Item 7.01 Regulation FD Disclosure
In addition to the chapter 11 cases filed by the Company and certain of its
subsidiaries on June 19, 2023, the Company also filed on that date a motion (the
"Motion") seeking an order of the United States Bankruptcy Court for the
Southern District of Texas (the "Bankruptcy Court") - which was granted by that
Court on June 20, 2023 (the "NOL Order") - establishing certain procedures (the
"Procedures") with respect to transfers of Beneficial Ownership of (as defined
in the Motion), and declarations of worthlessness, with respect to the Company's
common stock and related relief, in order to protect the potential value of the
Company's net operating loss carryforwards and certain other tax benefits.
The Procedures, among other things, restrict transactions on or after June 19,
2023, involving, and require notices of the holdings of and proposed
transactions by, any person or group of persons that is or, as a result of such
a transaction, would become, a Substantial Stockholder of the common stock
issued by the Company. For purposes of the Procedures, a "Substantial
Stockholder" is any person or, in certain cases, group of persons, that
beneficially owns, directly or indirectly (and/or owns options to acquire) at
least 457,428 shares of common stock (representing approximately 4.5% of all
issued and outstanding shares of common stock as of June 19, 2023). Pursuant to
the Procedures, any Substantial Stockholder must provide notice of such person's
or group's substantial ownership on or before the date that is the later of (i)
30 calendar days after the date of the notice of the NOL Order and (ii) 10
calendar days after such person or entity qualifies as a Substantial
Stockholder.
As set out in the Procedures, prior to entering into any transfer of Beneficial
Ownership of common stock that would result in (i) an increase or decrease in
the amount of Stock of which a Substantial Stockholder has Beneficial Ownership
or (ii) any entity or individual becoming or ceasing to be a Substantial
Stockholder, the parties to such transfer must file with the Bankruptcy Court
and serve on the Notice Parties (as defined in the Motion) an advance written
declaration of the intended transfer in accordance with the Motion.
The Procedures further provide, among other things, that any person or entity
that is or becomes a 50-percent shareholder must file with the Bankruptcy Court
and serve upon the Notice Parties (as defined in the Motion), a declaration of
such status on or before the later of (i) 30 calendar days after the date of the
notice of the NOL Order and (ii) 10 calendar days after becoming a 50-percent
shareholder. For purposes of the Procedures, a 50-percent shareholder is any
person or entity that, at any time since December 31, 2019, has had Beneficial
Ownership of 50% or more of the common stock. Prior to filing any U.S. federal
or state tax return, or any amendment to such a return, or taking any other
action that claims any deduction for worthlessness of beneficial ownership of
stock for a taxable year ending before the Company's emergence from chapter 11
protection, such 50-percent shareholder must file with the Court and serve upon
the Notice Parties (as defined in the Motion), a declaration of intent to claim
a worthless stock deduction.
The Company will have 30 calendar days after receipt of written declarations in
connection with transfers of, and worthlessness with respect to, Beneficial
Ownership of common stock to file objections.
Any prohibited transfer of stock of the Company on or after June 19, 2023, is
null and void ab initio and may be subject to additional sanctions being imposed
by the Bankruptcy Court. A direct or indirect holder of, or prospective holder
of, stock issued by the Company should consult the Motion, the NOL Order, and
the Procedures set forth therein.
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