UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of
Report (Date of Earliest Event Reported): October 25, 2006
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American
Real Estate Partners, L.P.
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(Exact
name of registrant as specified in its charter)
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Delaware
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1-9516
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13-3398766
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(State
or other jurisdiction of
incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
No.)
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767
Fifth Avenue, Suite 4700, New York, NY
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10153
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: (212)
702-4300
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N/A
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(Former
name or former address, if changed since last report)
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Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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Written
communication pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Section
1 - Registrant’s Business and Operations
Item
1.01 - Entry into a Material Definitive Agreement.
On
October 25, 2006, National Energy Group, Inc. (OTCBB:NEGI), or NEGI, our
majority owned subsidiary, and our subsidiaries NEG Oil & Gas LLC, NEG, Inc.
and American Real Estate Holdings Limited Partnership, or AREH, entered into
an
agreement pertaining to the possible purchase of NEGI’s membership interest in
NEG Holding LLC (“NEG Holding”). NEG Oil & Gas, which is our wholly-owned
indirect subsidiary, is the owner of 50.01% of NEGI’s common stock and the
managing membership interest in NEG Holding. NEGI’s sole material asset is its
membership interest in NEG Holding.
The
possible purchase of NEGI’s membership interest in NEG Holding would be pursuant
to NEG Oil & Gas’ redemption right under Section 5.4 of the NEG Holding
Operating Agreement, which provides that NEG Oil & Gas has the right at any
time to purchase, or to cause NEG Holding to purchase, NEGI’s interest in NEG
Holding for an amount equal to the fair market value of NEGI’s interest
determined as if NEG Holding had sold all of its assets for fair market value
and liquidated.
Pursuant
to the agreement, if the transactions contemplated by the Exclusivity Agreement
and Letter of Intent, or the Letter of Intent, dated September 7, 2006 by and
among Riata Energy, Inc. (now known as SandRidge Energy, Inc.), AREH and
us are completed and NEG Oil & Gas exercises the redemption right under
Section 5.4 of the NEG Holding Operating Agreement, NEGI would transfer its
membership interest in NEG Holding to NEG Oil & Gas or one of its affiliates
and NEG Oil & Gas would cause to be delivered to NEGI a payment of
approximately $261.1 million, which the parties agree is the amount owed to
NEGI
for its interest in NEG Holding pursuant to Section 5.4 of the NEG Holding
Operating Agreement. The payment would be adjusted to take into consideration
the accrual of interest, after November 1, 2006, on NEGI’s 10.75% senior notes
due 2007.
In
addition, under the agreement, NEGI, NEG Oil & Gas, NEG and AREH each agree
that no action taken in furtherance of the transactions contemplated by the
Letter of Intent will be deemed a breach of the Agreement and Plan of Merger,
or
the Merger Agreement, dated December 7, 2005 by and among NEGI, NEG Oil &
Gas, NEG and AREH.
Pursuant
to the agreement, the Merger Agreement will automatically terminate upon the
transfer of NEGI’s membership interest in NEG Holding. At the time the payment
is delivered to NEGI with respect to its membership interest in NEG Holding,
as
described above, any assets or property of NEG Oil & Gas and its
subsidiaries owned by them but in the possession of NEGI will be transferred
and
delivered to NEG Oil & Gas or its subsidiaries.
There
cannot be any assurance that the redemption or the transactions contemplated
by
the Letter of Intent will occur.
This
summary of the agreement is qualified in its entirety by reference to the full
text of the agreement filed herewith as an exhibit.
2
Section
9 - Financial Statements and Exhibits
Item
9.01(d) Exhibits
Exhibit
10.1 - Agreement,
dated as of October 25, 2006 by and among National Energy Group, Inc., NEG
Oil
& Gas LLC, NEG, Inc. and American Real Estate Holdings Limited
Partnership.
[remainder
of page intentionally left blank; signature page follows]
3
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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AMERICAN
REAL ESTATE PARTNERS, L.P.
