UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
National Energy Group, Inc.
(Name of Issuer)
Class A Common Stock, Par Value $.01 Per Share
(Title of Class of Securities)
163581 21 0
(CUSIP Number)
Marc Weitzen, Esq.
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street, 20th Floor
New York, New York 10036
(212) 626-0800
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
July 19, 1996
(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(b)(3) or (4), check the following box //.
Check the following box if a fee is being paid with the
statement. (A fee is not required only if the reporting
person: (1) has a previous statement on file reporting
beneficial ownership of more than five percent of the class
of securities described in Item 1; and (2) has filed no
amendment subsequent thereto reporting beneficial ownership
of five percent or less of such class.) (See Rule 13d-7).
NOTE: Six copies of this statement, including all exhibits,
should be filed with the Commission. 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>
SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER
This Schedule 13D filed with the U.S. Securities
and Exchange Commission ("SEC") on July 27, 1995, by High
River Limited Partnership, a Delaware limited partnership
("High River"), Riverdale Investors Corp., Inc., a Delaware
corporation ("Riverdale") and Carl C. Icahn, a citizen of
the United States of America (collectively, the
"Registrants") is amended to furnish the additional
information set forth herein. All capitalized terms
contained herein but not otherwise defined shall have the
meanings ascribed to such terms in the original Schedule 13D
previously filed by the Registrants.
ITEM 4. PURPOSE OF TRANSACTION
Item 4 is hereby amended by adding the following:
High River intends to acquire the securities of
National Energy Group, Inc., a Delaware corporation (the
"Company") described in Item 6 for investment purposes.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE
ISSUER.
Item 6 is hereby amended by adding the following:
High River and the Company executed a term sheet
dated July 19, 1996, (the "Term Sheet") which is attached
hereto as Exhibit 2, and incorporated herein by reference in
its entirety. The Term Sheet is, with certain exceptions,
an agreement in principle, pursuant to which High River
agrees to acquire for $10 million (i) shares of the
Company's Convertible Preferred Stock, Series D, par value
$1.00 per share ("Preferred Stock") which shall be
convertible into shares of Common Stock, par value $.01 per
share, of the Company (the "Common Stock"), and (ii)
warrants to purchase the Common Stock at $2.50 per share.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Item 7 is hereby amended by adding the following:
Exhibit 2. Term Sheet.
<PAGE>
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: July 22, 1996
HIGH RIVER LIMITED PARTNERSHIP
By: RIVERDALE INVESTORS CORP., INC.
Its: General Partner
By: /s/ Robert J. Mitchell
Robert J. Mitchell
Its: Vice President and Treasurer
RIVERDALE INVESTORS CORP., INC.
By: /s/ Robert J. Mitchell
Robert J. Mitchell
Its: Vice President and Treasurer
By: /s/ Carl C. Icahn
Carl C. Icahn
[Signature Page of Schedule 13D Amendment No. 1 with respect
to National Energy Group, Inc.]
EXHIBIT 2
NATIONAL ENERGY GROUP, INC.
TERM SHEET
This term sheet sets forth the terms of the understanding
between National Energy Group, Inc. (the "Company") and High River
Limited Partnership, a Delaware limited partnership ("Investor"),
whose general partner is an entity owned by Carl C. Icahn,
concerning the issuance and sale by the Company to Investor of
shares of the Company's Series D Convertible Preferred Stock and
warrants to purchase the Company's Common Stock.
Terms of Investment
1.1 Investment. The Company shall issue and Investor shall
purchase 100,000 shares of Series D Convertible Preferred
Stock (the "Series D") of the Company, for an aggregate
price of $10,000,000 or $100.00 per share (the Purchase
Price). For the Purchase Price Investor shall also
receive warrants to purchase 700,000 shares of the
Company's Common Stock at $2.50 per share, which warrants
shall expire five years after issuance.
1.2 Use of Proceeds. The proceeds of the investment shall be
used by the Company for general corporate purposes.
1.3 Conversion. The Series D shall be convertible into
Common Stock at the Conversion Price of $2.25 subject to
anti-dilution adjustments. The Series D shall be
automatically converted into Common Stock if Investor no
longer holds at least 7.5% of the Company's Common Stock
on a fully diluted basis. To determine the percentage
that Investor owns as of any day, the number of shares of
Company Common Stock owned by Investor on a fully diluted
basis (assuming conversion of all preferred stock and
exercise of all outstanding options and warrants owned by
Investor) as of such day shall be divided by the number
of shares of the Company's Common Stock on a fully
diluted basis (assuming conversion of all preferred stock
and exercise of all options and warrants owned by all
holders) as of the date after closing of the merger of
the Company and Alexander Energy Corporation ("AEC")
described in Section 3.3 below (the "Merger") and after
closing the related private placement transactions,
consisting of the transactions with Investor described in
this Term Sheet and with entities managed by Kayne
Anderson Investment Management, Inc. (the "Private
Placement").
