HOUSTON, April 7, 2020 /PRNewswire/ -- Yuma Energy,
Inc. (NYSE American: YUMA) ("Yuma", "Company", "we" or "our")
announced today that it has been notified by its lender, YE
Investment LLC, ("YE" or the "Lender"), an affiliate of Red
Mountain Capital LLC.("Red Mountain"), that all outstanding
payments under its existing Credit Agreement are currently due and
that its Restructuring Agreement with Red Mountain has been
terminated.
In a press release issued on March 20,
2020, Yuma disclosed that it was not in compliance with the
various terms of the Restructuring Agreement and related credit
arrangements, and no further funds were available to Yuma under the
facility. Please refer to our prior press releases and prior
filings with the Securities and Exchange Commission for more
comprehensive information regarding the agreements and
transactions.
On March 30, 2020 the Company
disclosed that effective March 26,
2020, J. Christopher Teets,
who was appointed as a member of the Board of Directors on
September 30, 2019, resigned as a
member of the Board of Directors of Yuma Energy.
On April 3, 2020, Yuma Energy and
its related affiliates received written notice from Red Mountain
that numerous defaults and events of default have occurred and are
continuing under the Credit Agreement and the other loan documents,
including failure to pay interest within the time provided and
failure to comply with other covenants. Consequentially, Red
Mountain has terminated all loan commitments and has accelerated
the payments including accrued interest, fees and other
obligations, are now due immediately. Also, Yuma received
simultaneous written notice from Red Mountain that the
Restructuring Agreement and related Voting Agreement have been
automatically terminated.
As disclosed in September 2019, YE
Investment, LLC, an affiliate of Red Mountain, purchased all
of the Company's outstanding senior secured bank indebtedness and
related liabilities under the Company's senior credit facility (the
"Credit Facility"). The Credit Facility was then modified to
reduce the outstanding principal balance from approximately
$32.8 million, plus accrued and
unpaid interest and expenses, to approximately $1.4 million (the "Modified Note"). Yuma
also entered into a Restructuring and Exchange Agreement (the
"Restructuring Agreement") with Red Mountain and affiliates, which
was to result in the i) exchange of the Modified Note for a new
convertible note that would be convertible into Yuma common stock,
and ii) conversion of the Company's Series D Preferred Stock into
Yuma Common stock. Finally, in December
2019, the parties entered into an amendment to the
Restructuring Agreement and Credit Facility under which Red
Mountain provided an additional two-year senior secured
delayed-draw term loan for up to $2
million, maturing on September 30,
2022, from which the Company has drawn $850,000 to date. The transactions
contemplated by the Restructuring Agreement were subject to
stockholder approval pursuant to NYSE American rules and
requirements, and the Restructuring Agreement included a
termination right in the event such stockholder approval was not
received by December 31, 2019.
Mr. Anthony C. Schnur, Interim
Chief Executive Officer and Chief Restructuring Officer of Yuma
commented, "Despite our efforts to remedy our financial distress
and evaluate strategic alternatives over the past few months, we
have not come to a mutually agreeable understanding with Red
Mountain regarding the extension/modification of the Restructuring
Agreement, Modified Note and related agreements. We are
disappointed that YE and Red Mountain, our Senior Lender and
majority owner of our Series D Preferred stock and holder of
approximately 10% of our outstanding common stock, have taken this
action. Our ability to make timely interest payments has been
hampered by the dramatic collapse in oil prices, certain well
failures, and economic uncertainty caused by the COVID-19
virus. The acceleration of all outstanding payments demanded
by Red Mountain at this time will likely force the Company to cease
our business plan, sell assets or possibly take other remedial
steps such as seeking bankruptcy protection."
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.
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: our ability to raise
additional funding as needed; our ability to pay our debts as they
come due; rights that Red Mountain has under outstanding loan and
other agreements, including security interests in our assets and
their rights to foreclose on such security interests; the
ability of the Company to enter into an amended, extended and
modified 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; the risk
of being forced into, or determining to seek, bankruptcy
protection; 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 the Company's 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.