SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE
ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to Rule 14a-11(c) or Rule 14a-12
CANARGO ENERGY CORPORATION
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, If Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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CANARGO ENERGY CORPORATION
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 23, 2004
________________________________________
February ____, 2004
To The Stockholders:
Notice is hereby given that a Special Meeting of Stockholders of CanArgo
Energy Corporation ("CanArgo") will be held at The Continental Hotel,
Stortingsgaten 24-26, Oslo, Norway, on Tuesday, March 23, 2004 at 10:00
A.M. local time for the following purposes:
1) To approve the adoption of an amendment to CanArgo's Certificate of
Incorporation to increase the number of shares of Common Stock that
CanArgo will have authority to issue from 150,000,000 to 300,000,000
shares; and
2) To transact such other business as may properly come before the Special
Meeting and any adjournments thereof.
The Board of Directors has fixed the close of business on February 12, 2004
as the record date for determination of the stockholders entitled to notice
of and to vote at the Special Meeting. You may inspect a list of
stockholders of record at CanArgo's offices during regular business hours
during the 10-day period before the Special Meeting. You may also inspect
this list at the Special Meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE,
DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY TO ENSURE THAT YOUR
SHARES WILL BE REPRESENTED AT THE SPECIAL MEETING. THE PROXY CARD MAY BE
RETURNED IN THE ACCOMPANYING ENVELOPE TO WHICH NO POSTAGE NEED BE AFFIXED
IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE SPECIAL MEETING, YOU MAY
VOTE IN PERSON EVEN IF YOU HAVE SENT IN YOUR PROXY CARD.
By Order of the Board of Directors
Liz Landles
Corporate Secretary
CANARGO ENERGY CORPORATION
P.O Box 291, St Peter Port, Guernsey GY1 3RR, British Isles
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PROXY STATEMENT
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GENERAL INFORMATION CONCERNING SOLICITATION AND VOTING
Solicitation, Revocation and Voting of Proxies
The accompanying proxy is solicited by and on behalf of the Board of
Directors of CanArgo Energy Corporation ("CanArgo"), in connection with the
Special Meeting of Stockholders to be held at 10:00 AM local time on
Tuesday, March 23, 2004, at The Continental Hotel, Stortingsgaten 24-26,
Oslo, Norway and at any and all adjournments thereof, for the purposes set
forth herein and in the accompanying Notice of Special Meeting. It is
anticipated that this Proxy Statement and accompanying proxy will first be
mailed to Stockholders entitled to vote at the Special Meeting on or about
March 2, 2004.
The accompanying proxy, if properly executed and returned, will be voted as
specified by the Stockholder or, if no vote is indicated, the proxy will be
voted FOR each matter specified. As to any other matter of business, which
may be brought before the Special Meeting, a vote may be cast pursuant to
the accompanying proxy in accordance with the judgment of the persons
voting the same, but management does not know of any such other matter of
business. A Stockholder may revoke his proxy at any time prior to the
voting of shares by voting in person at the Special Meeting or by filing
with the Secretary of CanArgo a duly executed proxy bearing a later date or
an instrument revoking the proxy.
The costs of solicitation of proxies will be paid by CanArgo. The
solicitation shall be by means of mail, telephone and personal contact. In
addition to utilizing its directors, officers, and other regular employees
to solicit proxies, CanArgo has engaged Gambit AS ("Gambit") and ABG Sundal
Collier ASA ("Sundal") to assist with the solicitation of proxies from
Stockholders residing in Norway. CanArgo pays Gambit a quarterly fee of
$4,500 for investor relations' services and the solicitation of proxies may
incur extra charges. CanArgo will pay Sundal 100,000 NOK for general
advice and for the solicitation of proxies. Sundal will also receive a
success fee of 100,000 NOK if the resolution is passed. Banks, brokers,
fiduciaries and other custodians and nominees who forward proxy soliciting
material to their principals will be reimbursed their customary and
reasonable out-of-pocket expenses.
Voting Rights and Record Date
The voting securities of CanArgo consist of Common Stock, par value $0.10
per share. The Common Stock is entitled to one vote per share. The term
"Voting Securities" refers to the Common Stock.
Only stockholders of record of CanArgo's Voting Securities as of the close
of business on February 12, 2004 (the "Record Date") will be entitled to
vote at the Special Meeting.
On the Record Date, 105,765,890 shares of Common Stock were issued and
outstanding, each of which is entitled to one vote per share. Voting
Securities representing a majority of the votes entitled to be cast at the
Special Meeting represented in person or by proxy constitutes a quorum at
the Special Meeting. Abstentions and broker non-votes are counted as
present for purposes of determining the existence of a quorum but will be
counted as votes "against" the proposal to be considered at the meeting. A
broker non-vote occurs when a broker fails to vote on some matter on the on
the proxy card because the broker does not have the authority to do so.
