Each one in plain English, with the numbers worked through for a shareholder.
18 June 2012capital raising announcement● NeutralMajor
On June 13, 2012 Red Mountain bought 1,000,000 Cross Border shares for 2,000,000 of its own shares, bringing its stake to about 36.1%. It also reports that the extra-purchase rights from the private placement are now used up: the other investors bought 2,464,546 shares at $1.10 in April (about $2.71M) and 1,846,271 shares at $1.10 in June ($2,030,900), and the rest of the rights expired. Broker commissions were $425,090 in cash plus warrants for 425,090 shares at $1.20. This resolves the open extra-purchase thread and continues the share-funded Cross Border build-up, with further dilution. It also issued 10,000 shares to executive Tommy Folsom for fluid level equipment.
What it means for a shareholder
2.5m new shares at $1.10 to raise about $2.7m. That's 2.8% dilution: every existing holder's slice gets 2.8% smaller. If you held $1,000 of shares (909 at the issue price), your slice goes from 0.00107% to 0.00104% of the company. To keep it you'd need 26 more shares - about $29 at the issue price.
On May 28, 2012 Red Mountain signed indemnification agreements with its five directors: Alan Barksdale, Lynden Rose, Paul Vassilakos, Richard Roberts and Randell Ford. The company will cover and advance their legal costs for claims arising from their roles, to the fullest extent the law permits. This is routine governance paperwork with no stated financial amount.
On May 9, 2012 Red Mountain agreed to buy all the partnership interests of Swan PC, LP, an oil and gas producer in Jack, Palo Pinto, Clay, Parker and Wise Counties, Texas, from trusts of the Swan family for about $235.0 million, with $20.0 million held in escrow for indemnities. Closing was expected on or about July 1, 2012. The price is far larger than any deal in the company's history so far, and the filing does not say how it would be financed. Red Mountain could terminate at any time and for any reason.
This amendment updates the private placement: on December 21, 2011 one investor bought 2,727,272 shares at $1.10, and the other two investors' extra-purchase rights now run until February 29, 2012 (this answers the open question left in the last filing). On January 10, 2012 Red Mountain also bought 250,929 Cross Border shares for 501,858 of its own shares, leaving it with about 29.9% of Cross Border. It issued broker warrants for 300,000 shares tied to the December sale. This continues the pattern of paying for Cross Border stock with new Red Mountain shares, which dilutes existing holders.
What it means for a shareholder
2.7m new shares at $1.10 to raise about $3.0m. That's 3.7% dilution: every existing holder's slice gets 3.7% smaller. If you held $1,000 of shares (909 at the issue price), your slice goes from 0.00129% to 0.00124% of the company. To keep it you'd need 35 more shares - about $39 at the issue price.
This fourth amendment to the Black Rock acquisition report adds the information an annual report for Black Rock's year ended May 31, 2011 would contain, and responds to SEC staff comments; it is not a new deal. It restates the existing terms (27,000,000 shares to StoneStreet, 225,000,000 Lamson shares retired, the Lonoke Loan and Bamco Replacement Note with 2,000,000 pledged shares, $2.45M of 10% notes). The one updated figure is that the company owns about 29.9% of Cross Border, which is a different percentage from the 36.5% beneficial figure in the earlier amendment (the text shown does not explain the difference).
28 Dec 2011capital raising announcement▲ GoodMajor
This amendment adds detail on the completed private placement: 16,206,000 shares sold for $16,206,000, plus 313,875 shares and warrants over 1,463,000 shares (exercise $1.20, expiring April 30, 2014) issued to brokers. On December 21, 2011 one investor used its extra-purchase right to buy 2,727,272 shares at $1.10 (about $3.0M, an inference from the figures). This resolves part of the open right granted to investors, though the other investors' rights are not addressed.
What it means for a shareholder
2.7m new shares at $1.10 to raise about $3.0m. That's 3.7% dilution: every existing holder's slice gets 3.7% smaller. If you held $1,000 of shares (909 at the issue price), your slice goes from 0.00129% to 0.00124% of the company. To keep it you'd need 35 more shares - about $39 at the issue price.
On November 25 and 30, 2011 Red Mountain issued three 10% convertible notes due November 25, 2013: $1,500,000 to Personalvorsorge der Autogrill Schweiz AG, $1,000,000 to Hohenplan Privatstiftung and $250,000 to SST Advisors, Inc., totalling $2,750,000. Holders can convert into shares at $1.00 initially, which would dilute existing shareholders if exercised, and the shares are to be included in a planned resale registration.
