SCOTTSDALE, Ariz., July 5, 2012 /PRNewswire/ -- American Standard Energy Corp. ("American Standard" or the "Company") (OTCBB: ASEN), an emerging exploration and production company, today announced two agreements that strengthen the financial position and balance sheet of the Company.
The Company has entered into an agreement with Geronimo Holding Corporation ("Geronimo") under which the Company will provide Geronimo 35,400 shares of a newly created Series A Cumulative Convertible Preferred Stock ("Preferred Stock") in exchange for the $35 million subordinated Promissory Note issued to Geronimo on March 5, 2012 plus all accrued and unpaid interest to date.
The terms of the Preferred Stock provide for an annual dividend of 7.5% which can be both accumulated and paid-in-kind. The Preferred Stock can be converted into American Standard Common Stock on or after March 6, 2013, contingent on certain approvals, at a price equal to $3.00 per common share. The Company, at its sole option, can choose to adjust the conversion price one time in the two years immediately following the issuance of the Preferred Stock, to a price equal to the average closing sale price of any 10-trading day period immediately following the election to do so by the Company.
Separately, American Standard, along with certain wholly-owned subsidiaries of the Company, entered into an agreement with XOG Operating, LLC ("XOG") under which XOG agreed to accept 4,444,445 shares of American Standard Common Stock at a price per share equal to $2.25 for the satisfaction of $10 million due XOG under certain Joint Interest Billing Statements for projects in which XOG provided drilling and other operational services to American Standard. The agreement eliminates substantially all of the Company's outstanding payables currently due XOG.
In combination, the two transactions reduce the Company's outstanding liabilities by approximately $45 million.
"These two agreements begin a new chapter in the evolution of American Standard Energy," said Richard MacQueen, President of American Standard. "Our ability to equitize a meaningful portion of our liabilities – at a premium to the current market price – represents the beginning of a strategic repositioning aimed at strengthening our overall financial position, repositioning the Company to focus on our strongest asset positions, and articulating a plan for long-term growth and value creation for all of our stakeholders."
"American Standard has rapidly accumulated a portfolio of strategic oil and gas assets that should provide years of drilling and value creation opportunities," added MacQueen. "Our challenge now is to carefully evaluate our opportunities, focus on prospects that offer the best long-term potential returns for our shareholders, look for opportunities to high-grade our portfolio and redeploy capital to further improve our balance sheet and shape the future growth prospects of American Standard. We are fortunate to have stakeholders that understand the future value of these assets as we forged what we believe to be important and deleveraging, value-enhancing transactions."
An independent committee of the Company's Board of Director's has reviewed and approved the transactions and received independent opinions on the fairness of each agreement. A complete description of the transactions can be found in a Form 8-K Current Report to be filed with the U.S. Securities and Exchange Commission.
The effective date of the transactions is June 30, 2012.
About American Standard Energy
American Standard Energy Corp. is an emerging oil and gas exploration and production company based in Scottsdale, Arizona. The Company's oil and gas asset base is balanced between operated acreage in the Permian and non-operated acreage in the Williston Basin and South Texas Eagle Ford resource prospects. The Company currently controls approximately 112,000 net acres in emerging unconventional plays including the Permian Basin, Williston Basin and Eagle Ford shale. For additional information on American Standard Energy Corp. visit our website at: www.asenergycorp.com
Forward Looking Statements
Except for the historical information contained herein, this press release contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933 (the "Securities Act") and the Securities Exchange Act of 1934 (the "Exchange Act"). All statements other than statements of historical facts included in this report regarding our financial position, business strategy, plans and objectives of management for future operations, industry conditions, and indebtedness covenant compliance are forward-looking statements. When used in this report, forward-looking statements are generally accompanied by terms or phrases such as "estimate," "project," "predict," "believe," "expect," "anticipate," "target," "plan," "intend," "seek," "goal," "will," "should," "may" or other words and similar expressions that convey the uncertainty of future events or outcomes. Items contemplating or making assumptions about, actual or potential future sales, market size, collaborations, and trends or operating results also constitute such forward-looking statements. Please refer to the documents American Standard files, from time to time, with the Securities and Exchange Commission; specifically, American Standard's most recent Form 10-K and the cautionary statements and risk factors contained therein. Those documents contain and identify important risk factors that could cause the actual results to differ materially from those contained in or implied by these forward-looking statements.
Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our Company's control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following: oil and gas prices, our ability to raise capital, general economic or industry conditions nationally and/or in the communities in which our Company conducts business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting our Company's operations, products, services and prices.
We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control.
American Standard Energy Corp.
SOURCE American Standard Energy Corp.