SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of
report (Date of earliest event reported): February 4,
2009
HOUSTON
AMERICAN ENERGY CORP.
(Exact
name of registrant as specified in Charter)
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Delaware
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1-32955
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76-0675953
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(State
or other jurisdiction of incorporation or organization)
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(Commission
File No.)
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(IRS
Employer Identification
No.)
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801
Travis St., Suite 1425
Houston,
Texas 77002
(Address of Principal Executive Offices)(Zip Code)
713-222-6966
(Issuer Telephone number)
(Former name or former address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligations of the registrant under any of the following
provisions (see General Instruction A.2. below):
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£
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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£
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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£
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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£
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
1.01.
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Entry
into a Material Definitive
Agreement.
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Houston
American Energy Corp. (“Houston American”) entered into a letter agreement (the
“Letter Agreement”) with Yazoo Pipeline Co., L.P. (“Yazoo”), Sterling
Exploration & Production Co., L.L.C. (“Sterling”), and Matagorda Operating
Company (together with Yazoo and Sterling, the “Debtors”), pursuant to which
Houston American agreed to provide debtor-in-possession financing (“DIP
Financing”) to the Debtors subject to approval of the Letter Agreement by the
U.S. Bankruptcy Court for the Southern District of Texas (the “Bankruptcy
Court”). On February 4, 2009, the Bankruptcy Court entered an order
approving the DIP Financing on the terms set out in the Letter
Agreement.
Under the
terms of the Letter Agreement, Houston American agreed to advance to the Debtors
up to $300,000 (the “Maximum Borrowing Amount”). Advances under the
Letter Agreement are to be made for purposes and pursuant to a budget acceptable
to Houston American and subject to approval of the same by the Bankruptcy Court,
including, prior to the date of entry of an order by the Bankruptcy Court
approving a sale (the “Asset Sale”) of the assets of the Debtors to Houston
American, not more than $75,000 of Debtors’ professional fees. After
approval of the Asset Sale and upon closing of the Asset Sale, Houston American
will advance additional amounts, up to the balance of the Maximum Borrowing
Amount not previously advanced, to pay Debtors’ remaining professional fees
provided that the same have been approved by the Bankruptcy Court.
Advances
under the Letter Agreement bear interest at 10% per annum and are repayable in
full, with interest, 90 days following approval of the DIP Financing by the
Bankruptcy Court; provided, however, all amounts advanced under the Letter
Agreement, including interest thereon, shall be deemed paid in full upon closing
of the Asset Sale.
As a
condition of the Letter Agreement, the Debtors are required to enter into good
faith negotiations with Houston American, and to seek Bankruptcy Court approval
of, the Asset Sale, including the sale to Houston American or its designees of
rights to seismic data owned by the Debtors and certain affiliates of the
Debtors and all other assets of the Debtors, subject to the reservation by Yazoo
and Sterling of a 15% working interest in all oil, gas and mineral properties
and a 15% retain interest in all tangible assets. The purchase price
pursuant to the Asset Sale shall be the lesser of (i) $5.6 million or (ii) the
amount necessary to pay all allowed claims against the Debtors; plus, if the
total allowed claims are less than $5.3 million, 50% of the difference between
$5.3 million and the actual amount of allowed claims.
Subject
to the performance, for a period of one year, of specified consulting services
on behalf of Houston American by Charles Cheatham, the principal of the Debtors,
and abidance by an Area of Mutual Interest/Non-Compete Agreement, Houston
American will pay an additional $400,000 to the Debtors in quarterly
installments of $100,000 commencing 90 days after closing of the Asset
Sale. Pursuant to the anticipated consulting agreement with Charles
Cheatham, Mr. Cheatham will be required to devote his full time and attention
for a one year period to assisting Houston American in operating and developing
the properties acquired by Houston American in the Asset Sale and Houston
American will pay to Mr. Cheatham $10,000 per month.
In the
event that the assets of the Debtors are sold to a party other than Houston
American, a breakup fee of $200,000 plus all advances of DIP Financing will be
payable to Houston American.
Consummation
of the Asset Sale is subject to satisfactory completion of due diligence,
execution of definitive documents and other conditions. The
obligations with respect to the Asset Sale will terminate upon dismissal of the
bankruptcy, conversion of the bankruptcy to Chapter 7, appointment of a trustee
and certain other conditions.
For a
more complete description of the terms of the Letter Agreement, the DIP
Financing and the Asset Sale, see the Letter Agreement attached hereto as
Exhibit 10.1.
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Item
9.01.
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Financial
Statements and Exhibits.
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Letter
Agreement, dated February 3, 2009, between Houston American Energy Corp.,
Yazoo Pipeline Co., L.P., Sterling Exploration & Production Co.,
L.L.C., and Matagorda Operating
Company.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this Report to be signed on its behalf by the undersigned hereunto
duly authorized.
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HOUSTON
AMERICAN ENERGY CORP.
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Dated: February
5, 2009
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By:
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/s/
John F. Terwilliger
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John
F. Terwilliger,
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President
and
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Chief
Executive Officer
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