1.4 Voting Rights. The Series D will vote as a separate
class for one director to be appointed by the Series D as
provided in Section 2.1, under the circumstances
described in Section 2.2 and as otherwise required by
law.
1.5 Liquidation Preference. On any voluntary or involuntary
liquidation, dissolution or winding up of the Company,
Investor will be entitled to receive the liquidation
preference of $100.00 per share, plus accrued but unpaid
dividends. Such preference shall be to the Common Stock
but not to the Preferred Series B and Preferred Series C
which shall have a liquidation preference to the Series
D. The Series D shall be pari passu with the Series E
Preferred Stock of the Company for purposes of any
liquidation preference.
1.6 Dividends. The Series D shall be entitled to the same
dividends provided to the Common Stock on an as converted
basis.
1.7 Registration. The Company shall cause the Series D, the
warrants and the Common Stock to be issued upon
conversion of the Series D and upon exercise of the
warrants to be registered, upon demand, commencing nine
months after the Closing, provided Investor represents to
the Company that it has a present intention to sell.
Investor shall have the right to have the registration
kept effective until all shares covered thereby have been
sold by Investor. The Company shall register Investor's
shares during the nine month period and, thereafter, on
a piggy-back basis (except for registrations relating to
the merger transactions or on Forms S-4, S-8, and similar
forms), subject to pro rata underwriter cutbacks,
provided Investor represents to the Company that it has
a present intention to sell.
1.8 Obligations of Investor and the Company; Payment of
Certain Fees.
A. Upon execution of this Term Sheet, the parties will
instruct their counsel to prepare the Definitive
Agreement (as hereinafter defined) with a view to
its execution on or about July 25, 1996. If a
Definitive Agreement is not executed by July 25,
1996, unless the Company has refused to enter into
the Definitive Agreement as a result of substantial
changes in this transaction required by Investor
from those reflected in this Term Sheet, upon
written notice from Investor to the Company,
Investor may elect to terminate this Term Sheet,
the Company shall pay a fee of $300,000 to Investor
on October 31, 1996, and all other obligations of
Investor and the Company under this Term Sheet
shall terminate except for the last sentence of
Section 1.8.B. and for Section 1.8.C.
Alternatively, if Investor notifies the Company
that Investor is willing to execute a Definitive
Agreement on such date on the terms reflected in
this Term Sheet, and the Company refuses either to
present the Definitive Agreement or to sign the
Definitive Agreement, Investor shall have the right
to elect to purchase one-half of the Series D and
warrants for $5,000,000 on or before October 30,
1996 on the terms set forth in this Term Sheet and
to receive a fee of $150,000 on October 31, 1996.
B. Once a Definitive Agreement has been executed, in
the event the Merger closes before September 30,
1996, Investor shall be obligated to purchase the
Series D and the warrants. In the event that the
Merger shall not have been consummated by September
30, 1996, until October 30, 1996 Investor shall no
longer be obligated but shall have the right to
purchase one-half of the Series D and the warrants
for $5,000,000 and to receive a fee of $150,000
from the Company on October 31, 1996. If Investor
does not elect to purchase one-half of the Series D
and the warrants on or before October 30, 1996, the
Company shall pay to Investor $300,000 on October
31, 1996; provided, however, that Investor shall
not be entitled to such fee in the event the
Company has refused to close as a result of
substantial changes in the transaction required by
Investor from those reflected in the Definitive
Agreement. If NEG is obligated to pay a fee under
this Section 1.8.B. or Section 1.8.A. hereof, and a
business combination with AEC is consummated within
five years after the date of this Term Sheet,
Investor shall have the right to purchase the
Series D and warrants (or any remaining portion
thereof not previously purchased by Investor) on
the terms set forth in this Term Sheet in
connection with such business combination.
C. So long as this Term Sheet or the Definitive
Agreement remains in effect, the Company agrees (i)
not to seek to replace Investor to raise additional
equity in connection with the Merger, (ii) not to
close a business combination with AEC without
selling the Series D and warrants to Investor (or
any remaining portion thereof not previously
purchased by Investor) so long as Investor is
willing to purchase such securities on the terms
set forth in this Term Sheet or the Definitive
Agreement, as the case may be, and (iii) not to
seek equity in addition to that raised in the
Private Placement in connection with the Merger
without first offering to Investor the right to
acquire such additional equity on the same terms
being offered by the Company to such other
potential investors.
