16 May 2018listing compliance notice▼ BadMajor
ROYALE ENERGY FUNDS, INC deregistered its securities, ending its obligation to file reports with the SEC.
Announcements, explained
Each one in plain English, with the numbers worked through for a shareholder.
9 Mar 2018asset acquisition disposition● NeutralMajor
The Matrix merger closed on March 1, 2018 (California filings accepted March 7). Royale was merged into a subsidiary of the new Delaware parent, Royale Energy Holdings, and each Royale share became one share of the parent (22,600,185 shares in total). Matrix holders received 15,995,121 shares for the Matrix common stock, plus parent common stock for the partnership and operator interests, and $20,124,000 of Matrix preferred interests became 2,012,400 Series B preferred shares. Some closing conditions were waived, including delivery of evidence that Royale's DWI business assets had been transferred and executed employment agreements. The old Royale registration is being terminated, and the parent's stock continues on the OTC QB as ROYL. This resolves the long-running merger thread. The press release names a new board and says Jonathan Gregory is CEO and Johnny Jordan is President/COO.
26 Feb 2018business combination▼ BadMajor
A supplement to the merger proxy discloses that Arena, Matrix's lead secured lender, had said in November 2017 it would not consent, but the parties have now reached a consent agreement. Terms: the loan maturity moves up to April 15, 2018 (from June 30, 2018), Arena waives some existing defaults, the interest rate rises by 5% to the Adjusted LIBO Rate plus 14%, a $200,000 fee is added to the loan, and Parent and Royale assume obligations and pledge their shares and assets as security. By March 15, 2018 the borrowers must either raise $2 million in cash equity or hire an advisor to start a sale of Matrix, Royale and Parent. The supplement also says the Sunny Frog deadline is extended to March 30, 2018 and that the purchase right may be assigned to a new joint venture (the 'Development JV'). It describes a non-binding letter of intent with a private equity investor for $25 million in the Development JV, in exchange for 80% preferred interests and warrants for 4,000,000 Parent shares at $0.01. Parent would keep 20%, and the investor would receive a preferred return. This replaces the earlier $24M preferred and $17.5M credit facility proposals. It resolves the lender-consent hurdle but
15 Feb 2018material agreement▼ Bad
The Seventh Amendment extended the merger's outside termination date again, from February 14 to February 28, 2018. The stated reason is unchanged: finalizing the terms on which Matrix's secured lender will consent. The merger had still not closed and the lender consent was still outstanding.
2 Feb 2018material agreement● Neutral
Filed the formal paperwork for the January 30, 2018 Sixth Amendment, which moved the Matrix merger's outside termination date from January 31 to February 14, 2018. The stated reason is to finalize the terms on which Matrix's secured lender will consent, so that consent was still outstanding. It repeats the 2018-02-02 summary of the same amendment and adds no new terms.
2 Feb 2018material agreement▼ Bad
On January 30, 2018 the parties extended the merger's outside termination date again, from January 31 to February 14, 2018 (Sixth Amendment). The filing says the extension is to finalize the terms on which Matrix's secured lender will consent to the merger, a required condition, so that consent was still outstanding.
4 Jan 2018material agreement● NeutralMajor
On December 28, 2017 the parties extended the merger's outside termination date from December 31, 2017 to January 31, 2018 (Fifth Amendment), so the merger had not closed despite shareholder approval. Royale also disclosed a non-binding letter of intent with a Dallas private equity firm for up to $24 million of new convertible preferred stock, and a non-binding term sheet from a commercial lender for a $17.5 million senior secured credit facility. The proceeds (up to $41.5 million) are meant to repay and replace Matrix's lenders, fund the Sansinena 50% purchase and pay for 2018 drilling. Neither financing is binding, and the filing says there is no assurance they or the merger will close.
1 Dec 2017material agreement● NeutralMajor
On November 27, 2017, after Royale shareholders approved the merger on November 16 (as the filing states), Royale agreed to buy Sunny Frog, LLC's 50% non-operated working interest in the Sansinena and East Los Angeles fields for $15 million cash. Sunny Frog keeps a term overriding royalty on up to 300,000 barrels, starting at 2.75% and rising 1% a year after 2018 to a maximum of 9.75%. Matrix owns the other 50%. Closing is meant to coincide with the merger and depends on Royale arranging acceptable financing. The filing says it adds over 8.7 MBOE of net proved reserves for the merged company.
