Repurchase - more details,
Nolly - I don't know any great details on the repurchase, but from what I've seen and read on the original and updated loan agreement it may well be a good deal in a number of ways. I'll try an call CEO Westmoreland next week and chat. He's very open to calls.
Anyway, not sure if you knew the background. DBRM got a loan from Maxmillian, which included various rights for stock, etc. The repurchase ends up cashing out the stock, which lowers total shares outstanding, as well as changes the terms of the loan by reducing the interest rate, etc. Looking at the big picture this can be very helpful. Max trades shares that may have higher future value for current cash. DBRM gets remainder of loan at lower rates and other benefits. If they are at, or very close, to breaking even and still have enough cash for the new wells, then cashing out the loan can make good sense.
Below is another more details item on the repurchase.
Daybreak Oil and Gas, Inc. Enters into First Amendment to Amended and Restated Loan Repurchase Agreement with Maximilian Resources LLC
Aug 27 14
On August 21, 2014, Daybreak Oil and Gas, Inc. entered into a first amendment to amended and restated loan repurchase agreement with Maximilian Resources LLC under its amended and restated loan and security agreement dated as of August 28, 2013. Pursuant to the amendment, the lender agreed to make a loan to the company under the loan agreement in the amount of $2,200,000 (the additional advance). The lender also agreed to temporarily decrease the monthly payment made by the company pursuant to the loan agreement to 3% of the outstanding principal balance of the loan until the savings to the company from the decrease in monthly payments total $1,000,000. The additional advance, combined with the $1,000,000 in monthly payment decreases, will be used by the company to drill up to four additional wells on its twin bottom fields acreage in Kentucky and to loan funds to its Kentucky drilling partner, App Energy, LLC, for its portion of the anticipated four additional wells. Furthermore, the lender agreed to amend the loan agreement to decrease the interest rate applicable to the loans under the loan agreement from 12% per annum to 9% per annum, with the monthly commitment fee of 0.5% per month of the outstanding principal balance of the loans remaining unchanged. The lender also agreed to decrease the default interest rate by 3%. The amendment also amended the loan agreement to reflect the prior termination of the deposit account control agreements by agreement of the parties. Advances made by lender under the amended and restated loan and security agreement dated as of August 28, 2013 (the loan agreement) had already exceeded the lender's minimum commitment.
AI
