAT AFFECT THE COMPANY.
RISKS OF OIL AND GAS DRILLING OPERATIONS
The Company must continually acquire and explore for and develop new
oil and gas reserves to replace those being depleted by production.
Without successful drilling or acquisition ventures, the Company's assets,
properties and revenues will decline. Oil and gas exploration and
development are speculative and involve a high degree of risk. The
process of drilling for oil and gas can be hazardous and carries the risk
that no commercially viable oil or gas production will be obtained. The
cost of drilling, completing and operating wells is often uncertain.
Moreover, drilling may be curtailed, delayed or canceled as a result of
many factors, including title problems, weather conditions, shortages or
delays in delivery of equipment, as well as the financial instability of
well operators, major working interest owners and well servicing
companies.
A significant portion of the Company's oil and gas properties are
proved undeveloped reserves and probable reserves. Successful development
and production of such reserves cannot be assured. Additional drilling
will be necessary in future years both to maintain production levels and
to define the extent and recoverability of existing reserves. There is no
assurance that present oil and gas wells of the Company will continue to
produce at current or anticipated rates of production, that development
drilling will be successful, that production of oil and gas will commence
when expected, that there will be favorable markets for oil and gas which
may be produced in the future or that production rates achieved in early
periods can be maintained.
The nature of the oil and gas business involves a variety of risks,
including, but not limited to, the risks of operating hazards such as
fires, explosions, cratering, blowouts, adverse weather conditions,
pollution and environmental risks, encountering formations with abnormal
pressures, and, in horizontal wellbores, the increased risk of mechanical
failure and collapsed holes, the occurrence of any of which could result
in substantial losses to the Company. The Company obtains insurance
against some, but not all, of these risks in amounts that management
believes to be reasonable in accordance with customary oil and gas
industry practices. The occurrence of a significant event that is not
fully insured, however, could have a material adverse effect on the
Company's financial condition and results of operations.
POTENTIAL ADVERSE IMPACT ON TRADING MARKET
While the Company's Common Stock is traded on the Nasdaq SmallCap
Market, there has historically been a relatively low volume of trading in
those Shares. Consequently, the price at which Shares trade may be highly
volatile. The Selling Shareholders are not restricted as to the price or
prices at which they may sell their Shares. Sales of such Shares at less
than the market prices may depress the market price of the Company's
Common Stock. Moreover, the Selling Shareholders are not restricted as to
the number of Shares which may be sold at any one time, and it is possible
that a significant number of Shares could be sold at the same time which
may have a depressive effect on the market price of the Company's Common
Stock. The Shares being offered hereby represent 56.7% of the Company's
outstanding Common Stock. Given the historic low volume of trading, sale
of these Shares in the market could materially and adversely affect the
market price of the Company's securities. In addition, although the
Common Stock is currently traded on the Nasdaq SmallCap Market, there is
no assurance that it will remain eligible to be included on Nasdaq.
OIL AND GAS PRICING AND MARKETS
The Company's revenues, profitability and future rate of growth, if
any, are substantially dependent upon prevailing prices for oil and
natural gas and the ability of the Company to develop and produce its
undeveloped reserves. Historically, the prices for oil and natural gas
have been quite volatile. Further, a significant portion of the Company's
oil and gas production is subject to spot market prices, which have
historically been even more volatile. The volatility of the spot market
for oil and natural gas is due to factors beyond the Company's control,
including seasonality of demand and currency fluctuations. Prices are
also affected by actions of state and local agencies, the United States
and foreign governments, and international cartels. These external
factors and the volatile nature of the energy markets make it difficult to
estimate future prices of oil and natural gas. Any substantial or
extended decline in the price of oil or natural gas would have a material
adverse effect on the Company's financial condition and results of
operations.
The availability of a ready market for the Company's oil and gas
depends on numerous factors beyond its control, including the demand for
and the supply of oil and gas, the proximity of the Company's natural gas
reserves to pipelines, the capacity of such pipelines, fluctuations in
production and seasonal demand, the effects of inclement weather and
governmental regulation. Gas wells may be shut-in for lack of a market
until a gas pipeline or gathering system with available capacity is
extended into the area. Oil wells may have production curtailed until
production facilities and delivery arrangements are acquired or developed.
The Company's business will always be subject to these types of risks.
