HOUSTON, Sept. 10, 2019 /PRNewswire/ -- Yuma Energy,
Inc. (NYSE American: YUMA) ("Yuma," the "Company," "we" or
"our") today announced that an affiliate of Red Mountain Capital
Partners, LLC ("Red Mountain") has purchased all of Yuma's
outstanding senior secured bank indebtedness and related
liabilities (the "Senior Secured Debt") totaling approximately
$35 million from the Company's
lending group, led by Société Générale. The purchase includes
a principal balance of the Company's credit facility of
$32.8 million, plus accrued interest
of $1.3 million, and the release or
purchase of losses associated with the Company's prior hedging
arrangements totaling approximately $1.1
million.
In anticipation of a contemplated comprehensive debt
restructuring (the "Restructuring"), Red Mountain and Yuma have
signed a non-binding Letter of Intent broadly outlining the terms
that the parties expect to pursue in an effort to restructure the
Company's balance sheet and position the Company for growth.
The Letter of Intent contemplates that Red Mountain would
enter into a forbearance agreement with respect to the Senior
Secured Debt and provide Yuma with funding on a senior secured
basis for certain capital expenditures. In addition, the Letter of
Intent contemplates that Red Mountain and Yuma would work towards a
restructuring approved by Yuma's Board of directors by September 30, 2019, which would provide for the
modification of the Senior Secured Debt on mutually agreeable terms
and, subject to obtaining applicable stockholder approval, the
exchange of the Senior Secured Debt for debt convertible into a
mutually agreed amount of newly-issued Yuma common stock and the
conversion of the existing Yuma preferred stock into a
mutually-agreed amount of newly-issued Yuma common stock. The
Letter of Intent contemplates that the exchange and conversion
described above would occur prior to December 31, 2019. The contemplated
Restructuring, if completed, is subject to definitive agreements on
mutually agreeable terms to be negotiated by the parties.
As the restructuring effort progresses, management will endeavor
to reduce other liabilities on Yuma's balance sheet.
Management will also endeavor to meet the requirements of Yuma's
continued listing on the NYSE American stock exchange, maintain the
continued service by the current members of Yuma's Board of
directors and retain Mr. Anthony C.
Schnur, Yuma's Interim CEO and CRO, as Yuma's CEO and a
director, which are expected to be conditions to the
contemplated Restructuring. Other expected conditions to the
contemplated Restructuring include the availability of net
operating losses to offset all cancellation of indebtedness income
arising as a result of the contemplated Restructuring, the right
(but not the obligation) of Red Mountain to appoint up to four new
directors to the Yuma Board, the payment by Yuma of all expenses
associated with the contemplated Restructuring, including Red
Mountain's legal expenses, and the receipt by Yuma of required
Board and stockholder approvals. Following, or concurrent with, the
Restructuring, Yuma will re-establish a management incentive plan
approved by its Board and attempt to secure a new lender to fund
its operations and to refinance any outstanding loans extended to
Yuma by Red Mountain. Finally, Yuma will seek to merge with a
third party or acquire assets of a scope and size to provide for
the profitability and growth of the Company.
"We are pleased to have the opportunity to work with Red
Mountain in an effort to realign our outstanding debt with the
combined goal of establishing a meaningful path forward for the
Company," said Anthony C. Schnur,
Yuma's Interim Chief Executive Officer and Chief Restructuring
Officer. "This is the first step toward strengthening our
capital base, improving our liquidity and positioning the Company
to pursue growth opportunities. Final terms and results of
any restructuring will be negotiated as soon as practicable with
the mutual goal of significantly reduced leverage and enhanced
flexibility by the end of 2019. While there is much work to
be done to accomplish the plan as set out, we are working
diligently to restructure the Company into a financially
sustainable organization on which we can deliver shareholder
returns."
Continuing Uncertainty
Substantial risk continues to
exist that the Company will be unable to reach agreements on key
issues envisioned by the non-binding Letter of Intent or meet
conditions necessary to fully effect any debt or equity
restructuring or the other actions contemplated by the Letter of
Intent. In addition, 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. 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.