Escalera Resources Co. (fka ESCRQ)

[ecmoney]

chapter 11 is possible and common shareholders will receive nothing


series A preferred shares 1,610,000 X $25.00 = $40,250,000

Even if the Company is successful at reducing its costs and increasing its liquidity through asset sales, the Company may not have sufficient liquidity to satisfy its debt service obligations, meet other financial obligations, and comply with covenants contained in the Company’s credit agreement . The Company has engaged advisors to assist with the evaluation of its options to obtain alternative debit financing, improve its l iquidity position and evaluate strategic alternatives. The strategic alternatives may include, but are not limited to, seeking a merger partner , restructuring, amendment or refinancing of our outstanding debt through a private restructuring or reorganization under Chapter 11.







Preferred stock

In 2007, the stockholders of the Company approved an amendment to the Company’s Articles of Incorporation to provide for the issuance of 10,000,000 shares of preferred stock, and the Company subsequently completed a public offering of 1,610,000 shares of 9.25% Series A Cumulative Preferred Stock (the “Series A Preferred Stock”) at a price of $25.00 per share.



The shares of Series A Preferred Stock are classified outside of permanent equity on the consolidated balance sheets due to the change of control redemption provision applicable to such shares. Following a change of ownership or control of the Company by a person or entity in which the common stock of the Company is no longer traded on a national exchange, the Company will be required to redeem the Series A Preferred Stock within 90 days after the date on which the change of ownership or control occurred for cash. In the event of liquidation, the holders of the Series A Preferred Stock will have the right to receive $25.00 per share, plus all accrued and unpaid dividends, before any payments are made to the holders of the Company’s common stock .



http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=10863878


ec


good luck to everyone