DEPENDENCE ON KEY PERSONNEL
The success of the Company will largely be dependent upon the efforts
and active participation of Timothy L. Hoops, the President of the
Company, John T. Kopcheff, Vice President-International and Robert J.
Pett, the Chairman of the Board. The Company presently does not have key
person life insurance on the lives of any of its officers. The loss of
the services of any of these individuals may adversely affect the
Company's business.
COMPETITION
The Company operates in a highly competitive environment. The
Company competes with major and independent oil and gas companies for the
acquisition of desirable oil and gas properties, as well as the equipment
and labor required to develop and operate such properties. The Company
also competes with major and independent oil and gas companies in the
marketing and sale of oil and natural gas to transporters, distributors
and end-users. Many of these competitors have financial and other
resources substantially greater than those of the Company.
RELIANCE ON RESERVE ESTIMATES
Information relating to the Company's estimates of proved reserves of
oil and gas is based upon engineering estimates. Petroleum engineering is
not an exact science. Estimates of commercially recoverable oil and gas
reserves and of the future net cash flows therefrom are based upon a
number of variable factors and assumptions, such as historical production
from the subject properties, comparison with other producing properties,
the assumed effects of regulation by governmental agencies and assumptions
concerning future oil and gas prices and future operating costs, severance
and excise taxes, abandonment costs, development costs and workover and
remedial costs, all of which estimates may in fact vary considerably from
actual results. All such estimates are to some degree speculative, and
various classifications of reserves are only attempts to define the degree
of speculation involved. For these reasons, estimates of the commercially
recoverable reserves of oil and natural gas attributable to any particular
property or group of properties, the classification, cost and risk of
recovering such reserves and estimates of the future net cash flows
expected therefrom prepared by different engineers or by the same
engineers at different times, may vary substantially. The Company
therefore emphasizes that the actual production, revenues, severance and
excise taxes, development expenditures, workover success rate and remedial
expenditures, abandonment expenditures and operating expenditures with
respect to its reserves will likely vary from such estimates, and such
variances may be material.
In addition, actual future net cash flows will be affected by factors
such as actual production, supply and demand for oil and natural gas,
curtailments or increases in consumption by natural gas purchasers,
changes in governmental regulations or taxation and the impact of
inflation on costs. The timing of actual future net revenue from proved
reserves, and thus their actual present value, can be affected by the
timing of the incurrence of expenditures in connection with development of
oil and gas properties. The 10% discount factor, which is required by the
United States Securities and Exchange Commission to be used to calculate
present value for reporting purposes, is not necessarily the most
appropriate discount factor based on interest rates in effect from time to
time and risks associated with the oil and gas industry. Discounted
present value, no matter what discount rate is used, is materially
affected by assumptions as to the amount and timing of future production
and pricing of oil and gas, all of which may and often do prove to be
inaccurate.
GOVERNMENT REGULATION, ENVIRONMENTAL RISKS AND TAXES
Various aspects of the Company's oil and natural gas operations in
the United States are regulated by administrative agencies under statutory
provisions of the states where such operations are conducted and by
certain agencies of the federal government for operations on federal
leases. In the past, the federal government has regulated the prices at
which oil and natural gas could be sold. While sales by producers of
natural gas, and all sales of crude oil, condensate and natural gas
liquids can currently be made at uncontrolled market prices, the United
States Congress could reenact price controls in the future.
Extensive federal, state and local laws govern oil and gas operations
regulating the discharge of materials into the environment or otherwise
relating to the protection of the environment. Numerous governmental
departments issue rules and regulations to implement and enforce such
laws, with which it is often difficult and costly to comply and which
carry substantial penalties for noncompliance. These laws, rules and
regulations may restrict the rate of oil and gas production or otherwise
increase the Company's costs of doing business. Consequently, any such
restrictions or increases could have an effect on the operations of the
Company and its profitability. Compliance with environmental requirements
generally could have a material adverse effect upon the capital
expenditures, earnings or competitive position of the Company. Although
the Company's experience has been to the contrary, there is no assurance
that this will continue to be the case.
In addition, many states have raised state taxes on energy sources
and additional increases may occur, although there can be no certainty of
the effect that increases in state energy taxes would have on natural gas
and oil prices. If market conditions or the Company's contracts with gas
purchasers do not allow the Company to effectively pass on the burden of
the tax imposed to the ultimate consumer of oil or gas, the Company's
financial condition and results of operations could be materially
adversely affected.
