The lies here of no cash, failed deals and maxed out credit just got BUSTED! New credit facility that refinaces all debt of both companies, $6mm in new equity...obviously the claims of maxed out credit and no cash were nothing but lies. Why the lies?
Form 8-K for RED MOUNTAIN RESOURCES, INC.
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11-Feb-2013
Entry into a Material Definitive Agreement, Creation of a Direct Fin
Item 1.01 Entry into a Material Definitive Agreement
Senior First Lien Secured Credit Agreement
On February 5, 2013, Red Mountain Resources, Inc. ("Red Mountain") entered into a Senior First Lien Secured Credit Agreement (the "Credit Agreement") with Cross Border Resources, Inc. ("Cross Border"), Black Rock Capital, Inc. ("Black Rock") and RMR Operating, LLC ("RMR Operating," and together with Red Mountain, Cross Border and Black Rock, jointly and severally, the "Borrowers") and Independent Bank, as Lender (the "Lender"). Black Rock and RMR Operating are wholly owned subsidiaries of Red Mountain, and Red Mountain owns approximately 77.9% of the outstanding common stock of Cross Border.
The Credit Agreement provides for an up to $100 million revolving credit facility with an initial commitment of $20 million and a maturity date of February 5, 2016. The borrowing base under the Credit Agreement is determined at the discretion of the Lender based on, among other things, the Lender's estimated value of the proved reserves attributable to the Borrowers' oil and gas properties that have been mortgaged to the Lender, and is subject to regular redeterminations on August 31 and February 28 of each year, and interim redeterminations described in the Credit Agreement and potentially monthly commitment reductions, in each case which may reduce the amount of the borrowing base. A portion of the revolving credit facility, in an aggregate amount not to exceed $2 million, may be used to issue letters of credit for the account of Borrowers. The Borrowers may be required to prepay the facility in the event of a borrowing base deficiency as a result of over-advances, sales of oil and gas properties or terminations of hedging transactions.
Amounts outstanding under the Credit Agreement will bear interest at a rate per annum equal to the greater of (x) the U.S. prime rate as published in The Wall Street Journal's "Money Rates" table in effect from time to time and (y) 4.0%. Interest is payable monthly in arrears on the last day of each calendar month. Borrowings under the Credit Agreement are secured by first priority liens on substantially all property of each of the Borrowers and are unconditionally guaranteed by Doral West Corp. and Pure Energy Operating, Inc., each a subsidiary of Cross Border.
Under the Credit Agreement, the Borrowers have or will incur (i) an unused facility fee equal to 0.5% multiplied by the average daily unused commitment amount, payable calendar quarterly in arrears until the commitment is terminated; (ii) a fronting fee payable on the date of issuance of each letter of credit and annually thereafter or on the date of any increase or extension thereof, equal to the greater of (a) 2.0% per annum multiplied by the face amount of such letter of credit or (b) $1,000; and (iii) an origination fee (x) paid on the closing date, equal to 1.0% of the commitment as of the closing date, and (y) payable on any date the commitment is increased, an additional facility fee equal to 1.0% multiplied by any increase of the commitment above the highest previously determined or redetermined commitment.
The Credit Agreement contains negative covenants that may limit the Borrowers' ability to, among other things, incur liens, incur additional indebtedness, enter into mergers, sell assets, make investments and pay dividends. The Credit Agreement also contains financial covenants, measured as of the last day of each fiscal quarter of Red Mountain, requiring the Borrowers to maintain a ratio of
(i) the Borrowers' and their consolidated subsidiaries' consolidated current assets to consolidated current liabilities of at least 1.00 to 1.00 inclusive of the commitment and debt under the Credit Agreement; (ii) the Borrowers' and their subsidiaries' consolidated "Funded Debt" to consolidated EBITDAX (for the four fiscal quarter period then ended) of less than 3.50 to 1.00; and (iii) the Borrowers' and their subsidiaries' consolidated EBITDAX to interest expenses (each for the four fiscal quarter period then ended) of at least 3.00 to
1.00. Funded Debt is defined in the Credit Agreement as the sum of all debt for borrowed money, whether as a direct or reimbursement obligor. EBITDAX is defined in the Credit Agreement as (a) consolidated net income plus (b) (i) interest expense, (ii) income taxes, (iii) depreciation, (iv) depletion and amortization expenses, (v) dry hole and exploration expenses, (vi) non-cash losses or charges on any hedge agreements resulting from Financial Accounting Standards Board
("FASB") Statement 133, (vii) extraordinary or non-recurring losses, (viii) expenses that could be capitalized under generally accepted accounting principles ("GAAP") but by election of Borrowers are being expensed for such period under GAAP, (ix) costs associated with intangible drilling costs, (x) other non-cash charges, (xi) one-time expenses associated with transactions associated with (b)(i) through (iv), minus (c)(i) non-cash income on any hedge agreements resulting from FASB Statement 133, (ii) extraordinary or non-recurring income, and (iii) other non-cash income.
