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8-K - CURRENT REPORT - Yuma Energy, Inc. | yuma_8k.htm |
Exhibit
99.1
Yuma Energy, Inc.
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NEWS RELEASE
Yuma Energy, Inc. Provides an Update on its Financial
Status
HOUSTON, TX – March 20, 2020 – 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