The Company's drilling and potential development operations in other
countries involve comparable or even greater risks from governmental
regulation and taxes, including the risk of partial or complete forfeiture
of the Company's interests to the foreign government as the result of a
radical change in such government or its policies. While the Company does
not believe that there is a material risk of government seizure of some or
all of its interests in any of the foreign countries in which it currently
proposes doing business, such action remains a possibility, albeit a
remote one.
DIVIDENDS NOT LIKELY
The Company does not anticipate paying any dividends on the shares of
Common Stock offered hereby within the foreseeable future. The Company's
Articles of Incorporation authorize the issuance of one million shares of
Preferred Stock, none of which is currently outstanding. Therefore, the
Company does not anticipate paying any dividends on the shares of
Preferred Stock.
USE OF PROCEEDS
The Company will not receive any proceeds from this offering;
however, the Company received net proceeds of approximately $4,674,000
(after deducting estimated offering expenses of $330,000, including
$270,000 in placement agent fees) from the sale of the Shares in the
Company's Regulation S offering, through which the Selling Shareholders
acquired the 2,502,000 Shares to be offered and sold hereunder. The
Company intends to spend approximately $2,500,000 in development of its
recently acquired properties in the San Joaquin Basin Project in
California. The Company has also identified several other U.S. domestic
development projects which would require approximately $1,186,000.
Additionally the Company intends to spend approximately $500,000 towards
international exploration activities in Papua New Guinea, Australia and
southeast Asia. In addition, subject to management's determination that
there are appropriate opportunities, the Company may use the remaining
proceeds, together with its operating cash flow and a bank line of credit,
to acquire producing properties or exploration or developmental
opportunities.
The proposed allocation of the net proceeds of the Company's
Regulation S offering set forth above represents the Company's best
estimate based upon its present plans and certain assumptions regarding
general economic and industry conditions and the Company's future revenues
and expenditures. If any of these factors change, the Company may find it
necessary or advisable to reallocate some of the proceeds within the above
described categories or use portions thereof for other purposes.
The Selling Shareholders have agreed to pay all commissions and other
compensation to any securities broker-dealers through whom they sell any
of the Shares.
THE SELLING SHAREHOLDERS
The following table sets forth certain information regarding the
Selling Shareholders and the Shares offered by the Selling Shareholders
pursuant to this Prospectus. To the Company's knowledge, the Selling
Shareholders have not had any other material relationship or held any
office or position with the Company, its predecessors or affiliates during
the past three years.
<TABLE>
<CAPTION>
Shares to Be
Beneficially
Owned on
Completion of the
Offering
Number of
Shares Number of
Name of Selling Beneficially Shares Being % of
Shareholder (1) Owned Offered Number Class
--------------- ------------ ------------ ------ -----
<S> <C> <C> <C> <C>
Steven Horton 2,250 2,250 0 *
David Andersen 2,000 2,000 0 *
Guy Aird 3,250 3,250 0 *
Margaret Rich 20,000 20,000 0 *
Raymond G. Barnes 10,000 10,000 0 *
J.J.F. Delfos 10,000 10,000 0 *
Bella Horton 5,000 5,000 0 *
Hamish Smith 5,000 5,000 0 *
Tyra M. Williams 10,000 10,000 0 *
Jendry Management Pty. 10,000 10,000 0 *
Ron Prefontaine 2,000 2,000 0 *
Ian Paton 10,000 10,000 0 *
Falcon Resources Pty. Ltd. 15,000 15,000 0 *
Daphne Kopcheff 10,000 10,000 0 *
Nieuport Pty. Ltd. 40,000 40,000 0 *
Ross H. Haldane 2,000 2,000 0 *
Mitabel Pty. Ltd. 5,000 5,000 0 *
Meng Kanji Lim 15,000 15,000 0 *
Robert Archer Black 20,000 20,000 0 *
Jeffrey Roche 10,000 10,000 0 *
Stephanie Hodge 2,500 2,500 0 *
Graham Daniels 3,000 3,000 0 *
Roger Blake 2,000 2,000 0 *
Lakes Oil N.L. 50,000 50,000 0 *
James Capel & Co. 200,000 200,000 0 *
Donald Tulloch 5,000 5,000 0 *
William Tulloch 5,000 5,000 0 *
Kenneth Lewis Tulloch 5,000 5,000 0 *
Mark Syropoulo 35,000 35,000 0 *
Syrops & Co. Pty. Ltd. 5,000 5,000 0 *
Derain Pty. Ltd. 15,000 15,000 0 *
Australasian Syndication 5,000 5,000 0 *
Management Services Pty.
