UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Amendment No. 2)*
HARKEN ENERGY CORPORATION
(Name of Issuer)
Common Stock, par value $.01 per share
(Title of Class of Securities)
412-552-309
(CUSIP Number)
Alan G. Quasha
Attorney-in-Fact
Lyford Investments Enterprises Ltd.
c/o Quadrant Management, Inc.
720 Fifth Avenue, 9th Floor
New York, New York 10019
(212) 231-3900
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
with a copy to:
Amar Budarapu
Baker & McKenzie
2300 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
(214) 978-3000
April 25, 2003
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following
box. [_]
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7 for other
parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
CUSIP No. 412-552-309
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1 Names of reporting persons.
Lyford Investments Enterprises Ltd.
I.R.S. Identification Nos. of above persons (entities only).
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2 Check the appropriate box if a member of a group (a) [_]
(See Instructions) (b) [_]
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3 SEC use only
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4 Source of funds (See Instructions) WC, OO
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5 Check if disclosure of legal proceedings is [_]
required pursuant to Items 2(d) or 2(e)
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6 Citizenship or place of organization British Virgin Islands
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Number of 7 Sole voting power 68,144,544
Shares
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Beneficially 8 Shared voting power None
Owned
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By each Reporting 9 Sole dispositive power 68,144,544
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Person 10 Shared dispositive power None
with
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11 Aggregate amount beneficially owned by each
reporting person 68,144,544
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12 Check if the aggregate amount in row (11) excludes [_]
certain shares (See Instructions)
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13 Percent of class represented by amount in row (11) 64.6%
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14 Type of reporting person (See Instructions) CO
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Item 1. Security and Issuer
This statement on Schedule 13D (this "Statement") relates to the common
stock, par value $.01 per share, of Harken Energy Corporation, a Delaware
corporation ("Harken"). The principal executive offices of Harken are located at
580 WestLake Park Boulevard, Suite 600, Houston, Texas 77079.
Item 2. Identity and Background
(a)-(c), (f) The name of the company filing this Statement is Lyford
Investments Enterprises Ltd., a British Virgin Islands company ("Lyford"). The
address of Lyford's principal office is Tropic Isle Building, Wickhams Cay, Road
Town, Tortola, British Virgin Islands. Lyford is a company engaged in the
business of making investments. The name, citizenship, residence or business
address and present principal occupation or employment (including the name,
principal business and address of any corporation or other organization in which
such employment is conducted) is listed on Schedule A attached hereto for each
(i) executive officer and director of Lyford, (ii) person controlling Lyford,
and (iii) executive officer and director of any corporation or other person
ultimately in control of Lyford.
(d) Neither Lyford nor, to Lyford's knowledge, any person named on Schedule
A attached hereto is required to disclose legal proceedings pursuant to Item
2(d) of Schedule 13D.
(e) Neither Lyford nor, to Lyford's knowledge, any person named on Schedule
A attached hereto is required to disclose legal proceedings pursuant to Item
2(e) of Schedule 13D.
Item 3. Source and Amount of Funds or Other Consideration
As described in response to Item 4, the 1,714,286 shares (the "Standby
Commitment Fee Shares") of Harken common stock to which, in part, this Statement
relates were not purchased by Lyford. As an inducement for Lyford to enter into
the Standby Purchase Agreement described in Item 4, and in consideration
thereof, Harken agreed to issue to Lyford on September 18, 2002 an aggregate of
$600,000 of Harken common stock, at a price per share of $0.35. Harken issued
the Standby Commitment Fee Shares to Lyford in accordance with the Standby
Purchase Agreement, and Lyford did not pay any additional consideration
therefor.