7 Nov 2017business combination▲ Good
Royale announced that proxy advisers Institutional Shareholder Services and Glass Lewis both recommend that shareholders vote FOR the Matrix merger at the November 16, 2017 meeting. This is outside support for the vote, not a change in terms.
3 Nov 2017business combination● Neutral
Royale filed a near-duplicate of the November 2 filing, saying it issued a press release urging shareholders to vote at the November 16, 2017 meeting. No new deal terms or substance.
2 Nov 2017business combination● Neutral
Royale sent a letter to shareholders urging them to vote at the November 16, 2017 meeting, where the Matrix merger will be considered. The filing text gives no new deal terms.
20 Oct 2017business combination▲ Good
Royale and Matrix announced the Sansinena 9A-4 well, the first drilled in the Sansinena Field since Matrix acquired it in June 2016. It initially flowed at over 350 barrels of oil per day and is now produced at about 200 barrels per day, which the companies say is more than twice management's internal projections. They say the results support more than 70 further well locations and plan at least six more wells in 2018, subject to permitting and capital. The well is Matrix's asset, so it matters to Royale shareholders only if the merger closes.
20 Oct 2017business combination● NeutralMajor
Royale announced that the Matrix merger registration statement (S-4/A) was declared effective on October 16, 2017, and that its shareholder meeting to consider the merger is set for November 16, 2017 (record date September 29, 2017). The release restates the deal terms: Royale shareholders and Matrix holders each get 50% of Royale Energy Holdings common stock, Royale assumes Matrix's $12.4 million senior secured debt, and $20 million of 3.5% Series B preferred is issued. It still needs both shareholder votes and the consent of Matrix's senior secured lender. This moves the long-pending merger to the vote stage.
30 June 2017material agreement● NeutralMajor
Royale and Matrix adopted an amended and restated merger agreement, effective as of December 31, 2016, that includes all earlier changes and moves the outside termination date from June 30 to September 30, 2017. This is the second extension of the deadline, so the Matrix merger had still not closed.
9 May 2017business combination● Neutral
On May 4, 2017 the new parent company, Royale Energy Holdings, filed Pre-Effective Amendment No. 1 to its S-4 registration statement for the Matrix merger. It includes a preliminary proxy statement for Royale shareholders. This is a procedural step; the filing gives no new terms and no shareholder vote date, and the merger still needs the approvals described earlier.
19 Apr 2017material agreement● Neutral
This corrects the April 6 filing by attaching a revised exhibit that names the original November 30, 2016 merger agreement, not the December 31, 2016 restated one, as the document being amended. The filing says the revised exhibit is identical in substance and that the restated agreement takes effect subject to approval by certain senior debt holders of Matrix and its affiliates. No new deal terms.
6 Apr 2017material agreement● NeutralMajor
On March 31, 2017 Royale and Matrix amended the merger agreement to push the outside termination date from March 31 to June 30, 2017, so the deal had not closed by the original deadline. Royale will pay Matrix $100,000 toward its legal fees, and Matrix owes Royale a $100,000 termination fee in certain termination cases not caused by Matrix. The amendment also drops a closing condition requiring Royale to hold cash above 65% of its deferred drilling obligations, which makes closing easier for Royale to satisfy.
5 Jan 2017material agreement● Neutral
On December 30, 2016 Royale signed a first amendment to the Matrix merger agreement. It changes how the consideration is split among Matrix's owners because of an asset transfer between Matrix and Matrix Investments, but the filing says the total consideration and the terms between Royale and Matrix are materially unchanged. Little changes for Royale shareholders.
2 Dec 2016business combination● NeutralMajor
On November 30, 2016 Royale signed a merger agreement with Matrix Oil Management Corporation under which a new Delaware holding company, Royale Energy Holdings, would own both. Royale shareholders would swap each share one-for-one into the new parent and are meant to hold 50% of its common stock, with Matrix-side holders getting the other 50% plus Series B preferred stock for about $20,124,000 of Matrix debt. It needs shareholder and lender approvals and an S-4 registration, and either side can terminate if it has not closed by March 31, 2017. The filing says Royale was delisted from NASDAQ in January 2016 and trades on the OTC QB, and the company will apply to relist the new stock but approval is not a closing condition. This gives a different answer to the earlier Nasdaq deficiency threads and sets the proposed board (eight members) and officers (Gregory CEO, Johnny Jordan President/COO, Stephen Hosmer CFO).