Ltd.
Haifa Pty. Ltd. 10,000 10,000 0 *
Stenbank Pty. Ltd. 10,000 10,000 0 *
Universal Oil (Australia) 50,000 50,000 0 *
Pty. Ltd.
Gacaked Pty. Ltd. 5,000 5,000 0 *
Drilltech Services Pty. 10,000 10,000 0 *
Ltd.
Austrust Ltd. 10,000 10,000 0 *
Running Water Limited 20,000 20,000 0 *
Clifton Y. Adams 5,000 5,000 0 *
(T/F Trueman Trust)
Ivanhoe Pty. Ltd. 1,000 1,000 0 *
Peter John Nelson 7,500 7,500 0 *
Blackmort Nominees 12,500 12,500 0 *
Pty. Ltd.
Orebrod Nominees Pty. Ltd. 20,000 20,000 0 *
Narrow Lane Pty. Ltd. 5,000 5,000 0 *
Advena Nominees Pty. Ltd. 5,000 5,000 0 *
V.L.H. Pty. Ltd. (as 10,000 10,000 0 *
Trustee for V.L.H. Pty.
Ltd. Superannuation Fund)
Francesca Carulili 20,000 20,000 0 *
Cazenove & Co. 100,000 100,000 0 *
Anz Grindlays Nominee 125,000 125,000 0 *
Limited
Woodspeen Investment 40,000 40,000 0 *
Management Ltd.
Cuent A/C
John Bernard Marsh 50,000 50,000 0 *
Booth & Co. 840,000 840,000 0 *
CM Investment Nominees 80,000 80,000 0 *
Limited
CM Investment Nominees 37,000 37,000 0 *
Limited Account 49136
CM Investment Nominees 125,000 125,000 0 *
Limited Account 48437
Hare & Co. 125,000 125,000 0 *
Fiske Nominees Limited 40,000 40,000 0 *
Thorney Pty. Ltd. 150,000 150,000 0 *
Pershing Keen Nominees 50,000 50,000 0 *
Limited
</TABLE>
==========================================================================
(1) Effective as of April 30, 1997, all of the above named Selling
Shareholders purchased 2,502,000 Shares pursuant to a private offering of
the Shares in Canada, Europe and Australia and elsewhere in accordance
with Regulation S under the Securities Act. Prior to the private
offering, the Company had no relationship with the Selling Shareholders.
PLAN OF DISTRIBUTION
All of the Shares offered hereby are being sold by the Selling
Shareholders. The Shares will be offered by the Selling Shareholders from
time to time (i) at market prices prevailing on the Nasdaq SmallCap Market
at the time of offer and sale or at prices related to such prevailing
market prices and (ii) in negotiated transactions, or (iii) in a
combination of such methods of sale. The Selling Shareholders may effect
such transactions by offering and selling the Shares directly to or
through securities broker-dealers, and such broker-dealers may receive
compensation in the form of discounts, concessions, or commissions from
the Selling Shareholders and/or the purchasers of the Shares for whom such
broker-dealers may act as agent or to whom the Selling Shareholders may
sell as principal, or both (which compensation as to a particular broker-
dealer might be in excess of customary commissions).
The Selling Shareholders and any broker-dealers who act in
connection with the sale of the Shares hereunder may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act
and any commissions received by them and profit on any resale of the
Shares as principal might be deemed to be underwriting discounts and
commissions under the Securities Act. The Company has advised the Selling
Shareholders that they and any securities broker-dealers or others who may
be deemed to be statutory underwriters will be subject to the Prospectus
delivery requirements under the Securities Act. The Company has also
advised the Selling Shareholders that, in the event of a "distribution" of
the Shares, the Selling Shareholders, any "affiliated purchasers," and any
broker-dealer or other person who participates in such distribution may be
subject to Rule 10b-6 under the Exchange Act until his or its
participation in that distribution is completed. A "distribution" is
defined in Rule 10b-6(c)(5) as an offering of securities "that is
distinguished from ordinary trading transactions by the magnitude of the
offering and the presence of special selling efforts and selling methods."
