16 June 2014capital raising announcement● NeutralMajor
The company closed a private sale on June 16, 2014 of 3,250,000 depositary shares (including a fully exercised 500,000 over-allotment) in new 6.00% Convertible Perpetual Preferred Stock, Series B, each worth $100 of liquidation preference, for net proceeds of about $312.5 million. The preferred is convertible at an initial $18.34 per share, which would be about 17.7 million common shares if all converted, so it could dilute common holders. Proceeds are meant to pay down the revolver in the near term and fund an accelerated Eagle Ford program, including an added rig in July 2014 and more lease acquisitions. The company also signed a Sixth Amendment to its credit agreement raising the permitted annual shareholder dividends to $30 million and allowing up to $20 million of inducement payments to Series A preferred holders, and agreed conversion deals under which Series A holders get 4,321,039 common shares plus about $3.8 million in cash.