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8-K - CURRENT REPORT - PEDEVCO CORP | ped_8k.htm |
EXHIBIT 99.1
Pacific Energy Development Announces Entry into Letter of
Intent
June
22, 2017 – PEDEVCO Corp. d/b/a Pacific Energy Development
(NYSE MKT: PED) (the “Company”), announced today that
it has recently entered into a new non-binding letter of intent
with a Hong Kong-based investor group who has expressed an interest
in funding the development of the Company’s oil and gas
assets and restructuring the Company’s debt. The Company has been in discussions with the
investor since November, 2016, and in late April 2017, the Company
and the investor prepared a draft term sheet which the Company
presented to its senior lenders, along with the anticipated
pro-forma model results of the restructuring, for consideration and
approval to move forward. A conference call was held in early May
2017 between the Company, its lenders, and a representative of the
investor, where the parties discussed in more detail the deal
structure and short-term, intermediate-term and long-term plans of
the Company and the investor, whose goal is to grow the Company
into a larger institutionally-sponsored public company. The Company
notified the investor in mid-May 2017 that it was interested in
moving forward on the terms proposed, and in late May 2017, the
Company and the investor signed a non-binding term sheet which
includes a binding 90-day no-shop period expiring in late August
2017, during which time the parties intend to conduct in-depth due
diligence on one another, prepare definitive documentation, and
move to closing. Due to the binding no-shop provisions under the
term sheet and what the Company believes to be a more certain and
favorable transaction with the new investor group, the Company
terminated its pending merger with GOM Holdings LLC, which
transaction has been delayed for over a year while GOM’s
assets continue to be subject to Bankruptcy proceedings and with
increasing uncertainty as to when, and if, GOM would be able to
close the contemplated transaction on terms satisfactory to the
Company. The letter of intent is non-binding as to the
transactions contemplated in the letter of intent and there can be
no assurance that such transactions will be completed on favorable
terms, if at all. Additionally, the transactions contemplated in
the letter of intent, if consummated, may result in significant
dilution to existing shareholders.
The proposed plan calls for all of the Company’s fixed debt,
except for the approximately $6 million senior secured position
that matures May 2019, to convert into equity of the Company,
followed by an equity investment of $12 million to be made by the
new investor, all of which equity would convert into common stock
of the Company. The result would be a company with only
approximately $6 million in debt and more than an estimated $70
million in assets, including $12 million in cash, with an increase
to stockholders’ equity by more than an estimated $70
million. If the planned transaction is consummated as planned, the
Company believes it would emerge properly capitalized and
positioned to initially grow through execution of its development
plan to increase cash flow and subsequently through accretive
acquisitions of oil and gas properties and operating companies,
funding permitting.
Mr. Michael Peterson, the President and Chief Executive Officer of
the Company, commented, "We are pleased that the negotiations that
we have been involved in with our lenders and investors since the
end of 2016 are moving forward to the next stage. We have
previously been unable to speak publicly about our discussions
given their premature nature, but given recent advances in our
discussions, we wanted to let investors know of the exciting
transaction currently contemplated by the Company. We believe that
this transaction, if consummated as planned, will be much more
favorable to the Company and more accretive to our shareholders
than the previously contemplated merger with GOM, and that this new
transaction will transform the Company in a very positive way,
immediately increasing stockholders’ equity by over an
estimated $70 million, removing most of the debt burden on the
Company, and providing the development capital needed to execute
the development plan of our current assets and create an additional
estimated $42 million of net present value (NPV) cash flow which,
per our pro-forma model, using an average DJ Basin EBITDA multiple,
is anticipated to significantly increase the value of our shares to
the benefit of our common equity shareholders.”
Mr. Peterson added, “Since crude oil prices began to sell off
in the fall of 2014, our management team has acted very proactively
to raise capital, buy additional assets to increase our cash flow,
restructure our debt in order to extend their maturities and reduce
our interest payments, and to significantly reduce our G&A
expenses. All of these actions have allowed the Company to weather
an environment where most small E&P companies like ours have
failed. It has been our singular pursuit to do those strategic
things that would give us the time necessary to seek and negotiate
transactions designed to strengthen our balance sheet while
satisfying our lenders and significantly increase the value of our
shares for our shareholders.”
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Mr. Peterson continued, “While we haven’t yet entered
into binding definitive agreements, and the contemplated
transaction remains subject to due diligence and documentation, and
may not be consummated on terms and condition acceptable to the
Company, its lenders and the investor, if at all, we are optimistic
and anticipate a simultaneous closing of the first stage of the
transaction with the signing of the definitive agreements in Q3
2017, and a final close after a shareholder vote in Q4 2017. Given
an anticipated quick diligence period and first closing, we felt it
was important to let our shareholders know our plans and intentions
as I would not want any shareholder to make any investment
decisions regarding our stock, especially at these prices which we
believe fail to take into account the potential significant
positive outcome of the proposed transaction, without an
understanding of the Company’s plans.”
About Pacific Energy Development (PEDEVCO Corp.)
PEDEVCO
Corp, d/b/a Pacific Energy Development (NYSE MKT: PED), is a
publicly-traded energy company engaged in the acquisition and
development of strategic, high growth energy projects, including
shale oil and gas assets, in the United States. The Company’s
principal asset is its D-J Basin Asset located in the D-J Basin in
Colorado. Pacific Energy Development is headquartered in Danville,
California, with an operations office in Houston,
Texas.
Cautionary Statement Regarding Forward Looking
Statements
All
statements in this press release that are not based on historical
fact are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 and the provisions
of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended (the
“Acts”). In particular, when used in the preceding
discussion, the words “estimates,”
“believes,” “hopes,” “expects,”
“intends,” “plans,”
“anticipates,” or “may,” and similar
conditional expressions are intended to identify forward-looking
statements within the meaning of the Act, and are subject to the
safe harbor created by the Act. Any statements made in this news
release other than those of historical fact, about an action, event
or development, are forward-looking statements. While management
has based any forward-looking statements contained herein on its
current expectations, the information on which such expectations
were based may change. These forward-looking statements rely on a
number of assumptions concerning future events and are subject to a
number of risks, uncertainties, and other factors, many of which
are outside of the Company's control, that could cause actual
results to materially differ from such statements. Such risks,
uncertainties, and other factors include, but are not necessarily
limited to, those set forth under Item 1A "Risk Factors" in the
Company's Annual Report on Form 10-K for the year ended December
31, 2016 and subsequently filed Quarterly Reports on Form 10-Q
under the heading "Risk Factors". The Company operates in a highly
competitive and rapidly changing environment, thus new or
unforeseen risks may arise. Accordingly, investors should not place
any reliance on forward-looking statements as a prediction of
actual results. The Company disclaims any intention to, and
undertakes no obligation to, update or revise any forward-looking
statements, except as otherwise required by law, and also takes no
obligation to update or correct information prepared by third
parties that are not paid for by the Company. Readers are also
urged to carefully review and consider the other various
disclosures in the Company's public filings with the Securities
Exchange Commission (SEC).
Contacts
Pacific
Energy Development
1-855-733-3826
PR@pacificenergydevelopment.com
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