Rule 10b-6 makes it unlawful for any person who is participating in a
distribution to bid for or purchase stock of the same class as is the
subject of the distribution. The Company has also advised the Selling
Shareholders that Rule 10b-7 under the Exchange Act prohibits any
"stabilizing bid" or "stabilizing purchase" for the purposes of pegging,
fixing or stabilizing the price of the Company's Common Stock in
connection with this offering.
The executive officers, Directors and certain large shareholders of
the Company are "affiliates" of the Company which subject them to the
limitations of Rule 144, promulgated under the Securities Act ("Rule
144"). In general, under Rule 144 as currently in effect, an "affiliate"
of the Company, or a person who has beneficially owned shares which are
"restricted securities" for at least one year, is entitled to sell within
any three-month period a number of shares that does not exceed the greater
of: (i) one percent (1%) of the then outstanding shares of Common Stock
of the Company, or (ii) the average weekly trading volume of the Common
Stock during the four calendar weeks preceding a sale by such person.
Sales under Rule 144 are also subject to certain manner of sale
provisions, notice requirements and the availability of current public
information about the Company. Under Rule 144, however, a person who has
held shares of restricted securities for a minimum of two years and who is
not, and for the three months prior to the sale of such shares has not
been, an affiliate of the Company is free to sell such shares without
regard to the limitations contained in Rule 144.
To comply with certain states' securities laws, if applicable, the
Shares may be offered or sold by the Selling Shareholders in such
jurisdictions only through registered or licensed brokers or dealers. In
addition, in certain states the Shares may not be offered or sold by the
Selling Shareholders unless they have been registered or qualified for
sale in such states or an exemption from registration or qualification is
available and is complied with.
EXPERTS
The consolidated financial statements of the Company as of June 30,
1996 and 1995, and for each of the years in the three-year period ended
June 30, 1996, have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG Peat Marwick
LLP, independent certified public accountants, also incorporated by
reference herein, and upon the authority of said firm as experts in
accounting and auditing.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon for
the Company by Gorsuch Kirgis L.L.C., 1401 17th Street, Suite 1100,
Denver, Colorado 80202.
INDEMNIFICATION OF DIRECTORS
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors,
officers and controlling persons of the small business issuer pursuant to
the foregoing provisions, or otherwise, the Company has been advised that
in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table shows the estimated expenses to be incurred in
connection with the issuance of the securities being registered by the
Company:
Registration Fee--Securities and Exchange Commission . . . . . $1,706
Nasdaq Notification Fee--The Nasdaq Stock Market, Inc. . . . .$ 7,500
Printing and Mailing Costs and Fees. . . . . . . . . . . . . .$ 1,000
Accountants' Fees and Expenses . . . . . . . . . . . . . . . $ 2,500
Legal Fees and Expenses. . . . . . . . . . . . . . . . . . . .$15,000
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . $1,294
-------
Total Costs. . . . . . . . . . . . . . . . . . . . . . . . . .$29,000
All of the above expenses except the SEC registration fee are estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Colorado Business Corporation Act (the "Act") provides at
Article 109 for indemnification by a corporation of officers and directors
in connection with proceedings brought against them by reason of their
position with the corporation the person being indemnified must, in civil
matters, have acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the corporation.
In criminal matters, indemnification is permitted where the person had no
reasonable cause to believe that his or her conduct was unlawful.
Indemnification is required (unless limited by a corporation's Articles of
Incorporation) where the officer or director is wholly successful, on the
merits or otherwise, in the defense of any proceeding. The Act also
establishes procedures by which persons seeking indemnification can obtain
cost advances from the corporation and procedures by which indemnification
determinations can be made.
Article VI of the Company's Amended and Restated Articles of
Incorporation requires the Company to indemnify to the fullest extent
permitted by applicable law against all liability and expense (including
attorneys' fees) incurred by reason of the fact that a person is or was a
director or officer of the Company.
Article V of the Company's Amended and Restated Bylaws contains
provisions requiring indemnification by the corporation of officers and
directors where the person seeking indemnification acted in good faith and
in a manner reasonably believed to be in the best interest of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Indemnification by
the Company is also required in connection with derivative actions where
the party seeking indemnification is found to have acted in good faith and
in a manner he reasonably believed to be in the best interest of the
Company. Finally, indemnification is required where the officer or
director seeking indemnification has been successful on the merits in the
defense of the action. The Bylaws also contain provisions setting forth
procedures by which parties seeking indemnification may obtain payment in
advance of expenses incurred by them.