As a result of the closing of the Standby Purchase Agreement on March 20,
2003, Lyford purchased 59,716,227 shares of common stock (the "Standby Purchase
Shares") from Harken for a price of approximately $8,193,000. This transaction
resulted in a change of control of Harken. After giving effect to the purchase
of the Standby Commitment Fee Shares and the Standby Purchase Shares, Lyford
became the beneficial owner of approximately 62% of Harken's outstanding common
stock. Lyford paid $3,184,942.71 in cash to Harken from its available working
capital at the closing of the Standby Purchase Agreement. The remainder of the
purchase price was offset against two promissory notes issued by Harken in favor
of Lyford on July 15, 2002 and August 29, 2002. As a result, upon the closing of
the Standby Purchase
Agreement, Harken's indebtedness to Lyford under those notes, totaling
$5,000,000 in principal amount plus accrued interest, was cancelled.
As described in Item 4, Lyford purchased $1,980,000 principal amount of
Harken's 5% Senior Convertible Notes due May 26, 2003 (the "5% European Notes")
in a privately negotiated transaction with the holders of such notes. Lyford
paid $1,405,800 in cash from its available working capital to purchase the 5%
European Notes. On April 25, 2003, Harken gave an irrevocable notice of the
redemption by conversion of such notes, which will require Lyford to convert
such notes into shares of common stock on May 26, 2003 (the maturity date of
such notes). As a result, Lyford has become the beneficial owner of an
additional 6,714,031 shares of common stock issuable upon the May 26, 2003
conversion of such notes (together with the Standby Commitment Fee Shares and
the Standby Purchase Shares, the "Shares"). After giving effect to the purchase
of the Shares and Shares issuable upon conversion of the 5% European Notes,
Lyford became the beneficial owner of approximately 65% of Harken's outstanding
common stock.
Item 4. Purpose of Transaction
On September 6, 2002, Harken entered into a Standby Purchase Agreement (the
"Standby Purchase Agreement") with Lyford that defined the parties' respective
rights and obligations with respect to Lyford's participation in Harken's recent
rights offering. The Standby Purchase Agreement obligated Lyford to subscribe
for and purchase from Harken a number of shares of common stock equal to the
Shortfall divided by the subscription price per share. The "Shortfall" is the
amount by which $10,000,000 exceeds the aggregate subscription price to be paid
by stockholders of Harken (other than Lyford) who subscribed for and purchased
shares in the rights offering. As compensation to Lyford for its standby
commitment, Harken paid Lyford a standby commitment fee of $600,000 by issuing
1,714,286 shares of common stock to Lyford, with each such share being
attributed a value of $0.35. Harken also paid Lyford $50,000 in cash for its
legal fees in connection with the rights offering.
Under the terms of the Standby Purchase Agreement, Harken agreed to
indemnify Lyford and certain other persons affiliated with it against claims and
liabilities arising out of or based upon any untrue statement or alleged untrue
statement of any material fact contained in the prospectus or the registration
statement relating to the rights offering, any amendment or supplement thereto,
or arising out of the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading. Harken also agreed to reimburse Lyford and certain persons
affiliated with it for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such actions or claims
asserting liabilities against them.
Pursuant to its rights offering commenced in February 2003, Harken
distributed to holders of its common stock, Series G1 preferred stock and Series
G2 preferred stock, at no charge, nontransferable subscription rights to
purchase shares of its common stock. These shares of common stock include
preferred stock purchase rights attached to such common stock under Harken's
stockholder rights agreement. Such holders received one subscription right for
each
share of common stock they owned (or in the case of the Series G1 preferred
stock and Series G2 preferred stock, one subscription right for each share of
common stock issuable upon conversion) at the close of business on January 30,
2003. Harken distributed 32,154,867 subscription rights exercisable for up to
72,885,437 shares of common stock. Harken did not distribute any fractional
shares, but rounded up the aggregate number of shares each holder was entitled
to receive to the nearest whole number.
Each subscription right entitled the holder to purchase 2.2667 shares of
common stock at a subscription price of $0.311 per right (or $0.1372 per share).
All unexercised subscription rights expired at 12:00 midnight, New York City
time, on March 13, 2003. Harken's board of directors did not make any
recommendation regarding the exercise of the subscription rights. The
subscription rights could not be sold or transferred except under very limited
circumstances.