D. In the event Investor purchases any Series D and
warrants, for a period of five years after the date
of this Term Sheet, the Company agrees not to seek
to sell equity securities for cash in a private
placement transaction without first offering to
Investor the right to acquire such additional
equity on the same terms being offered by the
Company to such other potential investors.
II. Governance
2.1 Board of Directors. The Series D shares (voting together
as one class) shall regularly designate one director but
shall designate one more than one-half the total number
of directors (including the director previously appointed
by Investor) in the event Section 2.2.B takes effect.
2.2 Restrictive Covenants to be Included in Certificate of
Designation of Series D Preferred Stock. The following
provisions are to become part of the Certificate of
Incorporation of the Company which may not be changed
without approval of a majority of the holders of the
Series D shares.
A. The Company may not, without the consent of the
director designated by the outstanding Series D
file a petition in bankruptcy.
B. If an event described in (a) or (b) below has
occurred, the holders of a majority of the
outstanding Series D (voting as a class) shall have
the right to appoint the number of directors that
would equal one-half of the directors plus one on
the Company's Board of Directors (including the
director previously appointed by such holders):
(a) If an involuntary case under the
Bankruptcy Code or any other applicable federal or
state insolvency or similar law is commenced
against the Company (including a case for the
appointment of a receiver, liquidator, custodian,
trustee or similar official for the Company or its
assets) which does not seek emergency or expedited
relief and such case is not dismissed or stayed
within fifteen (15) days of the commencement
thereof, or if a petition is filed under such laws
seeking emergency or expedited relief against the
Company, provided, however, that a filing shall be
deemed not to have occurred with respect to any
emergency or expedited relief petition (i) if the
Company prevails on such petition, or (ii) if no
permanent relief is granted on such petition, if
the Company provides to Investor an opinion of
counsel (being a firm of substantial size and of
good repute) which, without reservation, states
that the Company will prevail on the petition for
permanent relief. In the event that Company
counsel should withdraw its opinion or should the
Company thereafter not prevail on the petition for
permanent relief, the filing will be deemed to have
taken place; or
(b) A default shall have occurred under any
notes or other evidences of indebtedness of the
Company with a principal amount in any one case of
at least $10,000,000 outstanding or defaults shall
have occurred under notes or other indebtedness of
the Company with outstanding principal amounts
aggregating at least $10,000,000, and such
indebtedness is already due and payable in full by
reason of failure to pay the indebtedness and such
default shall not have been cured for a period of
thirty (30) days after occurrence of the default.
Further such a default shall be deemed to have
occurred if (i) such default has resulted in the
acceleration of the maturity of such indebtedness
and such acceleration has not been rescinded within
fifteen (15) days of the acceleration, or (ii) such
lender has issued a notice of foreclosure on its
collateral which notice of foreclosure has not been
rescinded for a period of five (5) days or the
scheduled date of sale of the lender's collateral
is less than five (5) days away.
III Documentation, Expenses and Closing
3.1 Purchase Agreement. The purchase of the Series D will be
made pursuant to a Series D Convertible Preferred Stock
Purchase Agreement (the Definitive Agreement). Such
agreement shall contain, among other things, covenants of
the Company reflecting the provisions set forth herein
and other typical representations and covenants, and
appropriate conditions of closing, including, among other
things, the filing of a certificate of amendment to the
Company's Certificate of Incorporation to authorize the
Series D, and the approval of the Board of Directors and,
if required, the approval of the shareholders of the
Company and of the holders of the Series B Preferred
Stock and Series C Preferred Stock.
3.2 Expenses. The Company shall pay Investor's expenses in
connection with this transaction up to $45,000.
3.3 Closing. If the Merger closes on or before September 30,
1996, the closing shall take place immediately after the
closing of the Merger contemplated by that certain
Agreement and Plan of Merger among the Company, AEC and
NEG-OK, Inc. dated June 6, 1996. Otherwise, the closing
shall occur on such date as the parties shall mutually
agree upon.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]<PAGE>
This letter is intended to be and shall be construed as a
statement of the parties' intent and shall be non-binding, except
the provisions of Sections 1.8.A., Section 1.8.B. and Section
1.8.C. relating to this Term Sheet, and Section 3.2, relating to
expenses incurred in connection with this Term Sheet, shall be
binding on the parties upon execution of this Term Sheet.
ACCEPTED:
NATIONAL ENERGY GROUP, INC.
By:/s/ MILES D. BENDER Date: 7/19/96
Miles D. Bender, President
and Chief Executive Officer
INVESTOR
HIGH RIVER LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Riverdale Investors Corp., Inc.,
its general partner
By:/s/ EDWARD E. MATTNER Date: 7/19/96
Edward E. Mattner
President
