CHARLOTTE, N.C. -- NewGen Technologies Inc. has secured an extension until June 16, 2007, on its agreement for the purchase of Appalachian Oil Co. to finalize financing and to purchase more than 65 additional properties. The company had hoped to complete its $30 million purchase of Appalachian Oil last Thursday.
The acquisition of APPCO's has been extremely detailed and time consuming due to the size of the company, multiple locations and complicated tax structures we have been reviewing, said S. Bruce Wunner, chairman and CEO of NewGen. Part of the [image-nocss] delay in closing this acquisition has been our successful negotiation of an option to purchase over 65 additional properties not originally included in the first phase of the acquisition.
NewGen also recently defaulted on $850,000 in principal and $21,014 in interest for a debenture due May 15, according to a report by The Charlotte Business Journal. That debt is due to NewGen's former chairman, Noel Corcoran of Noel M. Corcoran & Associates in Ireland. Corcoran stepped down as chairman March 13 and left the board in April. He loaned the company several million dollars in the year he was on its board. Through converting previous debentures, Corcoran owns about 13.6 million shares of NewGen's stock. He has the right to convert other debt totaling $2.64 million into more than 11.5 million additional shares. That note is due June 20.
In February, NewGen defaulted on a $1.1 million debenture owed to a third-party lender. That default put NewGen in technical default on two other debentures, totaling $6.3 million, said the report, citing a filing with the Securities & Exchange Commission (SEC). NewGen has had to delay the closing of the Appalachian Oil deal several times from the initial February 28 target date.
NewGen announced in mid-March that Noel Corcoran had resigned as chairman of NewGen Technologies and that Wunner, NewGen's previous chairman and a former senior executive with McDonalds Corp., would serve as interim chairman.
The company has declined to offer details to CSP Daily News on financing changes. In mid-January, NewGen had announced an agreement with BioFuel Investments LLC relating to $70 million in secured debt financing to be used to complete the APPCO purchase and pay off existing debt. BFI's proposed financing facility was for a 10-year term with an interest rate of 10%, interest-only for the first two years. In addition, BFI would receive a warrant to purchase five million shares of NewGen's common stock at a price of $2 per share. BFI is part of a private investment group focused on environmentally friendly, renewable biofuel and alternative energy projects. The BFI financing was contingent upon customary business due diligence and completion of commercial definitive agreements.
Blountville, Tenn.-based APPCO operates in 6 southeastern states with more than $450 million in revenue and 500 employees providing petroleum products to more than 200 retail gas stations and independent wholesale dealers in Tennessee, Kentucky, Virginia, West Virginia, North Carolina and South Carolina. APPCO's branded products include Exxon, BP, Marathon, Sunoco, CITGO and its own APPCO brand. It operates 58 company-owned locations and supplies petroleum products to more than 160 other independent dealers and distributors.
NewGen did not respond to a CSP Daily News request for details on the 65 sites involved in the new deal.
APPCO buys fuel products directly from secure petroleum product pipelines supplied by refineries of the major oil companies and independent refiners. It buys fuel ethanol in bulk from regional manufacturers and blends it with its hydrocarbon petroleum products. It also operates trucks, trailers and other delivery equipment capable of mobile refueling for various public and private-fleet customers.
Through this strategic acquisition of APPCO, NewGen looks to obtain significant wholesale and retail distribution for blender subsidiary ReFuel America's biofuels throughout the southeastern United States.
Charlotte, N.C.-based NewGen's mission is to be the leading global vertically integrated (fields-to-wheels) manufacturer and distributor of premium biofuels and hydrocarbon blends that are intended to dramatically reduce the environmental and economic impact of world petroleum use. It said that it is developing cleaner-burning fuels through its own proprietary products and other technology.
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