<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[X] Filed by Registrant.
[ ] Filed by Party other than the Registrant
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[X] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
GOTHIC ENERGY CORPORATION
(Name of Registrant as Specified in Its Charter)
NOT APPLICABLE
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
___________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
___________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
___________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
5) Total Fee Paid:
______________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the Fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement Number:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
<PAGE>
CONSENT SOLICITATION STATEMENT
GOTHIC ENERGY CORPORATION
5727 SOUTH LEWIS AVENUE - SUITE 700
TULSA, OKLAHOMA 74105
This Consent Solicitation Statement, and the enclosed form of Consent, are
being furnished to the holders of the 7 1/2% Cumulative Convertible Preferred
Stock, $.05 par value (the "Preferred Stock") of Gothic Energy Corporation, an
Oklahoma corporation (the "Company"), in connection with a solicitation of
consents by the Board of Directors of the Company to a proposal (the "Proposal")
to amend the Purchase Agreement dated December 20, 1995, as amended by Amendment
No. 1 dated January 10, 1996 (the "Purchase Agreement"), among the Company and
Epoch Capital Corporation, a corporation organized under the laws of British
Columbia, Canada, and Quest Capital Corporation, a corporation organized under
the laws of British Columbia, Canada, to delete the restrictive covenant
contained in Section 3C(viii) thereof. The Proposal is further described
herein.
The period for solicitation of consents will terminate at 4:30PM, New York
City time, on Monday, August 11, 1997 (unless extended) and all consents must be
submitted by such time in order to be taken into account. All holders of record
of Preferred Stock of the Company at the closing of business on July 22, 1997
(the "Record Date") are entitled to receive this Consent Solicitation Statement
and to consent, withhold consent or abstain with regard to the Proposal. As of
July 22, 1997, the Company had 4,340 shares of Preferred Stock outstanding, each
of which is entitled to one (1) vote on the Proposal. There were, as of the
Record Date, fifteen (15) holders of record of the Preferred Stock.
Stockholders are urged to review this Consent Solicitation Statement in its
entirety.
The consent of stockholders holding a majority of the shares of Preferred
Stock outstanding as of the closing of business on July 22, 1997 is required for
the approval of the Proposal. Consents will be tabulated by one or more
representatives of the Company. Affiliates of Directors of the Company and
other holders of 2,590 shares of Preferred Stock have advised the Company that
they intend to consent to approve the Proposal, and, as a result, approval of
the Proposal will be assured. See "Stock Ownership Information."
This Solicitation of consents is being made by the Company and the Company
will bear the cost of the solicitation. Consents may be solicited in person or
by telephone by Directors, officers and regular employees of the Company without
additional compensation.
<PAGE>
An executed consent may be revoked at any time by written revocation
thereof executed and delivered to the Company, at the office of the Secretary,
Gothic Energy Corporation, 5727 South Lewis Avenue, Suite 700, Tulsa, Oklahoma
74105, prior to 4:30PM, New York City time, on August 11, 1997. A revocation
may be in any written form (including a substitute Consent Form providing for
consent to be withheld), provided that it clearly states that the previously
delivered consent is no longer effective. This Consent Solicitation Statement,
and the enclosed Form of Consent, are being mailed to stockholders on or about
July _____, 1997.
PROPOSAL TO AMEND THE PURCHASE AGREEMENT
The Purchase Agreement, pursuant to which the Preferred Stock was
issued, contains, in Section 3C(viii) thereof, the following:
So long as at least 2,645 shares of Preferred [Stock] remain outstanding
the Company shall not:
* * *
(viii) issue additional indebtedness which would result in the aggregate
indebtedness of the Company outstanding in an amount greater than 75% of
the future net revenues, discounted at 10%, of the Company's proven oil and
gas reserves.
The Board of Directors of the Company is soliciting the consents of the
holders of Preferred Stock to delete this restrictive covenant. If the Proposal
is adopted, the Company's borrowings will no longer be restricted by the
covenant.
The Purchase Agreement was entered into by the Company with Epoch Capital
Corporation and Quest Capital Corporation on December 20, 1995. Accordingly,
the present holders of Preferred Stock were not parties to the Purchase
Agreement as executed and thereby, although not free from doubt, the current
holders of the Preferred Stock may be entitled to the benefits afford by the
foregoing restriction.
The Company is currently engaged in negotiations which it believes will
result in it entering into a transaction to borrow from institutional and other
investors the sum of $100 million, to be represented by the Company's Senior
Notes (the "Notes"), the proceeds of which will be used to pay the purchase
price of approximately $27.5 million for certain oil and gas producing
properties located in Oklahoma and New Mexico, all balances, estimated at $48
million, to be due under the Company's credit facility with a bank (the "Credit
Facility"),
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<PAGE>
repay other indebtedness of approximately $4.5 million and apply approximately
$15.7 million to future acquisitions and development of producing properties and
working capital. The terms of the Notes are expected to include an interest rate
of approximately 10% per annum, mature ten (10) years after issuance, subject to
certain optional redemption provisions commencing five (5) years after issuance
and be the unsecured obligations of the Company ranking senior to other
permitted indebtedness of the Company other than indebtedness under the Credit
Facility. The Notes will rank senior to the Preferred Stock in the event of the
liquidation of the Company. It is expected the Credit Facility will be amended
at the closing of the issuance of the Notes and that up to $30 million initially
will be available to be borrowed under the Credit Facility. The Credit Facility
is, and is expected to continue to be, secured by all or substantially all of
the assets of the Company. Although there are no agreements with or commitments
from the bank, the Company expects that it will seek to increase the amount
borrowed under the Credit Facility as additional oil and gas reserves are
acquired.