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(Registrant)
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By: American
Property Investors, Inc.,
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its
General Partner
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By:
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/s/
Hillel Moerman
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Hillel
Moerman,
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Chief
Financial Officer
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American
Property Investors, Inc.,
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the
General Partner of
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American
Real Estate Partners, L.P.
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Date: October
30, 2006
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4
Exhibit
10.1
AGREEMENT
This
Agreement is being entered into as of October 25, 2006 (this “Agreement”), by
and among National Energy Group, Inc. (the “Company”), NEG Oil & Gas LLC
(“NEG Oil & Gas”), NEG, Inc. (“IPOCO”) and American Real Estate Holdings
Limited Partnership (“AREH”). All capitalized terms used but not defined herein
shall have the meanings given such terms in the Agreement and Plan of Merger
dated as of December 7, 2005 (the “Merger Agreement”), by and among the Company,
NEG Oil & Gas, IPOCO and AREH.
WHEREAS,
this Agreement has been duly considered and approved by the Special Committee,
following its consideration of all relevant facts, circumstances and
alternatives and its consultation with its financial and legal advisors, and
such committee has recommended that the Company Board adopt and approve this
Agreement.
WHEREAS,
the Company Board, based on the recommendation of the Special Committee, has
approved and adopted this Agreement and the transactions contemplated
hereby.
WHEREAS,
it is anticipated that, assuming the purchase of the membership interests
contemplated in Section 3 occurs, the Company will distribute to its common
stockholders (through a dividend or tender offer) approximately $37
million.
NOW,
THEREFORE, in consideration of the foregoing premises and the representations,
warranties, covenants and agreements herein contained, and intending to be
legally bound hereby, the Company, NEG Oil & Gas, IPO Co. and AREH hereby
agree as follows:
1. Each
of
the undersigned acknowledges and agrees that no action by any party in
furtherance of the transactions contemplated by that certain Exclusivity
Agreement and Letter of Intent dated September 7, 2006 (the “Letter”), by and
among AREH, AREP and Riata Energy, Inc. (including, without limitation, the
NEG
Holding Purchase and the consummation of the Transaction or the Restructuring
(as such capitalized terms are defined in the Letter)), shall in any event
be or
be deemed to be a breach of the Merger Agreement or any representations,
warranties, covenants or other provisions thereof (including, without
limitation, Section 4.2 thereof).
2. Each
of
the undersigned (including the Company, which, as contemplated in Section 6.1(a)
of the Merger Agreement, is acting hereunder at the direction of the Special
Committee) agrees that the Merger Agreement shall terminate pursuant to Section
6.1(a) thereof, automatically,
without any further action required, upon the transfer
of all
of the Company’s membership interest in NEG Holding LLC (“NEG Holding”) as
provided in Section 3 below.
3. In
recognition of the fact that, as contemplated in the Letter, NEG Oil & Gas
or its Affiliate intends to purchase or to cause NEG Holding to purchase (such
purchaser, the "Interest Buyer") all of the Company’s membership interest in NEG
Holding pursuant to Section 5.4 of the NEG Holding Operating Agreement in
connection with the closing, if any, of AREP’s transaction with Riata Energy,
Inc. contemplated in the Letter:
(A) the
Company hereby represents, warrants, acknowledges and agrees that:
(i) the
Company owns its membership interest in NEG Holding and all rights under the
NEG
Holding Operating Agreement, all as set forth in the NEG Holding Operating
Agreement, free and clear of all liens, claims and encumbrances (other than
liens in favor of NEG Oil & Gas in connection with the NEG Operating LLC
credit facility (the “AREP Liens”));
(ii) effective
upon delivery of notice (the “Exercise Notice”) by NEG Oil & Gas to the
Company (which will be effective upon receipt of a facsimile copy thereof by
the
Company) stating that the purchase rights under Section 5.4 of the NEG Holding
Operating Agreement are being exercised by the Interest Buyer and the payment
of
the sum specified in Section 4(B) below: (x) all right, title and interest
of
the Company in NEG Holding shall automatically be and be deemed to be,
transferred, assigned conveyed and sold to the Interest Buyer and the Company
shall cease to be a member of NEG Holding or have any rights, powers or
interests therein or under the NEG Holding Operating Agreement and (y) the
Company will cease to have (and releases and shall be deemed to have released):
(I) any right to receive any payment or distribution from NEG Holding or its
subsidiaries or (II) any other right or claim with respect to NEG Holding or
its
subsidiaries, in the case of each of (I) and (II) associated with, arising
out
of or relating to its membership interests in NEG Holding, other than the right
to receive the payment contemplated in Section 4(B) below.