The above discussion of the Colorado Business Corporation Act, the
Company's Amended and Restated Articles of Incorporation and the Company's
Amended and Restated Bylaws is intended to be only a summary and is
qualified in its entirety by the full text of each of the foregoing.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
4.1 Amended and Restated Articles of Incorporation, as filed with
the Secretary of State of Colorado on March 16, 1995, filed as
Exhibit (3)1 to the Annual Report on Form 10-K/A for the fiscal
year ended June 30, 1994 and incorporated herein by reference.
4.2 Amended and Restated Bylaws, as adopted by the Board of
Directors on January 16, 1995, filed as Exhibit (3)2 to the
Annual Report on Form 10-K/A for the fiscal year ended June 30,
1994 and incorporated herein by reference.
4.3 The form of common stock share certificate filed as Exhibits 5.1
to the Registrant's Form S-2 Registration Statement under the
Securities Act of 1933, as amended, Registration No. 2-65317 and
incorporated herein by reference.
4.4 That portion entitled "Selling Restrictions" of the Registrant's
Private Placement Memorandum dated April 2, 1997.
5 Opinion of Gorsuch Kirgis L.L.C.
23.1 Consents of KPMG Peat Marwick LLP.
23.2 Consent of Gorsuch Kirgis L.L.C. is contained in its opinion
filed as Exhibit 5
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by section 10(a)(3) of
the Securities Act;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement; and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the
Registration Statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the Registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") that are incorporated by reference in the Registration
Statement.
(b) That, for the purpose of determining any liability under the
Securities Act each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(d) For the purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus filed
as a part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
a part of this Registration Statement as of the time it was declared
effective.
(e) For the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
(f) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of
an employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1993 (the "Securities Act") may be permitted to
directors, officers and controlling persons of the Registrant pursuant to
the foregoing provisions, or otherwise, the Registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in City of Denver, State of Colorado, on the
23rd day of May, 1997.
KESTREL ENERGY, INC.
By:/s/Timothy L. Hoops
Timothy L. Hoops, President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
SIGNATURES TITLE DATE
/s/ Timothy L. Hoops President, Chief Executive May 23, 1997
Timothy L. Hoops Officer, Principal Executive
Officer and Director
/s/ Mark A. Boatright Vice President-Finance, Chief May 23, 1997
Mark A. Boatright Financial Officer, Principal
Financial and Accounting
Officer, Treasurer, Secretary
and Director
Chairman of the Board
Robert J. Pett
/s/ John T. Kopcheff Vice President-International May 23, 1997
John T. Kopcheff and Director
/s/ Kenneth W. Nickerson Director May 23, 1997
Kenneth W. Nickerson
KESTREL ENERGY, INC.
PRIVATE PLACEMENT MEMORANDUM DATED APRIL 2, 1997
SECTION THEREOF ENTITLED "SELLING RESTRICTIONS"
SELLING RESTRICTIONS
The Shares have not been and will not be registered under the
United States Securities Act of 1933, as amended (the "Securities Act"),
or with any securities regulatory authority of any state or territory
within the jurisdiction of the United States, and may not be offered or
sold within the United States or to, or for the account or benefit of,
U.S. persons, except in accordance with Regulation S under the Securities
Act. The Shares will be placed in accordance with Rule 903 of Regulation
S (as provided below) under the Securities Act and in compliance with the
offering restrictions requirement of Regulation S. (Terms used herein
have the meanings given to them by Regulation S.) Each person that
purchases a share in this Issue will receive a share certificate bearing a
legend substantially to the following effect:
"THE SHARES COVERED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE SECURITIES ACT), OR WITH ANY SECURITIES
REGULATORY AUTHORITY OF ANY STATE OR OTHER
JURISDICTION OF THE UNITED STATES, AND MAY NOT BE
OFFERED AND SOLD WITHIN THE UNITED STATES OR TO, OR
FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT IN
ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.
TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM BY
REGULATION S AS PROMULGATED BY THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION."