On November 16, 2011 Red Mountain issued a senior secured note of up to $4,000,000 to Hyman Belzberg, William Belzberg and Caddo Management, advancing $500,000 at once, with further draws for property purchases once security is perfected. It carries 12% interest and matures November 16, 2012, is guaranteed by Black Rock and RMR Operating, and is secured by oil and gas property liens and a pledge of 2,233,000 Cross Border shares. This is the first senior secured borrowing at parent level and puts its Cross Border stake at risk if the note defaults; the note was later extended to February 2013 (per the exhibit-only recovery in context).
This third amendment to the Black Rock acquisition report adds full-year information for Black Rock and responds to SEC staff comments; it restates the deal terms rather than announcing a new transaction. It confirms the structure (27,000,000 shares to StoneStreet, 225,000,000 Lamson shares retired), the Lonoke Loan of about $2.8M and the Bamco Replacement Note with 2,000,000 pledged shares, and the $2.45M of 10% notes tied to 600,000 shares. Newer details: StoneStreet released 7,000,000 shares from lock-up on September 12 (11,000,000 remain locked, and 100,000 shares were cancelled in exchange), and the company now beneficially owns about 36.5% of Cross Border. It also refers to a July 8, 2011 Pawnee Prospect agreement in the Permian Basin.
On November 11, 2011 Black Rock closed the purchase of the Cowden Mineral Interests and some real property in Ector County, Texas from a court-appointed receiver for Alan Todd May and Prosper Oil & Gas, for $1,150,000, after court approval on November 9. The interests cover about 760 gross (740 net) acres with 31 producing wells, held at 75% to 100% working interests. It adds Permian Basin production to the portfolio.
On November 1, 2011 Red Mountain acquired 637,272 more Cross Border Resources shares for 1,274,544 of its own shares, lifting its Cross Border stake to 27.1%. This is another share-funded step in the Cross Border build-up, and the shares issued to the seller are to be included in the planned resale registration.
On November 4, 2011 Red Mountain sold another 4,151,000 shares at $1.00 and closed the $25 million private placement, which ended up raising 16,206,000 shares for $16,206,000, short of the $25 million ceiling. Three investors now hold rights to buy an additional $3,000,000 of shares until December 31, 2011, at the lesser of $1.10 or a 10-day average closing price. The filing states the aggregate purchase price for this day's sale as '$1.00', which looks like an error, since at $1.00 per share 4,151,000 shares would be $4,151,000 (an inference).
What it means for a shareholder
4.2m new shares at $1.00 to raise about $4.2m. That's 5.5% dilution: every existing holder's slice gets 5.5% smaller. If you held $1,000 of shares (1,000 at the issue price), your slice goes from 0.00141% to 0.00134% of the company. To keep it you'd need 59 more shares - about $59 at the issue price.
1 Nov 2011capital raising announcement● NeutralMajor
On October 26, 2011 Red Mountain acquired 1,377,193 Cross Border Resources shares by issuing 2,754,386 of its own shares, taking its stake to 23.1%. This continues its build-up of the Cross Border position begun through Black Rock and the August purchase, paid for in new Red Mountain shares rather than cash, so existing holders are diluted. It agreed to register the resale of the issued shares by December 1, 2011.
On October 25, 2011 Black Rock, the Red Mountain subsidiary, issued a $200,000 convertible note to Michael Garnick, due April 15, 2013 at 10% interest. After October 17, 2012 he can convert it into Red Mountain shares at $1.00. This replaces the amount he was still owed on the 10% notes from the June 2011 Black Rock-related borrowing, which is a move to a longer maturity rather than new money, and the shares would be included in a planned resale registration.
This amendment adds Black Rock's audited financials for the year ended May 31, 2011, which now stand as Red Mountain's own history after the June 22 acquisition. They show oil and gas sales of $3,711,815, net income of $1,642,293, and a working capital deficit of $10,361,821 including $5,750,000 owed to Red Mountain, which is the intercompany loan cancelled at closing. Black Rock's Cross Border investment is carried at $6,042,869. Black Rock's properties came from MSB Energy, Inc. (in Chapter 11) in June and October 2010, and its auditor was L J Soldinger, which Red Mountain had dismissed on August 30.
