Each one in plain English, with the numbers worked through for a shareholder.
9 Aug 2012bankruptcy or receivership▼ BadMajor
Filed for Chapter 11 in Delaware on 7 August 2012 together with both operating subsidiaries and the TVC OPUS 1 drilling partnership, five days after drawing a final $294,000 of emergency credit from the Gamble trust. The filing itself was another event of default, making the full $7.2 million owed to the trust immediately payable. Ends a company that had drilled in Bakersfield since 1963; the trigger was a demand-loan structure and unresolved partner and SEC claims, not the oil price, which was around $90 a barrel that week.
Chose to leave the exchange rather than fight: with an SEC inquiry into possible securities-law violations under way and the OPUS partner claims unresolved, the board judged a compliance plan impracticable and voted to delist from NYSE Amex, trading ending around 25 June. It also took a new $1.35 million line from the Gamble trust, drawable only at the trust's discretion, and hired restructuring advisers FTI Consulting. The first public disclosure of the SEC inquiry, and the point at which insolvency became the working assumption.
Papered the April loan as a second secured note with a warrant struck at $0.10, and in the same filing admitted it was already in default on the March note for missing one month's interest and for being unable to pay its debts as they fell due. The Gamble trust, owed $4.98 million, reserved every remedy including immediate acceleration; a separate newsletter went to the OPUS drilling partners about settling their claims.
NYSE Amex issued a third deficiency notice and, for the first time, cited not just the $6 million equity shortfall but the rule covering losses so large relative to resources that the exchange doubts a company can continue. Equity was $4.4 million; the objection had moved from a number to the viability of the business.
Borrowed another $1.5 million from the Gamble trust at 14% on the same collateral, and spent all of it settling the Hansen lawsuit in Ventura County. New money was no longer buying wells, it was paying off litigation.
Converted the chairman's three demand loans into a $3.3 million senior secured note due April 2013, plus a warrant over 3 million shares at $0.19 and, permanently, 2% of the oil revenue from Claflin and 1% from every other lease. Gamble had by then stepped down as chairman in November 2011, so the company's largest creditor was no longer even at the board table, and it had signed away a slice of its best asset's revenue for good.
Gamble lent a further $2 million through his family trust at 14%, on condition all $3.15 million be rolled into a secured senior note backed by pledges of both operating subsidiaries, a lien over Claflin and royalty rights on top. An unsecured board member had become a secured creditor with a claim on the company's core asset; the Oxnard leases were deliberately kept out of the collateral.
Second restatement in seven years, this time voiding the 2010 annual accounts and four quarters. The April 2010 offering had been valued $6.5 million too high, its reset warrants should have been carried as liabilities costing another $1.8 million of losses, and $1.7 million of steam generators taken from the TVC OPUS 1 drilling partnership had never been recorded, inflating what partners appeared to owe. The last item is the accounting trace of the partner dispute that helps force the company into bankruptcy.
Chairman G. Thomas Gamble lent the company $150,000 in August and $1 million in October, both repayable the moment he asked and the second at 14% interest. Two at-the-market programmes and a $5 million placement earlier in the year had not been enough; working capital now came from the boardroom on demand terms.
Signed the definitive Richardson agreement with US Gold and banked the first $200,000 option payment, with $100,000 due on each anniversary. Confirms the May letter of intent and brings in the company's first outside project money in over a year.
Select Resources agreed in principle to let US Gold spend up to $5 million and drill 30,000 feet at the Richardson gold project in Alaska to earn 60% of it. Someone else would pay to test the ground, and Tri-Valley kept 100% if US Gold walked away, which was the right structure for a company that could not fund exploration itself.
Raised $5.0 million gross, $4.7 million after fees, placing 10.1 million shares at $0.50. It matched the April 2010 raise in dollars but cost nearly three times as many shares, and came with penalty payments of 1% a month if the resale registration slipped.
What it means for a shareholder
10.1m new shares at $0.500 to raise about $5.0m. That's 18% dilution: every existing holder's slice gets 18% smaller. If you held $1,000 of shares (2,000 at the issue price), your slice goes from 0.00447% to 0.00365% of the company. To keep it you'd need 452 more shares - about $226 at the issue price.