As a consequence of the foregoing borrowings, the Company may be in
violation of the covenant described above. On a pro forma basis reflecting the
issuance of the Notes and the application of the estimated net proceeds
therefrom, including the acquisition of the oil and gas producing properties
(but without any borrowings under the Credit Facility), it is estimated that the
Company's aggregate indebtedness would be approximately 85.4% of the future net
revenues, discounted at 10%, of the Company's proven oil and gas reserves.
The Board of Directors of the Company believes that it is in the best
interests of the Company and its stockholders to adopt the Proposal. Adoption
of the Proposal will avoid any issue as to what, if any, rights the holders of
shares of Preferred Stock have under the Purchase Agreement in the event of
consummation of the transaction resulting in the issuance of the Notes. If the
Proposal is not adopted, the Company may be unable to proceed with the issuance
of the Notes.
Under the Purchase Agreement as executed and subsequently amended, an
aggregate of 5,540 shares of Preferred Stock were issued in January 1995.
Subsequently, through conversions into Common Stock of the Company, the number
of shares of Preferred Stock outstanding was reduced to 4,340 shares.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS CONSENT IN FAVOR OF THE
PROPOSAL.
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<PAGE>
STOCK OWNERSHIP INFORMATION
SET FORTH BELOW IS INFORMATION CONCERNING THE PREFERRED STOCK OWNERSHIP OF
ALL PERSONS KNOWN BY THE COMPANY WHO OWN BENEFICIALLY 5% OR MORE OF THE
COMPANY'S PREFERRED STOCK, AND THE PREFERRED STOCK OWNERSHIP OF EACH DIRECTOR OF
THE COMPANY, AND ALL DIRECTORS AND OFFICERS OF THE COMPANY AS A GROUP, AS OF
JULY 22, 1997. AS OF JULY 22, 1997, THE COMPANY HAD 4,340 SHARES OF PREFERRED
STOCK OUTSTANDING.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL HOLDER,
IDENTITY OF GROUP/(1)/ AMOUNT PERCENT OF CLASS
- --------------------------------------- ------ ----------------
<S> <C> <C>
Clarion Capital Corporation 500/(1)/ 11.5%
Ohio Savings Plaza - Suite 510
1801 East Ninth Street
Cleveland, Ohio 44114
Benitz & Partners, Ltd. 800 18.4%
16 Saville Road - 3rd Floor
London, England W1X 1AE
Dundee Bancorp Inc. 540 12.4%
Scotia Plaza - 55th Floor
409 King Street West
Toronto, Ontario, Canada M5H 4AP
Choi & Choi HK LTD. 550 12.7%
16 Saville Road - 3rd Floor
London, England W1X 1AE
All officers and Directors as a group 500/(1)/ 11.5%
(4 persons)
- -------------------------
</TABLE>
/(1)/ Includes 500 shares held by Clarion Capital Corp., of which Mr. Morton A.
Cohen, a Director of the Company, is an officer and director and principal
shareholder.
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<PAGE>
SUBMISSION OF STOCKHOLDERS' PROPOSALS FOR 1998 ANNUAL MEETING
Any proposals which stockholders intend to present for a vote of
stockholders at the Company 1998 Annual Meeting, and which such stockholders
desire to have included in the Company's Proxy Statement and form of Proxy
relating to that Meeting, must be sent to the Company's executive office and
received by the Company not later than December 14, 1997.
By Order of the Board of Directors
John Rainwater, Secretary
Dated: July _____, 1997
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<PAGE>
GOTHIC ENERGY CORPORATION
CONSENT FORM
CONSENT TO PROPOSED AMENDMENT TO
PREFERRED STOCK PURCHASE AGREEMENT
SOLICITED BY THE BOARD OF DIRECTORS OF GOTHIC ENERGY CORPORATION
The undersigned hereby consents, withholds consent or abstains, as
specified hereon, to the amendment of the Preferred Stock Purchase Agreement
dated December 20, 1995, as amended by amendment dated January 10, 1996 to
delete the restrictive covenant contained in Section 3C(viii) thereof.
Please be certain to indicate hereon whether you wish to consent, withhold
consent or abstain. If this form is executed but no choice is indicated, you
will be deemed to have consented.
The Consent Solicitation Statement contains important information regarding
the Proposal for which your consent is being solicited. Prior to executing this
Consent, you are urged to read a copy of the Consent Solicitation Statement.
[ ] Consent [ ] Withhold Consent [ ] Abstain
Dated: _______________, 1997 __________________________________________
Signature
__________________________________________
Signature
Please sign your name exactly as it appears
hereon. If signing for estates, trusts,
corporation or partnerships, title or capacity
should be stated. If shares are held jointly,
each holder should sign. PLEASE SIGN, DATE AND
RETURN THIS CONSENT USING THE ENCLOSED
ENVELOPE.