Amounts outstanding under the Credit Agreement may be accelerated and become immediately due and payable upon specified events of default of Borrowers, including, among other things, a default in the payment of principal, interest or other amounts due under the Credit Agreement, certain loan documents or hydrocarbon hedge agreements, a material inaccuracy of a representation or warranty, a default with regard to certain loan documents which remains unremedied for a period of 30 days following notice, a default in the payment of other indebtedness of the Borrowers of $200,000 or more, bankruptcy or insolvency, certain changes in control, failure of Lender's security interest in any portion of the collateral with a value greater than $500,000, cessation of any security document to be in full force and effect, or Alan Barksdale ceasing to be Chief Executive Officer of Red Mountain or Chairman of Cross Border and not being replaced with an officer acceptable to Lender within 30 days.
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Pursuant to the Credit Agreement, at least one of the Borrowers is required to have Acceptable Hedge Agreements (as defined in the Credit Agreement) in place at all times effectively hedging at least 50% of the oil volumes of the Borrowers.
At February 5, 2013, Red Mountain had borrowed $7.6 million under the Credit Agreement and used a portion of the proceeds to repay (i) outstanding promissory notes payable to First State Bank of Lonoke and (ii) the Amended and Restated Senior Secured Promissory Note dated December 10, 2012, in the aggregate principal amount of $6.0 million and payable to Hyman Belzberg, William Belzberg, Caddo Management, Inc. and RMS Advisors, Inc.
At February 5, 2013, Cross Border had borrowed $8.9 million and used a portion of the proceeds to repay in full its existing credit facility.
. . .
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
The information set forth in Item 1.01 relating to the Credit Agreement and the Subordinated Note is hereby incorporated by reference into this Item 2.03.
Item 3.02 Unregistered Sales of Equity Securities
On February 5, 2013, Red Mountain accepted subscriptions in a private placement for the purchase of an aggregate of 7,058,823 shares of common stock at a purchase price of $0.85 per share, for gross proceeds to Red Mountain of $6,000,000.
The closing of the private placement is expected to occur on or before February 28, 2013. Of the shares to be issued, 3,529,412 shares will be issued to a non-U.S. purchaser pursuant to an exemption from registration under Regulation S of the Securities Act of 1933, as amended (the "Securities Act"). The non-U.S. purchaser certified that it was not a U.S. person and was not acquiring the shares for the account or benefit of a U.S. person. In addition, Red Mountain implemented offering restrictions in accordance with the requirements of Regulation S and the common stock will be issued with appropriate legends in accordance with Regulation S. Of the shares to be issued, 3,529,411 shares will be issued to U.S. purchasers in reliance on the private placement exemption from the registration requirements of the Securities Act provided by Section 4(2) thereof and Rule 506 of Regulation D promulgated thereunder. The offer and sale of Red Mountain's common stock was conducted without general solicitation or general advertising, each U.S. purchaser represented that it was an "accredited investor" as defined in Rule 501 of Regulation D, and each U.S. purchaser represented that the common stock was acquired for its own account and was not intended to be sold or disposed of in violation of securities laws. The common stock to be issued to the U.S. purchasers will also contain appropriate restricted stock legends.
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