At the closing of the Standby Purchase Agreement on March 20, 2003, Lyford
purchased 59,716,227 shares of common stock from Harken for an aggregate
purchase price of approximately $8,193,000. Lyford paid $3,184,942.71 in cash to
Harken from its available working capital at the closing of the Standby Purchase
Agreement. The remainder of the purchase price was offset against two promissory
notes issued by Harken in favor of Lyford on July 15, 2002 and August 29, 2002.
As a result, upon the closing of the Standby Purchase Agreement, Harken's
indebtedness to Lyford under those notes, totaling $5,000,000 in principal
amount plus accrued interest, was cancelled.
Lyford also has a warrant to purchase 7,000,000 shares of Global Energy
Development PLC, a subsidiary of Harken ("Global"), at a price of 50 pence per
share. This warrant expires in 2005. An affiliate of Lyford owns approximately
1% of Global common stock.
On April 11, 2003, Lyford purchased $1,980,000 principal amount of 5%
European Notes in a privately negotiated transaction with the holders of such
notes. The 5% European Notes trade on the Luxembourg Stock Exchange. As a result
of this purchase, Lyford became the beneficial owner of 43,786 shares of common
stock issuable upon conversion of the 5% European Notes at a conversion price of
$45.22 per share. On April 25, 2003, Harken gave an irrevocable notice of
redemption by conversion for the 5% European Notes for shares of Harken's common
stock. The date of conversion is May 26, 2003. Each 5% European Note outstanding
on May 26, 2003 will be converted into a number of shares of common stock equal
to 115% of the principal amount of the notes to be converted, plus accrued and
unpaid interest thereon to the date of conversion, divided by approximately
$0.35 (the average market price of the common stock over the 30 calendar days
immediately preceding the date of the notice of the conversion). As a result of
this notice of conversion, Lyford has the right to acquire 6,714,031 shares of
common stock issuable upon conversion.
Lyford acquired the Shares for investment. However, Lyford will continually
evaluate the business, financial condition and prospects of Harken, the market
price of Harken common stock, its return on investment, alternative investments
and conditions in the economy and in the industry in which Harken is engaged,
with a view toward determining whether to hold, decrease or increase its
investment in Harken common stock. From time to time on or after the date of
this Schedule 13D, based upon such evaluation, Lyford may sell all or a portion
of its shares of Harken common stock, or may purchase additional shares of such
common stock, at varying prices in the open market, in privately negotiated
transactions and/or in other transactions.
In March and April, 2003, Larry G. Akers, James H. Frizell, Bruce N. Huff
and Stephen C. Voss resigned from Harken's board of directors. Mr. Huff also
resigned as President of the Company. On March 31, 2003, Alan G. Quasha, the
attorney-in-fact of Lyford, was elected to Harken's board of directors to fill
the vacancy created by the resignation of Mr. Voss and act as a representative
of Lyford. Mr. Quasha replaced Mikel D. Faulkner as Chairman of Harken's board
of directors, with Mr. Faulkner continuing as a director and Chief Executive
Officer of Harken. As a result of the foregoing, Harken's board of directors
amended Harken's bylaws to reduce the number of directors constituting the full
board of directors from nine directors to six directors. Lyford intends to
actively participate on Harken's board of directors and intends to be a
proactive and urgent voice in helping plan Harken's future to create value for
its stockholders.
Other than as described above, Lyford does not have any current definitive
plan, arrangement or understanding to seek to cause Harken to enter into any
extraordinary corporate transaction such as a merger, reorganization or
liquidation, to sell or transfer any assets, to cause Harken to change its
current capitalization, dividend policy, business, corporate structure, charter,
bylaws or similar instruments, or to cause the Harken common stock to be
delisted or become eligible for termination of registration pursuant to Section
12(g)(4) of the Securities Exchange Act of 1934, as amended (although Lyford
reserves the right to develop such plans).
