Blast Energy exits Chapter 11 bankruptcy

By Caroline Salls

Pittsburgh, April 7 - Blast Energy Services, Inc. emerged from Chapter 11 bankruptcy on Feb. 27, according to a filing with the Securities and Exchange Commission.

As previously reported, under the company's plan of reorganization, unsecured creditors will be paid in full, Blast will have no debt service scheduled for at least two years and equity shareholders' interests were kept intact.

Blast raised $4 million in cash proceeds from selling convertible preferred securities to Clyde Berg and McAfee Capital, two parties related to the company's largest shareholder, Berg McAfee Cos.

These funds were released to the company to pay 100% of the unsecured creditor claims, as well as all administrative and priority claims, for a total of $2.4 million.

Blast Energy said the remaining $1.6 million would be used to execute an operational plan, including reinvesting in its Satellite Services and Down-hole Solutions businesses and pursuing an emerging Digital Oilfield business.

Blast Energy said it also plans to change its corporate domicile from California to Texas; increase its authorized shares to 200 million from 100 million, including 20 million shares of preferred stock; reduce membership of its board of directors, with board members O. James Woodward III, Fred Ruiz and Scott Johnson expected to retire.

Current vice chairman H. Roger "Pat" Herbert has agreed to serve as chairman of the new board.

Plan creditor treatment

Treatment of creditors under the plan will include:

• Holders of priority claims received the full amount of their claim in cash;

• Laurus Master Fund Ltd. received a transfer of rigs in accordance with a settlement agreement and a $2.1 million payment in satisfaction of its secured claim;

• Holders of Berg McAfee claims received a $2.1 million note, with interest to be paid in new common stock in the reorganized company;

• Holders of secured claims received either full payment in cash, the collateral securing the claim or a note secured by the claim that provides for deferred cash payments. If the claim was not paid in full through these methods, the unpaid amount became a deficiency claim to be treated as a general unsecured claim;

• Holders of Blast and Eagle convenience claims, which is a claim for less than $10,000 or a claim that is reduced by the holder to less than $10,000, were to receive 75% of their claim in cash;

• Holders of Eagle and Blast unsecured claims recovered 100% in cash;

• Second Bridge LLC's shares of Blast common stock were bought by Blast on the plan effective date for $900 and returned to treasury; and

• Holders of directors' unsecured claims had their claims converted to new Blast common stock at a rate of $0.20 per share.

Blast Energy, a Houston-based provider of fabricated mobile drilling rigs to the oil and natural gas sector, filed for bankruptcy on Jan. 19, 2007 in the U.S. Bankruptcy Court for the Southern District of Texas. Its Chapter 11 case number is 07-30424.

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