Each one in plain English, with the numbers worked through for a shareholder.
13 Nov 2015material agreement▼ BadMajor
Filed November 13, 2015 for an agreement effective June 30, 2015, the fifth amendment to the Independent Bank credit agreement keeps the borrowing base at $12.4 million and sets monthly commitment reductions of $125,000 from July 1, 2015. The bank waived defaults on the current-ratio covenant for the quarter ended December 31, 2014 and on the rule against payables more than 90 days past due for the quarters ended December 31, 2014 and March 31, 2015. This continues the pattern of covenant breaches being waived, now including overdue payables.
On April 21, 2015 Red Mountain, through its subsidiaries, sold 50% of its interest in certain oil and gas assets to Black Shale Minerals, LLC for $25.0 million (subject to adjustments), effective April 1, 2015. It plans to use the cash to repay part of the Independent Bank loan, pay accounts receivable and for working capital. The same day the bank cut the borrowing base and commitment from $27.8 million to $12.4 million and set monthly reductions to $0. Pro forma financials are to be filed later.
On March 11, 2015 Independent Bank waived the borrowers' failure to meet the current-assets-to-current-liabilities ratio for the quarter ended September 30, 2014. The bank also cut the borrowing base and commitment from $30 million to $27.8 million from March 1, 2015, with monthly commitment reductions of $350,000 starting then. This is a second covenant waiver on the 2013 credit facility, now paired with a smaller credit line.
On August 12, 2014 Red Mountain announced a planned underwritten public offering of more Series A preferred stock (Northland Capital Markets and Euro Pacific Capital as managers; Nasdaq listing applied for), with proceeds meant to fund part of its fiscal 2015 development program; price and size were not set. Its operational update reported net production of about 109.2 MBoe for the quarter ended June 30, 2014 (about 1,200 Boe/d). The first Kansas well, Besperat #1 in Rush County, found no commercial hydrocarbons (dry hole cost about $100,000) out of a planned seven-well program, while a Turkey Track Bone Spring well made 632 Boe/d at its peak.
13 May 2014capital raising announcement● NeutralMajor
On May 12, 2014 Red Mountain agreed to exchange 222,224 shares of its Series A preferred stock for 1,388,898 common shares, effective April 1, 2014. That leaves 254,463 preferred shares outstanding with a total redemption amount of $6.4 million. This continues the conversion of the 2013 preferred (treated as debt) into common stock, which reduces the preferred and its dividend obligation but adds common shares.
Effective January 31, 2014, Red Mountain combined every 10 shares of common stock into 1 (about 134.0 million shares became about 13.4 million) and cut authorized common shares from 500 million to 50 million. It also moved its incorporation from Florida to Texas by merging into a wholly owned Texas subsidiary; the same directors and officers continue. Both steps were approved by shareholders at the December 20, 2013 annual meeting. Warrant terms were adjusted proportionally, and the stock traded as RDMPD for 20 business days before reverting to RDMP. Holders' ownership percentages are unchanged by the split; fractional shares are paid out in cash.
On October 3, 2013 Red Mountain agreed to take $75,000 of O&G Leasing 2009A debentures and $1,016,000 of 2009B debentures from one holder for 872,800 of its shares. It also declared its first quarterly dividend on the Series A preferred stock, about $0.4167 per share, payable October 15, 2013 to holders of record on September 30. The debenture exchanges for shares continue, and the preferred dividend is a new ongoing cash cost.
On September 12, 2013 Independent Bank waived a default over the borrowers' current-asset-to-current-liability ratio as of May 31, 2013, which they had failed to meet. The amendment also adjusted terms for the move of the fiscal year-end from May 31 to June 30 and raised the borrowing base and commitment from $20 million to $30 million (commitment increase on payment of a $10,000 fee). This shows a covenant breach on the February 2013 credit facility, which the lender waived.
On August 22, 2013 Red Mountain signed an amended underwriting agreement with Global Hunter Securities to sell up to 750,000 units (up from 500,000) at $22.50 each. Each unit is one 10% Series A cumulative redeemable preferred share ($25 liquidation preference) plus a warrant for up to 25 common shares, with sales to the public and to certain noteholders in cancellation of debt. The company will redeem the preferred on July 15, 2018 at $25 plus unpaid dividends, so it will be shown as debt on its balance sheet. Closing was expected around August 27, 2013.
