Each one in plain English, with the numbers worked through for a shareholder.
1 Nov 2016business combination● NeutralMajor
On October 26, 2016 Yuma's shareholders approved all proposals and the Delaware reincorporation and the Davis merger were completed. Each Series A preferred share converted into 35 Yuma California common shares (including accrued unpaid dividends), then a 1-for-20 reverse split was applied. Davis holders received about 7,455,000 common shares and about 1,754,000 Series D preferred shares, leaving about 12,201,000 common shares outstanding. The old Yuma California Series A preferred and common listings were suspended from October 27, with a Form 25 filed and a Form 15 planned to end reporting obligations. This resolves the merger thread; the filing does not say whether the new Delaware company will be listed, so the end of reporting for the old securities is not itself a sign of equity being wiped out. Cutoff of the old preferred and common is through conversion to new Yuma Delaware common stock.
Yuma and Davis announced that both special shareholder meetings will be held on October 26, 2016 (Yuma at 8:00 a.m., Davis at 9:00 a.m. in Houston). Yuma's record date is September 1, 2016 and Davis's is September 22, 2016. The filing states the SEC declared the Form S-4 effective on September 22, 2016, which clears the main condition the lenders had tied to the credit agreement waiver, and the merger is expected to close in the fourth quarter of 2016. Closing still requires shareholder approval and NYSE MKT listing of the new shares.
Yuma filed its final proxy statement asking shareholders to approve the Davis Petroleum merger, the move to Delaware, and a reverse split of between 1-for-10 and 1-for-20 (Yuma board's choice). Series A preferred would convert into 1.75 to 3.5 Yuma Delaware common shares each (the filing's range depends on the split). Assuming a 1-for-10 split, Davis common holders would get about 14.5 million Yuma Delaware common shares and Davis preferred holders about 3.3 million Series D preferred shares, leaving former Davis common holders with about 61.1% and existing Yuma common and preferred holders about 38.9%. The Yuma board unanimously recommends voting for all proposals, which need a majority of common and two-thirds of Series A preferred and are all linked. This continues the merger thread and moves it to the shareholder vote.
On September 2, 2016 Yuma and Davis amended the merger agreement to push the outside date from September 30 to October 31, 2016, which meets the lender condition set on August 25. The amendment also lets Yuma's board set the reverse split anywhere from 10-for-1 up to 20-for-1 (previously 1-for-10), and lets Davis's board reallocate employee bonuses without raising the total. The filing says the Form S-4 has been filed but does not say it is effective.
On August 25, 2016 Yuma Exploration signed a Waiver and Amendment to the Tenth Amendment, curing the August default situation: it waives the $9.8 million lump-sum payment due August 17 and the covenant breaches through June 30, 2016. The borrowing base still drops by $9.8 million to $20.0 million when the Tenth Amendment ends, unless lenders set another amount or a new facility is put in place with the merger. It now ends at the earliest of September 23, 2016 (S-4 not effective), 47 days after S-4 effectiveness, October 31, 2016, September 6, 2016 if the merger agreement's end date is not extended to at least October 31, or merger termination. This resolves the August 19 default notice for now but keeps the lenders on a short leash tied to the merger.
The Tenth Amendment ended on August 15, 2016 because the Form S-4 was not declared effective. The borrowing base automatically fell to $20.0 million against $29.8 million outstanding, and the $9.8 million payment due within two days was not made, which is an event of default. On August 19 the agent sent a notice of defaults (also citing June 30, 2016 covenant breaches) and reserved all rights; lenders could accelerate the $29.8 million and add 2.0% to the interest rate but had not done either, and no extension had been obtained. This is the credit trouble flagged in the Dec 2015 deadlines now materialising.
On June 6, 2016 (effective May 31) Yuma Exploration signed a Waiver and Tenth Amendment with Société Générale that keeps the borrowing base at $29.8 million instead of the scheduled drop to $20.0 million on May 31. The base falls by $9.8 million to $20.0 million when the amendment ends, which happens at the earliest of August 15, 2016 (if the Davis merger Form S-4 is not effective), 47 days after the S-4 is effective, September 30, 2016, or termination of the merger agreement. Covenant waivers were extended, including the no-going-concern audit requirement for 2015, and lender fees are payable. This tied the lenders' patience to the Davis merger timetable.