CanArgo will select one or more Inspectors of Election who will determine
the number of shares of voting stock outstanding, the voting power of each,
the number of shares represented at the Special Meeting, the existence of a
quorum and whether or not proxies are valid and effective. The Inspectors
of Election will determine any challenges and questions arising in
connection with the right to vote and will count all votes cast for and
against and any abstentions with respect to the proposal to be considered
at the meeting and will determine the results of the voting.
INCREASE OF AUTHORIZED SHARE CAPITAL
Proposal 1. Increase of Authorized Share Capital
The Board of Directors has unanimously adopted a resolution authorizing an
amendment to CanArgo's Certificate of Incorporation (the "Certificate"); to
increase the total number of CanArgo's authorized shares of Common Stock
from 150,000,000 shares to 300,000,000 shares, par value $.10. The proposed
amendment is subject to approval by CanArgo's Stockholders.
The Common Stock, including the additional shares proposed for
authorization, do not have pre-emptive or similar rights, which means that
current Stockholders do not have a prior right to purchase any new issue of
capital stock of CanArgo in order to maintain their proportionate ownership
thereof. Thus, the issuance of additional shares of Common Stock might
dilute, under certain circumstances, the ownership and voting rights of
stockholders. Each of the additional authorized shares of Common Stock will
have the same rights and privileges as the currently authorized Common
Stock.
The proposed amendment will modify the first sentence of paragraph (a) of
Article Four of the Certificate to read as follows:
"(a) The total number of shares of all classes of stock which the
Corporation shall have authority to issue is three hundred and five million
(305,000,000), consisting of:
(1) Five million (5,000,000) shares of Preferred stock, par value ten cents
($.10) per share (the "Preferred Stock"); and
(2) Three hundred million (300,000,000) shares of Common Stock, par value
ten cents ($.10) per share (the "Common Stock")."
CanArgo is currently authorized to issue 155,000,000 shares of capital
stock, of which 150,000,000 are designated as Common Stock and 5,000,000
shares are designated as Preferred Stock. The proposed amendment would
increase the total number of shares of authorized
capital stock to 305,000,000 shares and the number of shares of Common
Stock authorized to 300,000,000. The authorized shares of Common Stock
were last increased by the stockholders at the 2000 Annual General Meeting
when the number of shares was increased from 50,000,000 to 150,000,000
shares.
As of February 12, 2004, 105,765,890 shares of Common Stock were issued and
outstanding, no shares of capital stock were held by CanArgo as treasury
stock and no shares of Preferred Stock were issued and outstanding. In
relation to the 44,234,110 currently un-issued shares of Common Stock, an
aggregate of 43,073,502 shares have been reserved for future issuance:
46,085 shares in connection with the exchange of Exchangeable Shares
previously issued by CanArgo in connection with an acquisition; 7,989,917
shares of Common Stock upon exercise of outstanding stock options; 187,500
shares of Common Stock in connection with contingent contractual rights to
acquire Common Stock; 425,000 shares of Common Stock as a one-off
commitment fee payable to Cornell Capital Partners, L.P. ("Cornell") in
connection with an equity line of credit entered into with Cornell;
3,000,000 shares of Common Stock for issuance to Georgian British Oil
Services Company and Provincial Securities Limited in connection with the
sale of their minority interest in CanArgo Norio Limited; 8,000,000 shares
of Common Stock for issuance to a third party upon completion of a proposed
acquisition; and up to 23,425,000 shares of Common Stock in connection with
discretionary take-downs by CanArgo under the $20,000,000 equity line of
credit provided by Cornell ("Cornell Facility").
If the proposed amendment is adopted, it will become effective upon filing
of the proposed amendment with the Delaware Secretary of State's Office.
The Board of Directors believes that it is advisable and in the best
interests of CanArgo to have available additional authorized but un-issued
shares of Common Stock in an amount adequate to provide for the future
business needs of CanArgo and to take advantage of future corporate
opportunities. The increase in authorized Common Stock will not have any
immediate effect on the rights of existing stockholders. However, the
additional shares will be available for issuance from time to time by
CanArgo, in the discretion of the Board of Directors, without further
authorization by vote of the stockholders unless applicable law or
regulation or stock exchange requirements otherwise require such
authorization. These shares may be issued for any proper corporate purpose
including, without limitation: acquiring other businesses in exchange for
shares of Common Stock; entering into joint venture arrangements with other
companies in which Common Stock or the right to acquire Common Stock are
part of the consideration; stock splits or stock dividends; raising capital
through the sale of Common Stock; and attracting and retaining valuable
employees and consultants by the issuance of additional stock, stock
options or use of stock-based plans.
