HOUSTON, Nov. 14, 2019 /PRNewswire/ -- Yuma Energy,
Inc. (NYSE American: YUMA) ("Yuma" or "Company," "we" or
"our") today announced its financial results for the third quarter
ended September 30, 2019.
The 2019 third quarter balance sheet reflects the extinguishment
of $34.7 million of senior secured
bank debt, which was purchased by an affiliate of Red Mountain
Capital Partners, LLC ("Red Mountain"), and other liabilities as
part of the restructuring of Yuma's existing senior credit
facility. As previously disclosed and as part of the
Restructuring and Exchange Agreement dated September 30, 2019, by and among Yuma, Red
Mountain and certain of their affiliates (the "Restructuring
Agreement"), Yuma and Red Mountain entered into a Loan Modification
Agreement (the "Loan Modification Agreement") on September 30, 2019 which modified Yuma's existing
credit agreement by reducing the outstanding principal balance from
$32.8 million to $1.4 million, forgiving approximately
$31.4 million plus accrued and unpaid
interest and expenses, and hedge loss liability. This amount
of forgiveness from the reduction in principal balance, accrued and
unpaid interest and hedge loss liability has been recorded to
additional paid-in-capital on the Company's balance
sheet. As a result of the Loan Modification Agreement,
the Company reduced its total current liabilities to $11.9 million as of September 30, 2019 from $44.2 million as of December 31, 2018. Total liabilities were
$27.7 million as of September 30, 2019 compared to $55.6 million as of December 31, 2018.
Mr. Anthony C. Schnur, Interim
Chief Executive Officer and Chief Restructuring Officer of Yuma
commented, "We are pleased with the significant progress that the
Company made during the third quarter in restructuring our balance
sheet. As the first step following our entry into the
Restructuring Agreement with Red Mountain, the Loan Modification
Agreement dramatically reduced Yuma's outstanding indebtedness and
hedge liabilities, resulting in the write-down of our senior
secured note to $1.4 million from
$32.8 million and the
reclassification of the note from a current liability to long-term
debt. This effectively reduced our current liabilities by 73%
and our total liabilities by approximately 50% when compared to
year-end 2018 and improved total shareholders' equity.
Further steps in the restructuring will now take priority."
In addition to the Loan Modification Agreement, the transactions
to be consummated in connection with the Restructuring Agreement
are as follows:
- The Company and Red Mountain are negotiating, in good faith, an
amended and restated credit facility providing for a delayed draw
term loan of up to $2.0 million with
a maturity date of September 30,
2022.
- Upon shareholder approval, the $1.4
million note under the credit facility 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 shareholder 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.
- Following the consummation of the transactions, there will
effectively be a change in control wherein Red Mountain, its
affiliates and its investors will own approximately 91% of the
Company's fully-diluted outstanding shares.
- 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.
- The terms and conditions of the transactions are subject to
change during the final negotiations between the Company, Red
Mountain and its affiliates.
All of the transactions cited above are being negotiated between
the parties and may or may not come to fruition under the terms
described. While the Company anticipates the transactions
will be consummated as outlined above, there is no guarantee that
some terms and conditions will not change. Once the restructuring
is consummated, the Company plans to leverage its improved capital
structure to grow through merger and acquisition opportunities and
potential capital markets transactions, including the sale of debt
or equity securities.
The Company also continues to reduce its operating and general
and administrative expenses. During the 2019 third quarter,
lease operating expenses declined to $1.3
million, a 26.4% sequential decrease, from $2.0 million in the 2019 second quarter and a
48.4% decrease from $2.5 million in
the same period last year. General and administrative expense
fell to $1.1 million in the 2019
third quarter, a 27.8% sequential decrease, from $1.5 million in the 2019 second quarter and a
9.5% decrease from $1.2 million in
the same period last year.
Mr. Schnur continued, "These accretive transactions only
partially reflect the positive impact on our balance sheet that we
expect when the restructuring is completed. Subject to a
shareholder vote that is anticipated in early 2020, we plan to
exchange the modified $1.4 million
note with a convertible note, which will eliminate certain
remaining hedge liabilities, and also convert the outstanding
Series D Preferred Stock into common stock, which will eliminate a
liquidation preference of approximately $23.8 million. These anticipated transactions, if
approved, are expected to be further accretive to our balance sheet
and favorably position Yuma for the future.
"Management will continue to control overhead and operating
costs and address our production operations at the field
level. Yuma's reformed capital structure will allow
management to focus on growth opportunities from a stronger
financial footing."
Quarterly Report Form 10-Q Filed
On November 14, 2019, Yuma filed its quarterly
report on Form 10-Q for the three months ended September 30, 2019 with the Securities and
Exchange Commission ("SEC"). Investors and stockholders may
obtain our Form 10-Q, Form 10-K and other documents filed with the
SEC free of charge at the SEC's website, www.sec.gov. In addition,
copies of our filings are available on our website at
www.yumaenergyinc.com.
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, the quarter ended
June 30, 2019, and the quarter
ended September 30, 2019 raise
substantial doubt about the Company's ability to continue as a
going concern.
Please refer to our recently filed Quarterly Report on Form
10-Q for the three months ended September
30, 2019 and all our filings with the SEC for further
information.
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
Carol Coale
Managing Director
Dennard Lascar Investor
Relations
713-529-6600
ccoale@dennardlascar.com
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SOURCE Yuma Energy, Inc.