This amendment to the February 10, 2016 Davis Petroleum merger filing only replaces Exhibit 2.1 (the merger agreement, which had left out Exhibit I and had formatting errors) and Exhibit 10.1 (a minor typo). The filing states no disclosure changed, so the deal terms are the same as already reported.
On February 10, 2016 Yuma signed a merger agreement with Davis Petroleum Acquisition Corp. Yuma will first reincorporate in Delaware with a 1-for-10 reverse split, with each Series A preferred share converting into 3.5 common shares (including accrued dividends), then merge with Davis. Davis common holders will receive about 61.1% of the combined company's common stock, and Davis preferred holders about 3.3 million new Series D preferred shares ($18.7 million liquidation preference). Existing Yuma common holders will be substantially diluted. The deal needs two-thirds approval of Series A holders, both companies' shareholder votes, Davis's audited 2015 financials and an effective Form S-4. It must close by September 30, 2016 or either side may terminate, and a $1.5 million fee may be payable in some terminations. Sam Banks (about 57.2% holder) has agreed to vote in favor. This is plausibly the response to the credit agreement's March 31, 2016 requirement, though the filing does not say so (inference). Banks stays as CEO, Paul McKinney as COO and James Jacobs as CFO.
On December 30, 2015 Yuma Exploration signed a Waiver, Borrowing Base Redetermination and Ninth Amendment with Société Générale. The borrowing base falls from $35.0 million to $29.8 million and automatically drops to $20.0 million on May 31, 2016 unless the lenders set a different amount. The lenders waived the debt-to-EBITDA covenant for the quarter ended September 30, 2015 and any failure on certain financial covenants for the quarter ended December 31, 2015. Yuma must hire an investment bank by February 6, 2016 and by March 31, 2016 either secure underwritten capital sufficient to cover any borrowing base shortfall or sign a definitive deal for a third party to acquire all or substantially all of its assets. This is a sharp escalation from the earlier small cuts.
On July 27, 2015 Yuma Exploration signed an Eighth Amendment to its Société Générale credit agreement, reducing the borrowing base from $36.0 million to $35.0 million ($33.5 million conforming, $1.5 million non-conforming) until the next redetermination on October 1, 2015. This continues the stepwise reduction seen in April.
Yuma announced its Talbot 23-1 well (45% interest) tested at about 7.0 MMcf/d and 180 Bbl/d of condensate gross on June 23, 2015, adding about 431 BOE/d net, which the company says is roughly a 24% increase on its first-quarter 2015 average of about 1,794 BOE/d. This follows the February update on the Talbot drilling. The Crosby 14-1 well, reported in February as being cleaned out, failed to establish sustainable production and is being temporarily abandoned. Artificial lift raised output at the Livingston wells, the Bullock A-1 well and others. Cat Canyon's first operated well is still being permitted.
On April 7, 2015 Yuma Exploration signed a Seventh Amendment to its Société Générale credit agreement, cutting the borrowing base from $40.0 million to $36.0 million ($33.0 million conforming, $3.0 million non-conforming) until the next redetermination on June 15, 2015. This resolves the February 1 redetermination thread and is a smaller amount of credit available than before.
Yuma issued an operational update on its properties. Fourth-quarter 2014 output at La Posada (12.5% interest) averaged 4.7 MMcf/d of gas and 87 Bbl/d of oil net, and was about 5.5 MMcf/d and 99 Bbl/d net at the filing date after new water-handling equipment. Several fields had downtime from repairs. The Crosby 14-1 Austin Chalk well (61% interest) was not yet flowing and was being cleaned out, and the Talbot 23 No. 1 well (about 45% interest) logged about 45 feet of hydrocarbon-bearing Marg Tex sands, with total depth expected by mid-February 2015. The company is reviewing the timing of its Glacier prospect due to market conditions.
On January 23, 2015 Yuma Exploration signed a Sixth Amendment to its August 10, 2011 credit agreement with Société Générale. The borrowing base stays at $40.0 (the filing gives no unit) until the next review on February 1, 2015, and the company may issue more series of preferred stock under restrictions. The parent pledged its Yuma Exploration stock, Yuma Exploration pledged its interest in Pyramid Oil LLC, and the California properties held by Pyramid Oil were mortgaged to the lenders. This continues the October 2014 credit amendment.
On December 19, 2014 Yuma signed a sales agreement with MLV & Co. to sell up to $18,829,742 of common stock and 9.25% Series A preferred stock from time to time on the market, under its existing shelf registration. MLV earns up to 6.0% commission on sales. Any sales could add new shares, but the filing does not say any have been made.