5 Aug 2016capital raising announcement● NeutralMajor
On August 2, 2016 Royale raised money in two private deals: 2,392,500 units (one share plus a warrant for one-fifth of a share) at $0.40 each for $957,000, and $1,580,000 of one-year unsecured convertible notes. The notes convert into 3,950,000 shares only if shareholders approve, so existing holders face dilution from the new shares, the note conversion and the warrants (exercisable at $0.80, for 1,185,000 shares on the notes). The filing says the money is for drilling, costs of the proposed merger with Matrix Oil Corporation, and general purposes. This is the first mention of the Matrix merger in the record so far.
20 July 2016capital raising announcement● Neutral
On July 14, 2016 Royale issued 600,000 shares to Chairman Harry E. Hosmer as a final payment of $270,000 under existing consulting and expense reimbursement arrangements. The price was set from the July 7, 2016 stock price. This adds shares to the count and settles the arrangement.
17 Mar 2016listing compliance notice● NeutralMajor
ROYALE ENERGY FUNDS, INC's exchange filed to remove a class of its securities from listing.
30 Nov 2015material agreement● Neutral
On November 25, 2015 Royale sold 497,948 shares at $0.408 each, with warrants for 248,973 shares at $1.00 for three years (exercisable after one year), raising $203,165 gross. Proceeds go to the December 2015 drilling campaign, operating capital and offering costs. The price is well below $1, consistent with the bid-price problem, and the raise is very small relative to the equity shortfall.
13 Nov 2015material agreement● NeutralMajor
On November 10, 2015 Royale agreed to sell its working interest in the Western Block of its Alaska North Slope property (about 39,500 acres) to 70 & 146, LLC for $2 million in cash, keeping a 1⅓% overriding royalty; State of Alaska approval is required. Royale will keep about 57,000 acres and calls the sale a step to strengthen its balance sheet and regain Nasdaq compliance, with part of the proceeds funding a drilling campaign starting December 2015. This appears to replace the earlier Rampart participation agreement on the Western Block; the filing does not mention Rampart.
9 Oct 2015listing compliance notice▼ BadMajor
On October 6, 2015 Nasdaq staff said Royale still has not regained the $2.5 million equity requirement (after a June 4 notice and an extension to October 5) and the stock faces delisting unless Royale requests a hearing by October 13, which it intends to do. Royale will hold a November 19, 2015 shareholder meeting to vote on a reverse split between 1.5-for-1 and 5-for-1 and raising authorized shares from 20 million to 30 million. Appointing Ronald Verdier on September 24 as an independent director restored the audit committee, but the majority-independent board requirement is still unmet. The stock stays listed pending the hearing.
21 Sept 2015listing compliance notice▼ Bad
On September 11, 2015 Nasdaq said Royale breaches board-independence and audit-committee rules after Jonathan Gregory was appointed CEO and Vice-Chair and Tony Hall resigned from the board on September 10. The board has six directors, two independent. Royale must submit a plan by October 26, 2015 and is seeking to add independent directors. This adds a third listing issue, and Gregory's CEO appointment is a leadership change.
4 Sept 2015listing compliance notice▼ BadMajor
On August 31, 2015 Nasdaq notified Royale that its stock has failed the $1 minimum bid price rule. Royale has until February 27, 2016 to fix it, possibly with a further 180 days, and says it may consider a reverse stock split. This is a second, separate listing problem on top of the equity shortfall.
21 May 2015material agreement● NeutralMajor
On May 20, 2015 Royale signed a new at-the-market sales agreement with Roth Capital Partners to sell up to $7,726,103 of common stock, with a 3.5% commission. Proceeds are meant for developing Alaskan properties and working capital; issuance needs Nasdaq approval and Royale need not sell any. It follows the April 2015 equity shortfall notice and the earlier 2014 Roth program, and any sales would dilute shareholders.
13 Apr 2015listing compliance notice▼ BadMajor
On April 7, 2015 Nasdaq told Royale it fails the $2.5 million minimum stockholders' equity rule, because the 2014 10-K showed equity of $(1,141,227). Royale has to submit a compliance plan by May 22, 2015, and says it plans to raise equity, having filed a Form S-3 on April 2, 2015. This revives the equity-listing problem seen in 2009.
20 Nov 2014auditor change● Neutral
On November 19, 2014 Padgett, Stratemann & Co., LLP ended its engagement as Royale's auditor (it had audited 2007 through 2013), and Royale hired SingerLewak LLP the same day. The filing reports no disagreements with Padgett. The company's address is now El Cajon, California.