HOUSTON, Oct. 2, 2019 /PRNewswire/ -- 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.
Concurrently with the execution of the Restructuring Agreement,
the Company has appointed Red Mountain's nominee, J. Christopher Teets as a director. Mr. Teets
is a partner of Red Mountain and previously served on the Yuma
Board of Directors.
For further details regarding the Restructuring Agreement and
the Transactions, please reference our Current Report on Form 8-K
filed with the Securities and Exchange Commission (the "SEC") on
October 2, 2019.
Continuing Uncertainty
The Company's audited
consolidated financial statements for the year ended December 31, 2018, included a going concern
qualification. The risk factors and uncertainties described in our
SEC filings for the year ended December 31,
2018, the quarter ended March 31,
2019, and the quarter ended June 30,
2019 raise substantial doubt about the Company's ability to
continue as a going concern.
About Yuma Energy, Inc.
Yuma Energy, Inc., a
Delaware corporation, is an
independent Houston-based
exploration and production company focused on acquiring, developing
and exploring for conventional and unconventional oil and natural
gas resources. Historically, the Company's activities have
focused on inland and onshore properties, primarily located in
central and southern Louisiana and
southeastern Texas. Its common stock is listed on the
NYSE American under the trading symbol "YUMA."
Forward-Looking Statements
This release contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and
Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Any and all statements that are not strictly
historical statements constitute forward-looking statements and may
often, but not always, be identified by the use of such words such
as "expects," "believes," "intends," "anticipates," "plans,"
"estimates," "potential," "possible," or "probable" or statements
that certain actions, events or results "may," "will," "should," or
"could" be taken, occur or be achieved. We caution that these
statements by their nature involve risks and uncertainties, and
actual results may differ materially depending on a variety of
important factors, including, among others: the ability to obtain
stockholder approval of the Transactions; the ability to consummate
the Transactions; the consequences of consummating the
Transactions; the ability of the Company to enter into an amended
and restated credit facility; the ability to maintain sufficient
liquidity to fund operations; the ability to remain listed on the
NYSE American; the ability to continue as a going concern; and the
ability to use net operating losses to offset cancellation of
indebtedness income. The Company's annual report on Form 10-K
for the year ended December 31, 2018,
quarterly reports on Form 10-Q, recent current reports on Form 8-K,
and other SEC filings discuss some of the important risk factors
identified that may affect its business, results of operations, and
financial condition. The Company undertakes no obligation to
revise or update publicly any forward-looking statements, except as
required by law.
For more information, please contact
M. Carol Coale
Managing Director
Dennard Lascar Investor
Relations
1800 West Loop South, Suite 200
Houston, TX 77027
713-529-6600
ccoale@dennardlascar.com
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SOURCE Yuma Energy, Inc.