HOUSTON, March 20, 2020 /PRNewswire/ -- Yuma Energy,
Inc. (NYSE American: YUMA) ("Yuma", "Company", "we" or "our")
today provided an update on the Company's financial status and
ability to restructure its liabilities and capital structure.
As previously disclosed, in September
2019, YE Investment, LLC, an affiliate of Red Mountain
Capital Partners, LLC ("Red Mountain"), purchased all of the
Company's outstanding senior secured bank indebtedness and related
liabilities under the Company's senior credit facility (the "Credit
Facility"). The Credit Facility was then modified to reduce
the outstanding principal balance from approximately $32.8 million, plus accrued and unpaid interest
and expenses, to approximately $1.4
million (the "Modified Note"). In September 2019, Yuma entered into a Restructuring
and Exchange Agreement (the "Restructuring Agreement") with Red
Mountain and affiliates, which was to result in the i) exchange of
the Modified Note for a new convertible note that would be
convertible into Yuma common stock, and ii) conversion of the
Company's Series D Preferred Stock into Yuma Common stock. Finally,
in December 2019, the parties entered
into an amendment to the Restructuring Agreement and Credit
Facility under which Red Mountain provided an additional two-year
senior secured delayed-draw term loan for up to $2 million, maturing on September 30, 2022, from which the Company has
drawn $850,000 to date. The
transactions contemplated by the Restructuring Agreement were
subject to stockholder approval pursuant to NYSE American rules and
requirements and the Restructuring Agreement included a termination
right in the event such stockholder approval was not received by
December 31, 2019. Please refer to
our prior press releases and prior filings with the Securities and
Exchange Commission for more comprehensive information regarding
the above.
At present, Yuma is not in compliance with the various terms of
the Restructuring Agreement and related credit arrangements.
As a result, no further funds are currently available to Yuma under
the facility. The parties have been and continue to negotiate to
modify the various agreements and arrive at a mutually agreeable
path forward; however, there is no assurance that any transaction
or alternate restructuring plan will materialize.
Mr. Anthony C. Schnur, Interim
Chief Executive Officer and Chief Restructuring Officer of Yuma
commented, "Over the past few months, we have been diligently
working to complete our financial restructuring and have been
reviewing potential transactions to expand our footprint, improve
our economics, increase our production volumes, and ultimately,
generate positive cash flow. However, certain well failures
and the recent significant collapse in oil prices, combined with
the uncertainty about the economy caused by the COVID-19 virus, has
adversely impacted our ability to complete the restructuring
process and appropriately re-capitalize the Company. A
Special Committee of the Board of Directors has been established to
evaluate strategic or financing alternatives, if any.
However, the current unfavorable energy market and volatile
economic environment may limit our options at this time.
"In the event we are unable to come to a mutually agreeable
understanding with Red Mountain regarding the
extension/modification of the Restructuring Agreement, Modified
Note and related agreements, and/or find other available financing,
we may be forced to cease our business plan, sell assets or take
other remedial steps, which may include seeking bankruptcy
protection."
Continuing Uncertainty
The Company's audited
consolidated financial statements for the year ended December 31, 2018, included a going concern
qualification. The risk factors and uncertainties described
in our SEC filings for the year ended December 31, 2018, the quarter ended March 31, 2019, the quarter ended
June 30, 2019, and the quarter
ended September 30, 2019, raise
substantial doubt about the Company's ability to continue as a
going concern.
About Yuma Energy, Inc.
Yuma Energy, Inc., a
Delaware corporation, is an
independent Houston-based
exploration and production company focused on acquiring, developing
and exploring for conventional and unconventional oil and natural
gas resources. Historically, the Company's activities have
focused on inland and onshore properties, primarily located in
central and southern Louisiana and
southeastern Texas. Its common stock is listed on the
NYSE American under the trading symbol "YUMA."
Forward-Looking Statements
This release contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and
Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Any and all statements that are not strictly
historical statements constitute forward-looking statements and may
often, but not always, be identified by the use of such words such
as "expects," "believes," "intends," "anticipates," "plans,"
"estimates," "potential," "possible," or "probable" or statements
that certain actions, events or results "may," "will," "should," or
"could" be taken, occur or be achieved. We caution that these
statements by their nature involve risks and uncertainties, and
actual results may differ materially depending on a variety of
important factors, including, among others: our ability to raise
additional funding as needed; our ability to pay our debts as they
come due; rights that Red Mountain has under outstanding loan and
other agreements, including security interests in our assets and
their rights to foreclose on such security interests; the
ability of the Company to enter into an amended, extended and
modified credit facility; the ability to maintain sufficient
liquidity to fund operations; the ability to remain listed on the
NYSE American; the ability to continue as a going concern; the risk
of being forced into, or determining to seek, bankruptcy
protection; and the ability to use net operating losses to offset
cancellation of indebtedness income. The Company's annual
report on Form 10-K for the year ended December 31, 2018, quarterly reports on Form
10-Q, recent current reports on Form 8-K, and other SEC
filings discuss some of the important risk factors identified that
may affect the Company's business, results of operations, and
financial condition. The Company undertakes no obligation to
revise or update publicly any forward-looking statements, except as
required by law.
For more information, please contact
Carol Coale
Managing Director
Dennard Lascar Investor
Relations
713-529-6600
ccoale@dennardlascar.com
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SOURCE Yuma Energy, Inc.