LEXINGTON, Ky., Sept. 9 /PRNewswire-FirstCall/ -- DAUGHERTY RESOURCES,
INC. (Nasdaq: NGAS) today announced the completion of a $5,000,000
institutional private placement of its 7% Convertible Notes due September 5,
2008. The Notes are convertible into the Company's common stock at an initial
conversion price of $4.50 per share, reflecting a 3% premium above the stock's
average closing price for the thirty trading days preceding the transaction.
"The funds from this private placement will be used on our Leatherwood
Prospect in the Big Sandy Field in the Appalachian Basin," stated William S.
Daugherty, President and CEO. "We intend to drill 25 wells on the prospect
this year to begin development of this very attractive gas prospect. The Big
Sandy Field covers 250,000 acres and has produced over 2.5 trillion cubic feet
equivalent of natural gas from approximately 10,000 wells."
The private placement of the Notes was covered by a Securities Purchase
Agreement dated as of September 5, 2003. Under the Purchase Agreement, the
investors also received three year Warrants to purchase up to 222,222 common
shares at an exercise price of $5.11 per share. The Purchase Agreement
provides for the Company to register the shares issuable upon conversion of
the Notes and exercise of the Warrants for resale on behalf the investors.
The Purchase Agreement also provides the investors with a right of first
refusal to participate in any private placement of securities by the Company
during the three years following the issuance of the Notes.
Interest on the Notes is payable quarterly in cash or additional Notes and
must be paid in kind through September 30, 2004. The Company also has the
right to repay any unconverted Notes at maturity either in cash or in common
shares valued for that purpose at 90% of their prevailing market price. The
Notes are repayable upon any event of default in cash at the greater of 115%
of their principal amount or 100% of the prevailing market price of their
underlying conversion shares. Events of default include any delisting of the
Company's common stock and any change of control transaction not approved by
the Note holders.
The conversion price of the Notes is subject to anti-dilution adjustments
for any recapitalization transaction and for any issuance of common stock or
rights to acquire common stock for consideration less than the prevailing
conversion price. The exercise price of the Warrants is subject to similar
adjustments. For purposes of these adjustments, dilutive issuances do not
include securities issued under existing instruments, under board-approved
incentive plans or in a public offering, business acquisition or strategic
transaction. In addition, no anti-dilution adjustments will be made to the
extent they would increase the total shares issuable under the Notes and
Warrants above 1,947,990 common shares, representing 19.99% out the common
shares currently outstanding. The same limitation applies to the payment of
interest in kind and to repayment of the Notes in common shares.
Investment banking services for the transaction were provided to the
Company by The Shemano Group, Inc., headquartered in San Francisco,
California, which received a 7% fee and a five year warrant to purchase up to
40,000 shares of the Company's common stock at $5.11 per share.
Daugherty Resources is a natural resources company focused on natural gas
development drilling and reserve growth. Based in Lexington, Kentucky, the
Company specializes on developing geological prospects concentrated in the
Appalachian Basin. Additional information about the Company is available at
its website, http://www.ngas.com.
This Release includes forward looking statements within the meaning of
Section 21E of the Securities Exchange Act relating to matters such as
anticipated operating and financial performance, business prospects,
developments and results of the company. Actual performance, prospects,
developments and results may differ materially from anticipated results due to
economic conditions and other risks, uncertainties and circumstances partly or
totally outside the control of the company, including risks of production
variances from expectations, volatility of product prices, the level of
capital expenditures required to fund drilling operations and the ability of
the company to implement its business strategy. These and other risks are
described in the company's periodic reports filed with the United States
Securities and Exchange Commission.
SOURCE Daugherty Resources, Inc.
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Related links:
http://www.ngas.com
CONTACT:
William S. Daugherty, President and CEO of
Daughtery Resources, Inc., +1-859-263-3948, or fax,
+1-859-263-4228, or email, ngas@ngas.com
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