Red Mountain extended its $500,000 subordinated note to the Belzbergs and Caddo from July 31 to August 31, 2013, and issued 750,000 shares to two brokers for services on the February 2013 private placement. It reported proved reserves of 3,532 MBoe as of May 31, 2013 (including 100% of Cross Border, in which it now owns 83%), and said an offering of up to 500,000 units of 10% Series A preferred stock plus warrants was expected to close around August 2, 2013. The note extension continues the short-term debt thread; the preferred offering is a new funding step.
On February 28, 2013 Red Mountain agreed to issue 745,854 of its shares to two creditors of Cross Border's predecessor Pure Energy, covering half of $1.3 million in bankruptcy-plan fees (Cross Border pays the other half in cash), in return for 422,650 new Cross Border shares. It also bought 299,383 Cross Border shares from two holders for 598,766 of its shares, and converted about $917,450 of Cross Border notes into 611,630 Cross Border shares at $1.50. This continues the Cross Border consolidation, paid for largely in Red Mountain stock.
11 Feb 2013capital raising announcement● NeutralMajor
On February 5, 2013 Red Mountain, Cross Border and two subsidiaries signed a revolving credit agreement with Independent Bank (up to $100 million, initial commitment $20 million, maturing February 5, 2016, secured by first liens on substantially all borrower property). Red Mountain borrowed $7.6 million and used part of it to repay the First State Bank of Lonoke notes and the $6.0 million Belzberg senior note, which had been due February 14; Cross Border borrowed $8.9 million and repaid its own facility. This resolves the Belzberg maturity thread, though Red Mountain issued a new $500,000 unsecured subordinated 12% note to the Belzbergs and Caddo due July 31, 2013. It also accepted subscriptions for 7,058,823 shares at $0.85 for $6,000,000, closing by February 28, 2013. The loan has covenants including a requirement that Alan Barksdale remain CEO.
1 Feb 2013asset acquisition disposition● NeutralMajor
On January 28, 2013 Red Mountain bought 5,091,210 Cross Border shares from a limited number of its stockholders for 10,182,420 of its own shares, taking its stake to about 77.9% and leaving it to consolidate Cross Border's results from that date. It also bought 53,341 more Cross Border shares for 106,682 of its shares. This completes the share-funded Cross Border build-up to control (the pending deals were expected to reach 77.6%), at the cost of heavy dilution; the filing says Cross Border financials and pro forma figures will follow by amendment.
This second correction to the October 2012 filing restates the O&G Leasing debenture deals. The $165,000 of 2009B and $75,000 of 2009A deals are unchanged (154,948 and 67,042 shares), but the October 18 deal for $3,000,000 of 2009A and $1,255,000 of 2009B now shows 3,860,222 Red Mountain shares, where the original said $3,030,000 of 2009A for 3,887,039 shares. It only fixes earlier disclosure and adds no new transaction.
31 Dec 2012capital raising announcement● NeutralMajor
On December 24, 2012 Red Mountain agreed to buy 907,145 Cross Border shares for 1,814,290 of its shares, closed December 27. It then held 7,615,241 Cross Border shares (46.7%); if its other pending agreements close, it would hold 12,653,110 shares (77.6%). This continues the Cross Border build-up toward a controlling stake, with more share dilution.
On December 10, 2012 the Belzberg senior secured note was raised from $4,000,000 to $6,000,000, still 12%, maturing February 14, 2013, with first liens on Madera, Pawnee, Shafter Lake, Martin and Cowden and second liens on other properties and 2,136,164 Cross Border shares; the lenders got warrants over 200,000 shares at $1.00 through December 1, 2014. Red Mountain also agreed to buy Bamco Gas receivership assets (Duval, Johnson, Zapata County interests) by issuing 2,375,000 shares to the Bamco debenture trustee, with Black Rock releasing a claim; CEO Barksdale is the Bamco receiver, a related-party link. It also signed a flurry of Cross Border deals (e.g. 2,430,605 shares for 4,861,210 of its shares; Cross Border notes for 1,937,500 shares) that, if closed, would lift its stake from 41.1% to 72%. This continues the Bamco thread and the Cross Border build-up, with heavy dilution and more debt due in about two months.
Red Mountain pushed out the maturity of its senior secured note owed to Hyman and William Belzberg and Caddo Management by three months to 14 February 2013, and agreed it could not repay early without covering the interest it would have saved. The lenders extended, but priced the extension.