On September 6 and 7, 2011 Red Mountain sold 2,500,000 and 3,350,000 shares ($5,850,000 in total) at $1.00 to accredited investors in its $25 million private placement, for general working capital. That brings the placement to 12,055,000 shares and $12,055,000 raised, continuing the fundraising that began in spring 2011. One investor was also given the right, until December 31, 2011, to buy a further $3,000,000 of shares at the lesser of $1.10 or a 10-day average closing price, which could add shares for existing holders to absorb.
What it means for a shareholder
3.4m new shares at $1.00 to raise about $3.0m. Shares on issue before the raise aren't in the record, so the dilution can't be worked out.
On August 30, 2011 the board dismissed L J Soldinger Associates, engaged only in March, and hired Hein & Associates LLP as auditor. The filing reports no disagreements or reportable events; Soldinger's report on January 31, 2011 and 2010 financials included a going-concern doubt paragraph. This is the second auditor change in six months.
17 Aug 2011capital raising announcement▲ GoodMajor
On August 16, 2011 Red Mountain acquired a 100% working interest in the Martin Lease (320 acres, Andrews County, Texas) for 320,000 shares, and the Shafter Lake Lease (about 185 acres, same county, 75% net revenue interest) for $250,000 plus 250,000 shares. It also bought 218,535 Cross Border Resources shares for 273,169 of its own shares, adding to the stake gained via Black Rock. All share issues were private placements.
The Black Rock deal closed June 22, 2011: Red Mountain issued 27,000,000 restricted shares for 100% of Black Rock, of which StoneStreet Group (Alan Barksdale) received 18,000,000 (28.15% of Red Mountain), with lock-ups into 2012. Black Rock is treated as the accounting acquirer, so its history becomes Red Mountain's, and 225,000,000 shares held by former controlling shareholder Lisa Lamson were retired. The company now owns Black Rock's Madera assets in Lea County, New Mexico, Gulf Coast acreage in Duval and Zapata Counties, Texas, and about 13.3% of Cross Border Resources. The $5.75 million in loans to Black Rock was cancelled on closing.
The Black Rock acquisition was reported as completed under amended terms (27,000,000 shares), after the closing slipped from the May 30 target. First State Bank of Lonoke, Black Rock's lender, required conditions for loan assumption, including pledging Black Rock's shares, a new joint note for about $2.8 million tied to Bamco Gas, LLC (in receivership), and a pledge of two million Red Mountain shares by Black Rock holders. Black Rock also borrowed $2.5 million and holds 13% of Cross Border Energy, which it keeps.
Red Mountain signed an office lease on May 23, 2011 with Chateau Plaza Holdings, L.P. at a starting base rent of $107,383 a year, rising annually, running to September 30, 2016. The company's address is now Dallas, Texas.
The Black Rock Capital acquisition (27,000,000 Red Mountain shares for all of Black Rock's equity, announced March 22) closed in escrow on April 29, 2011, pending final audits and bank approval of a loan assumption, with final closing set for on or before May 30. Red Mountain lent Black Rock $4.9 million, secured by a mortgage on the Madera Assets, to fund their purchase; the note is to be extinguished on completion.
Red Mountain issued three non-interest-bearing promissory notes (Feb 18, Mar 16, Apr 19, 2011) for $212,500 in cash, due June 30, 2011, with $162,500 held by non-affiliate shareholders. It also reported that its private placement (up to $25 million at $1.00 per share) had sold 5,000,000 shares for $5,000,000, held in escrow. This is early progress on the fundraising planned in the March filing.
On March 22, 2011 Red Mountain signed a 12-month letter agreement with Madison Williams and Company to advise and assist it in various transactions. The filing gives no fees or specific deals.
31 Mar 2011asset acquisition disposition● NeutralMajor
The company described itself, after its 25-for-1 forward split effective March 22, 2011 and an increase in authorized shares to 500 million common and 100 million preferred, as an oil and gas company still in the acquisition stage with no current revenue or production. It says it has signed a contract for Permian Basin properties and made an offer for Gulf Coast properties from a receivership (subject to court approval), and plans to spend up to $25 million in 2011, to be raised through a private placement. These are plans, not completed acquisitions.
Red Mountain dismissed its auditor Lake & Associates on March 4, 2011 and engaged L J Soldinger Associates of Deer Park, Illinois, approved by the board on March 2. The filing says there were no disagreements; Lake's earlier report (dated Feb 3, 2010) carried a going-concern doubt paragraph.