References to, and descriptions of, the Standby Purchase Agreement, as
amended, and the 5% European Notes as set forth herein are qualified in their
entirety by reference to the copies of the Standby Purchase Agreement, and
amendment thereto, and the Trust Indenture for the 5% European Notes,
respectively, included as Exhibits to this Statement, and such agreements are
incorporated herein in their entirety where such references and descriptions
appear.
Item 5. Interest in Securities of the Issuer
Based upon information provided by Harken, as of April 25, 2003, there were
98,672,766 shares of Harken common stock issued and outstanding.
(a)-(b) Pursuant to the Standby Purchase Agreement, Lyford was issued and
became the beneficial owner of an aggregate of 61,430,513 shares of Harken
common stock. As a result of the acquisition of the 5% European Notes, Lyford
has the right to acquire 6,714,031 shares of common stock issuable upon
conversion of such notes on May 26, 2003. Such Harken common stock constitutes
approximately 65% of the issued and outstanding shares of Harken common stock,
based on the number of shares of Harken common stock outstanding as of April 25,
2003 Lyford has the sole power to vote and dispose (or to direct the vote or
disposition of) these shares.
To the knowledge of Lyford, no shares of Harken common stock are
beneficially owned by any of the persons listed on Schedule A to this Statement.
(c) As described in Items 3 and 4 of this Statement, Lyford acquired the 5%
European Notes and became the beneficial owner of an additional 6,714,031 shares
of common stock issuable upon conversion of such notes since the filing of the
Amendment No. 1 to this Statement on March 21, 2003.
(d) To the knowledge of Lyford, no person has the right to receive or the
power to direct the receipt of dividends from, or the proceeds from the sale of,
the securities of Harken deemed to be beneficially owned by Lyford.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
Other than pursuant to the Standby Purchase Agreement and the 5% European
Notes and except as discussed below, to the knowledge of Lyford, there are no
contracts, arrangements, understandings or relationships (legal or otherwise)
among the persons named in Item 2 and in Schedule A and among such persons and
any other person with respect to any securities of Harken, including, but not
limited to, transfer or voting of any of the securities, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees of profits,
division of profits or loss, or the giving or withholding of proxies.
Lyford has indicated to Harken that it will vote its shares to increase the
authorized shares of common stock at the Annual Meeting of Stockholders
scheduled to be held later this year.
Item 7. Materials to be Filed as Exhibits
Exhibit No. Description
1. Standby Purchase Agreement between Harken Energy Corporation and Lyford
Investments Enterprises Ltd. dated September 6, 2002 (filed as Exhibit 99.9
to Harken's Registration Statement on Form S-3, filed with the SEC on
September 13, 2002, File No. 333-99579, and incorporated by reference
herein).
2. Amendment No. 1 to Standby Purchase Agreement of September 6, 2002 between
Harken Energy Corporation and Lyford Investments Enterprises Ltd., dated
November 22, 2002 (filed as Exhibit 99.10 to Harken's Amendment No. 1 to
Registration Statement on Form S-3, filed with the SEC on December 24,
2002, File No. 333-99579, and incorporated by reference herein).
3. Loan Agreement dated July 15, 2002 between Harken Energy Corporation and
Lyford Investments Enterprises Ltd. (filed as Exhibit 10.18 to Harken's
Quarterly Report on
Form 10-Q for the period ended June 30, 2002, File No. 1-10262, and
incorporated by reference herein).
4. First Amendment to Loan Agreement between Harken Energy Corporation and
Lyford Investments Enterprises Ltd., dated August 29, 2002 (filed as
Exhibit 10.2 to Harken's Quarterly Report on Form 10-Q for the period ended
September 30, 2002, File No. 1-10262, and incorporated by reference
herein).
5. Letter to Harken Energy Corporation indicating intent to vote shares at the
2003 Annual Meeting of Stockholders (filed as Exhibit 5 to the Amendment
No. 1 to Schedule 13D filed on March 21, 2003 and incorporated herein by
reference).