13 Nov 2012capital raising announcement● NeutralMajor
On November 6, 2012 Red Mountain agreed to buy 1,049,628 Cross Border shares for 2,099,256 of its own shares, closing on or after December 3, 2012. It then held 6,708,096 Cross Border shares (41%), with agreements for 2,260,627 more. It also agreed to take $715,000 of 2009A and $280,000 of 2009B debentures for 902,075 shares, and $200,000 of 2009B for 187,816 shares (October 22). These debenture deals continue even though the Hunter Drilling purchase was terminated in October; the filing does not say why.
This amendment corrects the October 19 filing: the additional Cross Border shares Red Mountain had agreed to buy as of October 17 were 1,503,833, not 7,919,095. Other figures (512,329 shares bought for 1,024,658 of its own, 6,415,262 shares held, 39.7%, warrants over 2,136,164) are unchanged.
29 Oct 2012material agreement termination● NeutralMajor
On October 18, 2012 Red Mountain, Hunter Drilling and the trustee signed an agreement ending the July 19 purchase of the O&G Leasing and Performance Drilling assets; it was deemed terminated effective October 23, 2012. The trustee returned the $250,000 deposit. The filing gives no reason. This ends the drilling-rig acquisition thread; the debenture purchases already made are not addressed.
19 Oct 2012capital raising announcement● NeutralMajor
In October 2012 Red Mountain agreed to buy 512,329 Cross Border shares for 1,024,658 of its shares, and by October 17 held 6,415,262 Cross Border shares (39.7%), plus agreements for 7,919,095 more and warrants over 2,136,164. It also agreed to take in debentures of O&G Leasing: $165,000 of 2009B for 154,948 shares, $75,000 of 2009A for 67,042 shares, and $3,030,000 of 2009A plus $1,255,000 of 2009B for 3,887,039 shares. These continue both the Cross Border build-up and the debenture exchanges for the Hunter Drilling deal, with more shares issued. (The 39.7% is lower than the 45.9% in the prior filing; the text does not explain why, and the Cross Border share count in pending agreements was later corrected.)
29 Aug 2012capital raising announcement● NeutralMajor
On August 28, 2012 Red Mountain agreed to buy 1,185,301 Cross Border shares for 2,370,602 of its own shares, bringing its stake to about 45.9% (from about 38.5% earlier in the month). This continues the share-funded Cross Border build-up, with further dilution for Red Mountain holders.
This amendment repeats the Hunter Drilling purchase terms (the 2009B debenture side) and adds that on August 8 and 13, 2012 Red Mountain acquired $260,000 of 2009B Debentures from three holders in exchange for 244,161 of its shares. These are part of the debenture exchange the deal required before closing, and add to share dilution.
On August 10, 2012 Red Mountain bought 384,040 Cross Border shares for 768,080 of its own shares, bringing its stake to about 38.5% (up from about 36.1% in June). This continues the share-funded Cross Border build-up and further dilutes Red Mountain holders.
On July 19, 2012 Red Mountain and its subsidiary Hunter Drilling agreed to buy substantially all assets of O&G Leasing and Performance Drilling Company, including five drilling rigs, out of a bankruptcy. Payment is $450,000 cash at closing plus up to $500,000 for bankruptcy claims (a $250,000 deposit was paid into escrow), 1,509,307 Red Mountain shares at $1.50 for 2009A debenture interest and 697,110 shares at $1.50 for 2009B debenture interest, $25,955,000 of 6% senior secured convertible debentures and $7,610,000 of 6% junior secured debentures (both convertible at $2.00 in the first year, rising $0.50 each year), and a Washington State Bank note of about $4.08M. Closing needs Bankruptcy Court orders and was expected before the end of 2012. This is a new line of business (drilling rigs) for a company that so far held oil and gas properties, after the terminated Swan deal.
3 July 2012material agreement termination● NeutralMajor
On June 30, 2012 Red Mountain terminated the May 9, 2012 agreement to buy Swan PC, LP for about $235.0 million, using its right to end it at any time for any reason. The filing says no material early termination penalties were incurred. The filing gives no reason for terminating. This ends the Swan acquisition thread.
This amendment restates the August 2011 auditor change to give effective dates: Hein & Associates was engaged August 22, 2011 and approved by the board August 30, 2011, and L J Soldinger's engagement ended when it completed the Black Rock audit for the year ended May 31, 2011 on October 24, 2011. No disagreements or reportable events are stated. The only qualification mentioned was a going-concern paragraph in the January 31, 2011 report.
This fifth amendment to the Black Rock acquisition report adds audited revenue and direct operating expense statements for the Madera assets and responds to SEC comments. The filing says it does not reflect events after January 12, 2012, and the deal terms shown are the same as in the prior amendment. It carries no new transaction.