Although CanArgo may engage in the foregoing actions in the future, except
for the issuance of additional stock options under CanArgo's Long-Term
Incentive Plan, the issuance of shares of CanArgo Common Stock pursuant to
the Cornell Facility and the possible sale of shares of common stock to
raise additional capital, no such actions involving the issuance of
additional shares of Common Stock are pending as of the date hereof. The
Board of Directors intends to use funds raised from any such possible
issues to finance principally CanArgo's activities in the Republic of
Georgia, including without limitation the further appraisal and development
of the Manavi well M11 oil discovery, and further development of other
producing properties and exploration activities in Georgia.
If the proposed amendment is approved, the Board of Directors would be able
to authorize the issuance of shares of Common Stock without the necessity,
and related costs and delays, of either calling a special stockholders'
meeting or waiting for the next regularly scheduled meeting of stockholders
in order to increase the authorized shares of Common Stock.
The issuance of the additional shares of Common Stock could have the effect
of diluting earnings per share and book value per share, which could
adversely affect CanArgo's existing stockholders. Issuing additional
shares of Common Stock may also have the effect of delaying or preventing a
change of control of CanArgo. CanArgo's authorized but un-issued Common
Stock could be issued in one or more transactions that would make more
difficult or costly, and less likely, a takeover of CanArgo. The proposed
amendment to the Certificate is not being recommended in response to any
specific effort of which CanArgo is aware to obtain control of CanArgo, and
the Board of directors has no present intention to use the additional
shares of Common Stock in order to impede a takeover attempt.
The affirmative vote of a majority of the issued and outstanding shares of
Voting Securities of CanArgo entitled to vote at the Special Meeting is
required for approval of this Amendment to the Certificate to increase
CanArgo's authorized shares of Common Stock. An abstention will,
accordingly, result in a vote against the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOUR OF THIS PROPOSAL.
STOCKHOLDER PROPOSALS
Any Stockholder intending to submit to CanArgo a proposal for inclusion in
CanArgo's Proxy Statement and proxy for the Special Meeting must submit
such proposal so that it is received by CanArgo no later than March [19],
2004, and such proposal must otherwise comply with Rule 14a-8 under the
Exchange Act.
DISCRETIONARY AUTHORITY
While the Notice of the Special Meeting of Stockholders calls for the
transaction of such other business as may properly come before the Meeting,
the Board of Directors has no knowledge of any matters to be presented for
action by the Stockholders other than as set forth above. The enclosed
proxy gives discretionary authority, however, to the persons named in the
accompanying proxy to vote the shares represented thereby on all such
additional matters properly brought before the Special Meeting in
accordance with their best judgment.
By Order of the Board of Directors
LIZ LANDLES
Corporate Secretary
February [ ], 2004
CANARGO ENERGY CORPORATION
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS
March 23, 2004
The undersigned hereby constitutes and appoints Dr David Robson and Liz
Landles, and each of them, the attorneys and proxies of the undersigned
with full power of substitution to appear and to vote all of the shares of
the Voting Securities of CanArgo Energy Corporation held of record by the
undersigned on February 12, 2004 at the Special Meeting of Stockholders to
be held on March 23, 2004, or any adjournment or postponement thereof, as
designated below:
(1) To approve an amendment to the Certificate of Incorporation to increase
the authorized Common Share capital from 150,000,000 shares of Common Stock
to 300,000,000 shares of Common Stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(2) IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE ON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE SPECIAL MEETING OR ANY ADJOURNMENT
THEREOF.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CANARGO
ENERGY CORPORATION. IN THE EVENT YOU FAIL TO SIGNIFY YOUR CHOICE WITH
RESPECT TO ITEM ONE THE PROXIES ARE AUTHORIZED TO VOTE "FOR" ITEM ONE.
THIS PROXY IS TO BE RECEIVED BY SIGNATURE STOCK, 2301 OHIO DRIVE-SUITE 100,
PLANO, TEXAS USA 75093, OR FAX TO +1 (-972) -612-4122 TO BE RECEIVED ON OR
PRIOR TO 22nd March 2004, 15:00 HOURS EASTERN STANDARD TIME.
YOU ARE URGED TO DATE, SIGN AND RETURN PROMPTLY THIS PROXY IN THE ENVELOPE
PROVIDED. IT IS IMPORTANT FOR YOU TO BE REPRESENTED AT THE SPECIAL MEETING.
THE EXECUTION OF YOUR PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF
YOU ARE PRESENT AT THE SPECIAL MEETING.
Dated: ____________________, 2004
________________________________________ Signature(s)
IMPORTANT: please sign exactly as your name or names appear on this proxy,
and when signing as an attorney, executor, administrator, trustee or
guardian, give your full title as such. If the signatory is a corporation,
sign the full corporate name by duly authorized officer, or if a
partnership, sign in partnership name by authorized person.