Each one in plain English, with the numbers worked through for a shareholder.
4 Nov 2011capital raising announcement▲ GoodMajor
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.
Alan W. Barksdale, The StoneStreet Group, Inc reported a RED MOUNTAIN RESOURCES, INC. shareholding of 11,000,000 shares (15.60% of votes) in a periodic institutional filing.
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 STONESTREET GROUP, INC. ALAN W. BARKSDALE - Mr. Barksdale is an officer and disclosed a new substantial RED MOUNTAIN RESOURCES, INC. shareholding (28.20% of votes).
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.