An offer or sale of Shares within the United States except as
described above, may violate the registration requirements of the
Securities Act. Because the U.S. Securities and Exchange Commission (the
"SEC") proposed on February 20, 1997 to add a one year holding period to
securities purchased in offerings under Regulation S and there can be no
assurance that such proposal will not be adopted by the SEC before the
Company completes the Issue or before the expiration of the existing (40)
day restricted period for resales to U.S. persons under Regulation S as it
is currently in effect, the Company has agreed to file a Form S-3
registration statement with the SEC covering the Stock sold hereunder as
soon as practicable after the close of this Issue. The effect of such
registration, when it is declared effective by the SEC, will be to remove
all restrictions on resales into the U.S. by purchasers in the Issue other
than a prospectus delivery requirement. While there can be no assurance
as to how quickly the SEC will exercise its discretionary authority to
register the Shares, the Company's last registration of Shares that had
been previously issued in a Regulation S offering was declared effective
46 days after it was first filed with the SEC.
Kestrel, Williamson and any other participating Dealer, if any
("Seller") (i) will not offer or sell any Shares in the United Kingdom, by
means of any document, other than to persons whose ordinary business it is
to buy or sell shares or debentures, whether as principal or agent (or in
circumstances which do not constitute an offer to the public within the
meaning of the Companies Act 1985); (ii) has complied and will comply with
all applicable provisions of the Financial Services Act 1986 with respect
to anything done by it in relation to the Shares in, from or otherwise
involving the United Kingdom; and (iii) has only issued or passed on and
will only issue or pass on in the United Kingdom this document or any
other document received by it in connection with the issue of the Shares
to a person who is of a kind described in Article 9(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1988 or
is a person to whom the document may otherwise lawfully be issued and
passed on.
Seller will comply with all applicable securities laws and
regulations in each jurisdiction in which it offers, sells or delivers
Shares and will ensure that no obligations are imposed on the Company in
any such jurisdiction as a result of any of the foregoing actions. Seller
will obtain any consent, approval or permission required of it for, the
offer, sale or delivery by it of Shares under the laws and regulations in
force in any jurisdiction to which it is subject or in or from which it
makes any offer, sale or delivery. No one is authorized to make any
representation or use any information in connection with the issue,
subscription and sale of the Shares that is inconsistent with that
contained in this document.
The purchase of shares is subject to completion, execution and
satisfactory review of the Offshore Securities Subscription Agreement and
Purchaser Representations letter attached hereto.
In addition to the purchase price, purchasers of Shares in this
Issue may be required to pay stamp taxes and other charges in accordance
with the laws and practices of the country of purchase.
GORSUCH KIRGIS L.L.C.
Attorneys at Law
1401 Seventeenth Street, Suite 1100
Denver, Colorado 80202
Telephone (303) 299-8900
Fax (303) 298-0215
May 23, 1997
Kestrel Energy, Inc.
999 18th Street, Suite 1100
Denver, Colorado 80202
Re: Kestrel Energy, Inc.
Registration Statement on Form S-3
Gentlemen:
We are counsel to Kestrel Energy, Inc., a Colorado corporation (the
"Company"), in connection with the preparation of a Registration Statement
on Form S-3 filed with the Securities and Exchange Commission on May 23,
1997 (the "Registration Statement"), relating to a proposed offering by
the Selling Shareholders to the public of a maximum of 2,502,000 shares of
the Company's Common Stock, no par value (the "Common Stock").
In this connection, we have examined originals or copies, certified
or otherwise identified to our satisfaction, of such corporate records,
certificates and written and oral statements of officers, legal counsel
and accountants of the Company and of public officials, and other
documents that we have considered necessary and appropriate for this
opinion, and, based thereon, we advise you that, in our opinion:
1. The Company is a corporation duly organized and validly existing
under the laws of the State of Colorado; and
2. The Common Stock, when sold pursuant to and in accordance with
the Registration Statement, will be validly issued, fully paid and
nonassessable.
We hereby consent to the use of our name beneath the caption "Legal
Matters" in the Prospectus forming a part of the Registration Statement
and to the filing of this opinion as Exhibit 5 thereto.
Very truly yours,
GORSUCH KIRGIS L.L.C.
Consent of Independent Auditors
-------------------------------
The Board of Directors
Kestrel Energy, Inc.:
We consent to the incorporation by reference in the registration statement
Form S-3 of Kestrel Energy, Inc. of our report dated September 13, 1996
relating to the consolidated balance sheets of Kestrel Energy, Inc. and
subsidiary as of June 30, 1996 and 1995, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of
the years in the three-year period ended June 30, 1996, which report
appears in the June 30, 1996 Form 10-K of Kestrel Energy, Inc. and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Denver, Colorado
May 23, 1997
