02
Oct

Yuma Energy, Inc. Enters Into Restructuring and Exchange Agreement

by | in News | 0 comments


Yuma Energy, Inc. (NYSE American: YUMA) (“Yuma,” the “Company,” “we” or “our”) today announced that it has entered into a Restructuring and Exchange Agreement (the “Restructuring Agreement”) with Red Mountain Capital Partners LLC and its affiliates (“Red Mountain”).

As previously disclosed, YE Investment LLC, an affiliate of Red Mountain (“YE”), purchased all of the Company’s outstanding senior secured bank indebtedness and related liabilities under the Company’s credit facility (the “Credit Facility”), including the Company’s remaining hedge obligations due to its hedge counterparties (“Hedge Liabilities”). The primary purposes of the Restructuring Agreement are to reform Yuma’s capital structure, address the Company’s liquidity needs, and regain compliance with the NYSE American LLC listing standards. The Company plans to hold a Special Meeting of Stockholders to Vote on matters required to be approved by stockholders in connection with the transactions contemplated by the Restructuring Agreement (the “Transactions”).

Mr. Anthony C. Schnur, Interim Chief Executive Officer, and Chief Restructuring Officer commented, “The Restructuring Agreement and the modification of the Credit Facility, will immediately reduce Yuma’s debt-related and hedge liabilities by $34.7 million, and increase Yuma’s shareholder equity by the same amount. Yuma’s internal review indicates that the Company has sufficient NOLs to offset the associated cancellation of indebtedness income. In addition, the anticipated conversion of the Series D Preferred Stock into common stock will eliminate a liquidation preference of approximately $23.8 million. These factors indicate that the Transactions are accretive to the current shareholder equity of the Company and that the restructuring plan as adopted, with dramatically reduced levels of debt, favorably positions Yuma for the future.

“Management will continue to control overhead and operating costs as we have done over the previous six months, and we continue to be diligent in meeting the Company’s obligation to reduce its other liabilities in order to complete all phases of the restructuring. With additional capital availability, we will continue to address our production enhancement opportunities at the field level. Yuma’s reformed capital structure will significantly improve our ability to pursue merger and acquisition opportunities and/or equity financings.”

A summary of the Transactions are as follows:

The Credit Facility has been modified to (i) reduce the outstanding principal balance from approximately $32.8 million, plus accrued and unpaid interest and expenses, to $1.4 million (the “Modified Note”) with the forgiveness of approximately $31.4 million-plus the accrued and unpaid interest and expenses, (ii) increase the interest rate to 10% per annum payable monthly beginning in January 2020, and (iii) extend the maturity date to September 30, 2022. In addition, Hedge Liabilities in the amount of $750,000 have been eliminated.
The Company and YE will negotiate in good faith to enter into an amended and restated credit facility providing for up to $2.0 million of availability with a maturity date of September 30, 2022.
Upon stockholder approval, the Modified Note will be exchanged for a convertible note (the “Convertible Note”) that will be convertible into approximately 10.9 million shares of Yuma common stock, which would represent approximately 70% of the outstanding shares on a pro forma basis, assuming full conversion of the outstanding shares of Series D Preferred Stock as discussed below. Additionally, Hedge Liabilities in the amount of $360,000 will be eliminated as part of this exchange.
Upon stockholder approval, the conversion price of the Series D Preferred Stock will be reduced such that the Series D Preferred Stock will be convertible into approximately 3.1 million shares of Yuma common stock, which would represent approximately 20% of the outstanding shares on a pro forma basis, assuming full conversion of the Convertible Note as discussed above.
Upon the conversion of the Convertible Note and the Series D Preferred Stock, there will be a change in control of the Company as Red Mountain and its affiliates will hold approximately 90% of Yuma’s outstanding common stock.
At the closing of the Restructuring Agreement, Red Mountain will have the right (but not the obligation) to nominate an aggregate of four directors to the Company’s Board of Directors.

Comments (0)


No comments yet, but you can be the first

Leave A Comment


Find Out More

If you want more information on our products or have a general enquiry, please contact us.