Added a second $3 million at-the-market programme with C. K. Cooper, doubling the authorised drip-sale to $6 million, with the same $2 million earmarked for Claflin. Three months after the first programme, the funding need had not eased.
Issued another $835,000 of the 10% preferred stock to five investors to settle what it still owed for Great Valley Production Services, extending the debt-for-preferred swap done with the chairman three months earlier.
Bought back the dangerous half of the April 2010 deal: an institutional investor cancelled warrants over 2.1 million shares, and its right to take half of any future financing, in exchange for 1.2 million shares. Cheaper in shares than letting the reset warrants run.
27 Dec 2010asset acquisition disposition● NeutralMajor
Sold the Admiral Calder quarry in Alaska to Columbia River Carbonates for $2.5 million cash, five years after buying it for $3 million and never restarting production. With the Tri-Western sale in 2006 this ends the calcium carbonate business entirely.
Set up a $3 million at-the-market share selling programme through broker C. K. Cooper, mostly earmarked for Claflin development. Selling stock steadily into the open market, rather than in blocks to named investors, marks the point where identifiable backers had run out.
6 Oct 2010capital raising announcement● NeutralMajor
Chairman G. Thomas Gamble swapped $3.55 million the company owed him, an $850,000 loan and $2.7 million for Great Valley Production Services interests, for preferred shares paying a 10% cash dividend and ranking ahead of the common. It removed a cash debt but put its own chairman first in line ahead of ordinary shareholders in any wind-up.
The April placement's price-reset clause bit: two institutional investors, Capital Ventures International and Empery Asset Management, took 842,000 shares for a total of $842 because the stock had fallen below $1.30. Dilution handed over for nothing, and the first visible cost of the terms accepted three months earlier.
NYSE Amex issued a second equity deficiency notice: shareholders' equity had collapsed to $915,942 by March 2010, far worse than the $5.2 million that triggered the first warning in 2009. The company pointed to 305 barrels a day from Oxnard and a recovery to about $4.5 million of equity by June, still short of the $6 million minimum.
Raised $5 million from institutional investors at $1.30 a share, with warrants over 2.3 million more shares and, critically, a clause that reset the price if the company later sold stock more cheaply. Also sold a spare steam generator for $700,000 and put the South Belridge and Shields-Arms leases up for sale. The reset clause proves expensive: it triggers near-free share issues in July and forces a restatement in 2011.
Placed a further $406,000 of stock at around $1.50 and paid its six independent directors 5,000 shares each. Small change beside the $7.2 million raised weeks earlier, and the first filing signed by new finance chief John E. Durbin.
Bought a year's extension, to May 2010, on the Claflin lease at Edison Field near Bakersfield, which an independent engineer credited with 2.0 million barrels net of proved oil at only 650 to 750 feet depth. The lease had already expired once and will only be held if production starts in time, so this became the company's most urgent operational deadline; Claflin is also the asset later pledged to its chairman's trust.
11 Jan 2010capital raising announcement▲ GoodMajor
Raised $7.2 million by placing 5.2 million shares at $1.00 to $2.00 with 75 investors, by far the largest raise in the company's history and roughly a fifth of the enlarged share count. It restored the balance sheet the exchange had objected to and funded the Oxnard and Claflin projects; Maston Cunningham signed as president, with Blystone now chairman and chief executive.
What it means for a shareholder
5.2m new shares at $1.00 to raise about $7.2m. Shares on issue before the raise aren't in the record, so the dilution can't be worked out.
NYSE Amex accepted the recovery plan and lifted the equity deficiency, ending the listing threat raised in September. The reprieve lasted seven months.
Raised $450,000 from four investors at $1.00 a share while the listing deficiency was outstanding. The price is the point: shares that placed at $5.00 in January 2008 now cleared at a dollar.
NYSE Amex warned that shareholders' equity of $5.2 million had fallen below the $6 million minimum required of a company with five straight years of losses, and gave it a month to submit a recovery plan. The first formal signal that the drilling programme had been consuming capital faster than it replaced it.
6 July 2009capital raising announcement● NeutralMajor
Vice chairman G. Thomas Gamble put $1 million into convertible preferred stock at $10 a share when the common was trading at $1.02, taking an 8% dividend and warrants over 200,000 shares. With outside placements no longer available at any useful price, a board member became the company's financier, the beginning of a dependence that ends in bankruptcy court three years later.