(B) NEG
Oil
& Gas agrees that upon delivery of the Exercise Notice: (i) the Interest
Buyer will cause to be delivered to the Company the sum of
$261,124,876*
(the
"Payment"), which the parties agree is the amount owing to the Company under
Section 5.4 of the NEG Holding Operating Agreement; and (ii) the AREP Liens
will
be released and terminated. Upon receipt of such payment the Company will pay
in
full the amount of principal and outstanding interest owing under the Company’s
10.75% senior notes due 2006 (the "Bonds"), the principal amount of which is
approximately $148.6 million. As a result, after payment of the Bonds the
Company will retain approximately $112,487,876 from the Payment.
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The
above amount assumes that the closing occurs on November 1,
2006. If it
occurs on a different date then the price will be adjusted
to take into
account the appropriate accrual of interest on the Bonds (as
defined
above) and the appropriate distribution to NEG Oil & Gas under Article
VI of the NEG Holding Operating
Agreement.
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4. At
the
time the Payment is delivered, automatically and without any further action
necessary: (i) the management agreements between the Company and each of
National Onshore LP, National Offshore LP and NEG Operating LLC will be
terminated; and (ii) any assets or property of NEG Oil & Gas and its
subsidiaries owned by them but in the possession of the Company (including,
without limitation, information technology, software and data relevant to the
oil and gas operations of NEG Oil & Gas or its subsidiaries) will be
transferred and delivered to NEG Oil & Gas or its subsidiaries, as
designated by NEG Oil & Gas.
5. The
provisions of this Agreement constitute an agreement separate from the Merger
Agreement and shall survive any termination of the Merger Agreement.
6. This
Agreement may be executed through the use of separate signature pages or in
any
number of counterparts and all such counterparts shall be deemed one and the
same instrument.
7.
This
Agreement shall be deemed to be made in and in all respects shall be
interpreted, construed and governed by and in accordance with the law of the
State of Delaware without regard to the conflict of law principles
thereof.
[The
balance of this page has been left blank intentionally.]
IN
WITNESS WHEREOF, the undersigned have duly executed this Agreement as of the
date first written above.
NATIONAL
ENERGY GROUP, INC.
By:
/s/
Bob G. Alexander
Name:
Bob
G. Alexander
Title:
President
NEG
OIL
& GAS LLC
By:
AREP
O & G Holding LLC, its sole member
By:
AREP
Oil & Gas Holding LLC, its sole member
By:
American Real Estate Holdings Limited Partnership, its sole
member
By:
American Property Investors, Inc., its general partner
By:
/s/
Keith Meister
Name:
Keith Meister
Title:
Principal Executive Officer
NEG,
INC.
By:
/s/
Keith Meister
Name:
Keith Meister
Title:
Chief Executive Officer
AMERICAN
REAL ESTATE HOLDINGS LIMITED PARTNERSHIP
By:
American Property Investors, Inc.
By:
/s/
Keith Meister
Name:
Keith Meister
Title:
Principal Executive Officer
[Signature
page to Agreement among National Energy Group, Inc., NEG Oil & Gas LLC,
NEG,
Inc.
and American Real Estate Holdings Limited Partnership]