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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 25, 2000
UNITED STATES EXPLORATION, INC.
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(Exact name of registrant as specified in its charter)
Colorado 1-13513 84-1120323
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1560 Broadway, Suite 1900
Denver, Colorado 80202
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (303) 863-3550
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(Former name or former address, if changed since last report): N/A
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ITEM 5. OTHER EVENTS.
On April 25, 2000, United States Exploration, Inc. issued the press release
filed as Exhibit 99 to this Report and incorporated herein by reference.
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SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report on Form 8-K to be signed on its behalf by
the undersigned thereunto duly authorized.
UNITED STATES EXPLORATION, INC.
Date: April 26, 2000 By:/s/ F. Michael Murphy
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F. Michael Murphy, Vice President
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EXHIBIT INDEX
Exhibit No. Description
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99 Press Release
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EXHIBIT 99
United States Exploration Announces Settlement Agreement with ING
Denver, Colorado - April 25, 2000 - United States Exploration, Inc. (ASE - UXP)
announced today that it has entered into two agreements and a letter of intent
that, if consummated, will resolve the existing default under its principal
credit facility. The Company has been in default under its loan agreement with
ING (U.S.) Capital LLC since September 1998. As of March 31, 2000, the
outstanding loan amount due ING was $31,250,000 plus accrued past-due interest
of approximately $2,222,000. These amounts are secured by substantially all the
Company's oil and gas properties. ING has granted the Company (or its designee)
an option to purchase the ING loan for a total of $17,000,000 at any time on or
before May 15, 2000. The Company paid $500,000 for the option. The Company may
extend the option until May 31, 2000 by paying an additional $500,000 on or
before May 15, 2000. All amounts paid for these options would be credited
against the purchase price of the loan if the option is exercised.
The Company has also entered into an agreement with Bruce D. Benson, its
Chairman of the Board, Chief Executive Officer and President, for the purchase
by Mr. Benson of 3,000,000 shares of common stock for $1.10 per share or a total
of $3,300,000. On April 24, 2000, the closing price of the Company's common
stock on the American Stock Exchange was $0.69 per share. At the time the
purchase is consummated, Mr. Benson's employment agreement would be amended to
extend its term for an additional year, or until August 6, 2001. The amendment
would also provide for a severance payment of $1,000,000 to Mr. Benson in the
event that he is terminated by the Company without cause prior to the end of the
term of the agreement, the Company defaults under the agreement or a majority of
the board of directors changes during the period. The agreement with Mr. Benson
is conditioned upon the purchase of the ING loan pursuant to the exercise of the
option and the completion of a new credit facility as described below.
The Company has also entered into a letter of intent with a new lender to
provide a $24,000,000 credit facility. Of that amount, $12,000,000 would be
available to fund the purchase of the ING note and the remaining $12,000,000
would be available for future development of the Company's properties under
certain conditions. The loan would bear interest at the rate of 10% per annum
and be repayable in varying quarterly installments based on the Company's cash
flow beginning in June 2000 and continuing through December 2009. In addition,
the lender would be granted a 6% overriding royalty interest, proportionately
reduced, in all of the Company's existing wells in Colorado and in any new wells
drilled by the Company in Colorado while the loan remains outstanding. The
Company would have the right to repurchase a portion of these royalties after
the Lender has achieved a 15% per annum return on investment.
The initial proceeds of the new borrowing, together with the proceeds of the
sale of stock to Mr. Benson and internally generated funds, would be used to
fund the purchase of the ING loan. However, because the letter of intent with
the new lender is not binding there can be no assurance that the agreement for
the new credit facility will be successfully completed. If the Company is
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unable to complete arrangements for a new credit facility prior to the
expiration of the ING option, whether pursuant to the existing letter of intent
or otherwise, it would be unable to purchase the ING loan and ING could elect to
pursue its remedies under its existing credit agreement with the Company.
Bruce D. Benson stated that "we will be both relieved and pleased to finally
remove the uncertainty regarding our future caused by the Company's
non-compliance with the ING loan agreement. The combination of more than $16
million of debt and accrued interest relief, a $3.3 million cash infusion from
new equity and access to a $12 million development financing facility will give
us the ability to move forward aggressively with our development program and
create value for our shareholders." This news release includes 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. Although the Company
believes that its expectations are based on reasonable assumptions, it can give
no assurance that expected results will be achieved. Important factors that
could cause actual results to differ materially from those in the
forward-looking statements herein include risks related to the need to negotiate
agreements with new sources of financing and other risk factors as described in
the Company's Annual Report on Form 10-KSB for the year ended December 31, 1999
as filed with the Securities and Exchange Commission.
United States Exploration, Inc. is engaged in the acquisition, exploration,
development, production and marketing of natural gas and crude oil in North
America. The Company's principal reserves and producing properties are located
in northeast Colorado. The Company's common stock trades on the American Stock
Exchange under the symbol UXP.
