Each one in plain English, with the numbers worked through for a shareholder.
10 Mar 2010capital raising announcement● NeutralMajor
On March 5, 2010 NYSE Amex told the company it has resolved the continued-listing deficiency first raised in June 2009. On March 10 the company began issuing Langtry (controlled by CEO Wallen) 10,350,000 common shares and 103,500 convertible preferred shares (convertible at $1.20) in exchange for the pre-paid drilling credits, after the Exchange approved the listing on March 5. Authorized common shares were raised from 100M to 120M. This closes the listing thread and completes the Langtry issuance that dilutes existing holders.
23 Dec 2009capital raising announcement▲ GoodMajor
On December 18, 2009 the company signed a Second Amendment with Wells Fargo Energy Capital raising the revolver from $20M to $40M, lifting the borrowing base from $20M to $25M, and pushing maturity of the revolver and the $5M convertible term loan to July 1, 2012 (still prime+2%, secured on substantially all assets). It issued Wells Fargo new warrants for 5,000,000 shares at $1.00 (expiring Dec 1, 2014) and extended the existing 2,500,000-share warrants to the same date. Separately, CEO Calvin Wallen III lent the company $2,000,000 (prime+1%, due August 31, 2012, subordinated to Wells Fargo), and the proceeds repaid the Diversified Dynamics note held by director William Bruggeman. The filing does not say it settles the earlier $12.5M borrowing-base shortfall, but the new $25M base replaces the $7.5M base; the warrants add potential dilution.
1 Dec 2009asset acquisition disposition● NeutralMajor
On November 24, 2009 the company bought $30,952,810 of pre-paid drilling credits for Haynesville Shale wells from Tauren and Langtry, both controlled by CEO Calvin Wallen III (related parties; approved by a special committee of non-employee directors). In exchange it gave Tauren a ~2% overriding royalty below the Taylor Sand and agreed to issue Langtry 10,350,000 common shares plus $10,350,000 of 8% preferred stock convertible at $1.20, subject to NYSE Amex approval, which would dilute existing holders. Wells Fargo extended its waiver on the borrowing-base shortfall to January 1, 2010 to allow talks on a credit amendment, so that issue remains open.
In August 2009 the company sold 2,104,001 shares for about $1,788,400 ($0.85 per share), with warrants for 1,052,000 shares at $0.85 through July 31, 2014; $59,500 in commissions went to Avalon Group. Wells Fargo also extended its waiver on the $12.5M borrowing-base shortfall from September 1 to October 1, 2009, so the shortfall is still unresolved.
What it means for a shareholder
1.1m new shares at $0.850 to raise about $1.8m. Shares on issue before the raise aren't in the record, so the dilution can't be worked out.
Wells Fargo cut the borrowing base from $20.0M to $7.5M on June 29, 2009, leaving a $12.5M shortfall; it waived enforcement until September 1, 2009, and the company can prepay, pay in five monthly instalments, or add properties. Separately, NYSE Amex said on June 26 that the company's losses or financial condition make it questionable whether it can continue operations or meet obligations; the company plans a compliance plan by July 27 and must regain compliance by December 28, 2009 or face delisting proceedings. This reverses the 2008 borrowing-base expansion and is a serious warning for shareholders.
William L. Bruggeman, Jr. and Ruth Bruggeman, Joint Tenants with Rights of Survi reported a HILLTOP ENERGY, LLC. shareholding of 17,841,397 shares (28.20% of votes) in a periodic institutional filing.
