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NEW YORK, Feb. 27, 2007 - U.S. Energy Systems, Inc. (Nasdaq: USEY), a "clean and green" energy company, today announced that it has entered into definitive subscription agreements with private investors for the investors to acquire an aggregate of 1.28 million shares of the Company's common stock at $5 per share, for an aggregate purchase price of $6,400,000. At the closing, the investors also will receive warrants to purchase an aggregate of 652,000 shares of the Company's common stock, exercisable for a period of five years following the date of issuance at an exercise price of $0.01 per share. Additional information concerning these definitive agreements will be contained in a USEY Form 8-K filing with the SEC.
The new capital will be available for 3D seismic mapping and exploration of its UK gas fields, and corporate overhead and expenses. In addition, a portion of the new capital will be used to pay down indebtedness incurred in connection with the acquisition of USEY's UK assets.
Commenting on the 3D seismic mapping underway by USEY's UK-based natural gas business, UK Energy Systems Ltd. ("UKES"), Mr. Fogel said, "Our 3D seismic program is an important long-term growth investment that we believe offers the potential for significant reward both in the near-term and over time. Our 100,000 acres of gas licenses in the UK are located in a lightly explored region that is an onshore extension of the Southern North Sea Gas Basin, with geology similar to less accessible offshore fields. We believe that our investment in 3D seismic can, in effect, create new and valuable long-term assets from property we already own, and contribute to nearer-term upgrades to our reported reserves."
USEY also will use the new capital to fund corporate overhead and expenses. Under USEY's current structure, the Company does not use cash from the operations of its subsidiaries to fund corporate expenses, but rather uses these funds for subsidiary-specific operating expenses or to pay down subsidiary-level debt.
USEY separately today announced that its Board of Directors has approved the following corporate-level appointments: Adam D. Greene, formerly Senior Vice President, has been appointed Executive Vice President; James Boffardi, formerly Vice President for Finance and Analysis, has been appointed to Senior Vice President; and Gary Neus, whose more than 30 years of finance experience most recently included serving as Assistant Treasurer at Unocal and Vice President for Commercial Development at Amoco Power Resource, has joined USEY as Treasurer. Mr. Fogel commented, "USEY's strategy of acquiring undervalued, high potential clean and green energy assets and enhancing their value begins with our people. We are very pleased to recognize and reward the performance of our people and to further strengthen our management team."
About U.S. Energy Systems, Inc.
U.S. Energy Systems, Inc. is an owner of green power and clean energy and resources. USEY owns and operates energy projects in the United States and United Kingdom that generate electricity, thermal energy and gas production.
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, the effect of the USEB's Chapter 11 filing, access to needed financing or refinancing on acceptable terms, our ability to continue as a going concern, revisions in the initial estimates in the fair market value of the acquired assets, failure to realize the estimated savings or operating results of the acquisition, and other risks associated with acquisitions generally, including risks relating to managing and integrating acquired businesses, changes in market conditions, the impact of competition, changes in local or regional economic conditions, and the amount and rate of growth in expenses, dependence on management and key personnel, changes in federal or state laws and their interpretation with respect to regulation, energy policy and other business issues, the inability to commence planned projects in a timely manner, our ability to continue our growth strategy, and the ability to complete acquisitions, as well as other risks detailed from time to time in U.S. Energy's Securities and Exchange Commission filings, including its Annual Report on Form 10-K for the year ended December 31, 2005 as well as the 10-Q for the period ended September 30, 2006. We do not undertake to update any of the information set forth in this press release.
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