6. Trust Indenture dated May 26, 1998, by and between Harken Energy
Corporation and Marine Midland Bank plc (filed as Exhibit 10.1 to Harken's
Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1998,
File No. 1-10262, and incorporated herein by reference).
Signature
After reasonable inquiry and to the best of the undersigned's knowledge and
belief, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Lyford Investments Enterprises Ltd.
Date: April 30, 2003 By: /s/ Alan G. Quasha
--------------------------------------
Name: Alan G. Quasha
Title: Attorney-in-Fact
SCHEDULE A
EXECUTIVE OFFICERS, DIRECTORS AND CONTROLLING
PERSONS OF LYFORD INVESTMENTS ENTERPRISES LTD.
The name, citizenship, residence or business address and present principal
occupation or employment (including the name, principal business and address of
any corporation or other organization in which such employment is conducted) is
listed below for each (i) executive officer and director of Lyford, (ii) person
controlling Lyford, and (iii) executive officer and director of any corporation
or other person ultimately in control of Lyford.
Name and Citizenship Principal Occupation Address
-------------------- -------------------- -------
(i)
Linda Maxine Romney-Leue/British Manager (Sr). Corporate Services Slaney Hill P.O. Box 437
Road Town, Tortola
British Virgin Islands
Diane Heather Stockwell/British Financial Controller Insinger Trust (BVI) Ltd.
Tropic Isle Building
Road Town, Tortola
British Virgin Islands
Nicholas Leonard Reeder Lane/British Trust Manager La Valette Mont Les Vaux
St. Brelade, Jersey
Channel Islands JE3 8LS
Miles Camron Walton/British Trust Manager Insinger Trust (BVI) Ltd.
Tropic Isle Building
Road Town, Tortola
British Virgin Islands
Michael Grant/British Trust Manager Insinger Trust (BVI) Ltd.
Tropic Isle Building
Road Town, Tortola
British Virgin Islands
(ii)
Phyllis Grant Quasha/Australian Investor Lyford Suites
Lyford Cay
New Providence
Nassau, Bahamas
(iii) Not applicable
Exhibit Index
Exhibit No. Description
1. Standby Purchase Agreement between Harken Energy Corporation and Lyford
Investments Enterprises Ltd. dated September 6, 2002 (filed as Exhibit 99.9
to Harken's Registration Statement on Form S-3, filed with the SEC on
September 13, 2002, File No. 333-99579, and incorporated by reference
herein).
2. Amendment No. 1 to Standby Purchase Agreement of September 6, 2002 between
Harken Energy Corporation and Lyford Investments Enterprises Ltd., dated
November 22, 2002 (filed as Exhibit 99.10 to Harken's Amendment No. 1 to
Registration Statement on Form S-3, filed with the SEC on December 24,
2002, File No. 333-99579, and incorporated by reference herein).
3. Loan Agreement dated July 15, 2002 between Harken Energy Corporation and
Lyford Investments Enterprises Ltd. (filed as Exhibit 10.18 to Harken's
Quarterly Report on Form 10-Q for the period ended June 30, 2002, File No.
1-10262, and incorporated by reference herein).
4. First Amendment to Loan Agreement between Harken Energy Corporation and
Lyford Investments Enterprises Ltd., dated August 29, 2002 (filed as
Exhibit 10.2 to Harken's Quarterly Report on Form 10-Q for the period ended
September 30, 2002, File No. 1-10262, and incorporated by reference
herein).
5. Letter to Harken Energy Corporation indicating intent to vote shares at the
2003 Annual Meeting of Stockholders (filed as Exhibit 5 to the Amendment
No. 1 to Schedule 13D filed on March 21, 2003 and incorporated herein by
reference).
6. Trust Indenture dated May 26, 1998, by and between Harken Energy
Corporation and Marine Midland Bank plc (filed as Exhibit 10.1 to Harken's
Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1998,
File No. 1-10262, and incorporated herein by reference).