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New York, NY, March 16, 2006. US Energy Systems Inc. ("USEY") files a current report on form 8-K with respect to the UK acquisition. The 8-K report contains information supplementing the disclosure made in it is press release of March 9, 2006. The 8-K report discloses that the UK acquisition will be effected through a newly formed subsidiary, UK Energy Systems Limited ("UKES"). UKES is an English company owned by GBGH LLC, which is a Delaware limited liability company and an indirect majority owned and controlled subsidiary of USEY.
In connection with the October 2005 Agreement, UKES agreed, on March 9, 2006, to (i) buy the sellers' 69 shares in Viking Petroleum UK Limited ("Viking Petroleum") for an aggregate of $69.00 and (ii) to repay the principal and interest (approximately $37 million as of March 9, 2006 and not to exceed approximately $40 million at closing) in loans issued by Viking Petroleum and its affiliates. UKES has deposited $500,000 in a retention account which is to be remitted to the sellers upon closing, except to the extent it is used to satisfy UKES' indemnity claims. Completion of this purchase is subject to customary conditions. US Energy is in the process of arranging financing for this transaction, though the receipt of such financing is not a condition to closing. The sellers of the 69 shares are Viking, LLC, a Nevada limited liability company and TCW Global Project Fund II, Ltd., a Cayman Island company.
Viking Petroleum owns, directly or indirectly, six gas licenses containing 46 bcf (P1) of proved reserves and 16.4 bcf of probable reserves, for a cumulative 62.4 bcf (P2) of onshore gas in the United Kingdom.
Of the remaining 36 shares of Viking Petroleum, 26 shares are owned by a wholly owned subsidiary of VTEX Energy, Inc., a Nevada corporation and 10 shares are owned by two Viking Petroleum employees. Pursuant to an agreement between VTEX and Marathon Capital, LLC, (the "October 2005 Agreement") as reflected in our Current Report on Form 8-K filed with the SEC on October 11, 2005, VTEX agreed to enter into agreements to cause the 26 shares to be contributed to UKES. UKES also anticipates purchasing the 10 shares owned by the Viking Petroleum employees for relatively nominal consideration.
Management anticipates that these transactions will close not later than April 30, 2006, though no assurance can be given in this regard.
About U.S. Energy Systems, Inc.
U.S. Energy Systems, Inc is an owner of generating facilities and a provider of energy outsourcing services for large retail customers, including industrial, commercial and institutional end users. USEY owns and operates energy projects in the United States that generate electricity and thermal energy and use renewable fuels.
For further information contact:
Investor Relations Department
U.S. Energy Systems, Inc.
750 Lexington Avenue
15th Floor
New York, NY 10022
212-588-8901
info@useyinc.com
Certain matters discussed in this press release are forward-looking statements, and certain important factors may affect the Company's actual results and could cause actual results to differ materially from any forward-looking statements made in this release, or which are otherwise made by or on behalf of the Company. Such factors include, but are not limited to, changes in market conditions, the inability to commence planned projects in a timely manner, the impact of competition, the ability to complete acquisitions, risks associated with acquisitions, as well as other risks detailed from time to time in US Energy's Securities and Exchange Commission filings, including its Annual Report on Form 10-K for the year ended December 31, 2004, as amended. We do not undertake to update any of the information set forth in this press release.
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