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Wentex Subsidiary Sold to Repay Loans

January 12, 1985|ROBERT HANLEY | Times Staff Writer

Apparently unable to raise outside financing, Wentex International Inc. of Garden Grove said Friday that it had sold an oil-producing subsidiary to help repay $4.4 million in loans from First Interstate Bank of California.

Since November, Wentex has faced a Jan. 31 deadline to raise $2.3 million in cash to repay the loans. Wentex had been in default on the loans since October, 1984.

Friday, Wentex paid First Interstate $1.8 million in cash and gave the bank 350,000 shares of its stock. In addition, Wentex gave First Interstate five-year warrants to purchase an additional 250,000 shares of stock at 50 cents a share. In over-the-counter trading Friday, Wentex shares were selling for about 35 cents.

Wentex raised the cash by selling its All Ohio Producing Properties Inc. unit to KST Oil and Gas Co. Inc. of Stowe, Ohio. The company would not disclose the purchase price, however. The All Ohio subsidiary operates about 100 wells in northern Ohio.

Wentex President William J. Weaver Jr. said Friday that the All Ohio sale agreement includes an option that would allow Wentex to buy back the subsidiary under favorable terms within 18 months. Under terms of the agreement, Weaver said, Wentex will retain the subsidiary's cash assets and current accounts receivable, totaling about $310,000.

Weaver also said the company hopes to make a private placement of convertible preferred stock to raise between $5 million and $10 million. "We are planning to combine it with additional joint venture financing from institutional investors for acquiring and development of selective oil and gas fields," he said.

The sale of All Ohio reduces Wentex's total crude reserves by about 25%, further complicating Wentex's already troubled financial picture. For the nine-month period ended Sept. 30, 1984, Wentex reported losses of $52,067.

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