On October 14, 2014, Yuma's subsidiary Yuma Exploration and Production signed a Fifth Amendment to its credit agreement with Société Générale and its lenders. It lets the subsidiary send cash to the parent to pay dividends on Series A Cumulative Redeemable Preferred Stock, subject to limits, and requires majority lender approval before any Series A preferred is redeemed. This is the first mention of the bank credit facility in this history.
The Yuma merger closed on September 10, 2014. About 66,336,701 Pyramid shares were issued to former Yuma holders, who now hold about 93.0% of the voting power, leaving about 71,224,786 shares outstanding, so original Pyramid shareholders were heavily diluted as the February 2014 deal planned. Pyramid was renamed Yuma Energy, Inc., shares began trading on the NYSE MKT as 'YUMA' on September 11, and the company stayed a California corporation as per the August amendment. Sam Banks became CEO, Michael Conlon President and COO, and Kirk Sprunger CFO; the board went to six Yuma directors, Herman and the other former Pyramid directors resigned, and Grant Thornton replaced SingerLewak as auditor.
Pyramid and Yuma announced on August 12, 2014 that both special shareholder meetings will be held on September 10, 2014 in Houston, with a record date of August 11, 2014. This fills in the meeting dates that were blank in the S-4, so Pyramid shareholders now have a date to vote on the merger.
Pyramid filed Amendment No. 1 to its Yuma merger S-4 on August 7, 2014, restating the terms already known: Yuma holders get 66,336,701 Pyramid shares, fixed regardless of share price, and Pyramid's closing price on August 6, 2014 was $5.33. Meeting dates are still blank in this filing, and the document remains subject to completion; the part of the filing provided does not show what changed from the August 4 version.
Pyramid filed a new S-4 registration on August 4, 2014 for the Yuma merger, replacing an earlier S-4 that was withdrawn. It registers up to 66,336,701 Pyramid shares for Yuma holders: about 43.5 million to common holders, 15.1 million to Series A preferred holders and 7.8 million to Series B preferred holders, subject to a downward adjustment for dissenting shares. The consideration is fixed and will not change with Pyramid's share price. Both companies must hold special shareholder meetings, with dates still blank, and Pyramid's name will change to Yuma Energy, Inc. The proxy statement/prospectus is still subject to completion.
On August 1, 2014 Pyramid and Yuma amended their February merger agreement to drop the planned reincorporation from California to Delaware. The filing says all economic terms are unchanged. The parties said shareholders would be better served by the flexibility Pyramid has from its SEC reporting history if it is not reincorporated. The voting agreements were also restated to reflect the amendment.
Pyramid Oil agreed on February 6, 2014 to merge with privately held Yuma Energy, Inc. Yuma holders would receive up to 66,336,701 Pyramid shares, about 93% of the combined company, so existing Pyramid shareholders would be heavily diluted. Pyramid would be reincorporated in Delaware and renamed Yuma Energy, Inc., and Yuma's executives, led by Sam Banks as CEO, would take over management. The deal needs shareholder approval at both companies and an effective S-4 registration. It can be terminated if not completed by December 31, 2014, and a $1,000,000 fee may be owed in some termination cases. Michael Herman, who holds about 41% of Pyramid, has agreed to vote in favor.
Pyramid Oil filed a preliminary proxy for its June 1, 2006 annual meeting. Shareholders are asked to elect five directors, approve Singer Lewak as auditor for 2006, raise authorized common shares from 10,000,000 to 50,000,000 and create up to 10,000,000 preferred shares, and approve a 2006 Equity Incentive Plan. It notes that J. Ben Hathaway, who signed the 2002 filing as President, resigned as chairman and director effective June 15, 2005, in connection with the sale of all shares held by him and his family, and that Michael Herman replaced him as chairman. There were 2,494,430 shares outstanding on April 10, 2006. This is a routine annual meeting filing and mentions no merger.
This filing is by Pyramid Oil Company, the company that later became Yuma Energy, Inc. It says Arthur Andersen LLP resigned as auditor on May 29, 2002, after auditing the books from 1987 through 2001. The company has appointed Singer Lewak Greenbaum & Goldstein, subject to shareholder approval. The filing states there were no disagreements with Arthur Andersen and its 2001 report was unqualified.
