UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Amendment No. 3)*
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:
William A. Newman
McGuireWoods LLP
9 West 57th Street, Suite 1620
New York, New York 10019
(212) 548-2100
January 5, 2004
(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
--------------------------------------------------------------------------------
1 Names of reporting persons.
Lyford Investments Enterprises Ltd.
I.R.S. Identification Nos. of above persons (entities only).
--------------------------------------------------------------------------------
2 Check the appropriate box if a member of a group (a) [_]
(See Instructions) (b) [_]
--------------------------------------------------------------------------------
3 SEC use only
--------------------------------------------------------------------------------
4 Source of funds (See Instructions) WC, OO
--------------------------------------------------------------------------------
5 Check if disclosure of legal proceedings is [_]
required pursuant to Items 2(d) or 2(e)
--------------------------------------------------------------------------------
6 Citizenship or place of organization British Virgin Islands
--------------------------------------------------------------------------------
7 Sole voting power 65,380,795
Number of
Shares -------------------------------------------------
Beneficially 8 Shared voting power None
Owned
By each Reporting -------------------------------------------------
Person 9 Sole dispositive power 65,380,795
with
-------------------------------------------------
10 Shared dispositive power None
--------------------------------------------------------------------------------
11 Aggregate amount beneficially owned by each
reporting person 65,380,795
--------------------------------------------------------------------------------
12 Check if the aggregate amount in row (11) excludes [_]
certain shares (See Instructions)
--------------------------------------------------------------------------------
13 Percent of class represented by amount in row (11) 35.38%
--------------------------------------------------------------------------------
14 Type of reporting person (See Instructions) CO
--------------------------------------------------------------------------------
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 6,713,982 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 6,713,982 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. The sales of shares made in December
2003 and January 2004 that are referenced in Items 5(a)-(c) were made as a
result of an evaluation that the current market price represented an appropriate
return on the shares acquired on the conversion of the 5% European Notes
referenced above.
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 December 31, 2003,
there were 184,795,362 shares of Harken common stock issued and outstanding.
(a)-(b) On December 23, 2003 Lyford filed its Form 144 indicating its
intention to sell up to 6,713,982 shares of Harken common stock pursuant to the
provisions of Rule 144 promulgated under the Securities Act of 1933, as amended,
that apply to securities other than restricted securities that are held by an
affiliate. During the period from December 23, 2003 through January 5, 2004,
Lyford sold an aggregate of 2,763,700 shares of Harken common stock in open
market transactions in compliance with Rule 144. Lyford intends to sell the
balance of the 6,713,982 shares in open market transactions, subject to
compliance with Rule 144, in the immediate future.
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 6,713,982 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 Item 5(a)-(b), Lyford sold an aggregate of
2,763,700 shares of Harken common stock in open market transactions in
compliance with Rule 144 on December 23, 24 and 26, 2003 and on January 2 and 5,
2004. The respective prices per share at which the prices were sold are as
follows:
December 23, 2004 68,400 shares sold at $1.27 per share
468,700 shares sold at $1.26 per share
5,700 shares sold at $1.25 per share
91,900 shares sold at $1.24 per share
December 24, 2003 56,600 shares sold at $1.17 per share
8,600 shares sold at $1.18 per share
85,000 shares sold at $1.24 per share
105,400 shares sold at $1.25 per share
December 26, 2003 271,200 shares sold at $1.18 per share
146,900 shares sold at $1.19 per share
5,000 shares sold at $1.20 per share
January 2, 2004 405,000 shares sold at $1.26 per share
January 5, 2004 771,500 shares sold at $1.30 per share
226,400 shares sold at $1.32 per share
47,400 shares sold at $1.33 per share
As described in Items 3 and 4 of this Statement, Lyford acquired the 5%
European Notes and became the beneficial owner of an additional 6,713,982 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: January 8, 2004 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- Manager (Sr). Slaney Hill
Leue/British Corporate Services P.O. Box 437
Road Town, Tortola
British Virgin
Islands
Diane Heather Financial Controller Insinger Trust (BVI)
Stockwell/British Ltd.Tropic Isle
Building
Road Town, Tortola
British Virgin
Islands
Nicholas Leonard Reeder Trust Manager La Valette Mont Les
Lane/British Vaux
St. Brelade, Jersey
Channel Islands JE3
8LS
Miles Camron Walton/ Trust Manager Insinger Trust (BVI) Ltd.
British Tropic Isle Building
Road Town, Tortola
British Virgin
Islands
Michael Grant/ Trust Manager Insinger Trust (BVI)
British Ltd. Tropic Isle Building
Road Town, Tortola
British Virgin
Islands
(ii)
Phyllis Grant Quasha/ Investor Lyford Suites
Australian 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).