Each one in plain English, with the numbers worked through for a shareholder.
6 Nov 2020business combination● NeutralMajor
Amendment No. 4 reports the result: shareholders approved a 4-for-1 reverse split of the common stock at a special meeting on 22 October 2020, and the charter amendment was filed in Delaware on 26 October 2020. The split takes effect in the over-the-counter market once FINRA gives notice of the effective date. The filing does not state any cash price paid to holders. This resolves the vote, and the company deregistered its securities on 27 October 2020 (per the running context).
Amendment No. 3 accompanies the definitive (final-form) proxy statement filed 29 September 2020, so shareholders were then asked to vote on the reverse stock split. The only change visible in the text is the fee table's transaction value, which rose from $191 to $197; the split terms remain only in the proxy statement.
Amendment No. 2 to the going-private statement repeats the earlier text, again incorporating all terms by reference to an amended preliminary proxy statement (filing date left blank as 'September __, 2020'). It is dated 4 September 2020 and carries no new terms or figures.
Amendment No. 1 to the going-private statement is substantively identical to the original filing; it refers to an amended preliminary proxy statement filed 17 August 2020 and the fee table still shows $191. The filing does not say what changed in the proxy, and no terms are stated in this text.
Carbon Energy Corporation opened the going-private process with a Rule 13e-3 statement filed alongside a preliminary proxy statement. The transaction is a reverse stock split, and the filing's fee table uses a transaction value of $191 at $1.00 per share. The filing itself says little: every substantive item is incorporated by reference to the proxy statement, so the split ratio and what holders would receive are not in this text. This follows the May 2020 Diversified sale.
Seven weeks after the Appalachian sale, the remaining California business needed the same treatment: its Prudential lenders granted limited waivers of covenant breaches and amended all three of its note and securities purchase agreements. The distress had simply moved to the half of the company Carbon still owned.
29 May 2020asset acquisition disposition● NeutralMajor
Carbon closed the Diversified sale on 26 May for a base cash price of $99.2 million, with up to $15 million more contingent, and paid off the Prosperity Bank credit facility. It agreed a schedule to repay the $25.1 million Old Ironsides notes, and Pierce and Struzeski left as officers, staying on as consultants at $25,000 a month each.
With the Diversified sale signed but not closed, the lenders agreed to delay by a month each of the two scheduled $2 million cuts to the borrowing base - just enough breathing room to reach completion.
Carbon agreed to sell its entire Appalachian and Illinois Basin business - the Carbon Appalachia and Nytis Exploration subsidiaries, which is to say almost everything it had built since 2011 - to Diversified Gas & Oil for $110 million in cash plus up to $15 million contingent. Yorktown's funds, holding the majority, approved it by written consent the same week, so no shareholder vote was needed.
Under a third amendment, lenders cut Carbon's borrowing base from $75 million to $73 million, with further automatic cuts of $1 million twice and $2 million twice through May 1, 2020. They also waived hedging and asset-sale covenant breaches and dropped the $3 million minimum liquidity requirement.
A new omnibus bonus plan replaced the annual ones, paying cash against quarterly or annual targets, with the three executives eligible for up to 65% of salary.
Eight months after taking on the Old Ironsides debt, Carbon had to be forgiven for breaching its loan terms: the lenders granted limited waivers and imposed new ones - keep $3 million of liquidity, stop letting bills run past 90 days, and sell non-core assets and hand over the proceeds. This is the point at which the balance sheet started running the company rather than the other way round.
The employment contracts of McDonald, Pierce and Struzeski were amended to escrow any severance on an involuntary exit and to tighten the definition of a change of control - housekeeping, but the kind that gets done when a sale becomes conceivable.
7 Jan 2019asset acquisition disposition● NeutralMajor
Carbon closed the Appalachian buyout on the final day of 2018, paying Old Ironsides $33 million in cash plus about $25 million of its own 10% five-year notes, and took full ownership of the venture and its pipeline and mining subsidiaries. The credit facility was rewritten with LegacyTexas into a $500 million-limit borrowing-base revolver plus a $15 million term loan - a company that had been asset-light and partner-funded was now carrying the debt itself.
The deadline after which either side could walk away from the Old Ironsides buyout was pushed back, the first of three such extensions - the financing was taking longer than planned.
Auditor EKS&H merged into Plante Moran, so it resigned and the audit committee appointed the combining firm - a change of letterhead rather than of auditor. The company was by now filing as Carbon Energy Corporation.
Carbon agreed to buy out Old Ironsides Energy's 73.5% of the Appalachian venture for about $57 million in cash, which would take the venture from a shared vehicle to a wholly owned subsidiary. It was a large cheque for a company of Carbon's size and would have to be financed.
2 May 2018asset acquisition disposition▲ GoodMajor
The California venture completed a $43 million purchase of Ventura Basin production from Seneca Resources, agreed six months earlier. Because the warrant exercise had lifted Carbon's stake to 54%, a deal signed when Carbon was a minority investor now consolidated onto its own balance sheet, funded by enlarging the venture's secured note facility.
Yorktown Energy Partners XI, an existing stockholder, bought 50,000 shares of a newly created Series B Convertible Preferred Stock at $100 each, raising $5 million. Carbon planned to use it for its share of a capital contribution to Carbon California for a Ventura County acquisition expected to close in May 2018.
The matching California warrant was exercised the same way, for 1,527,778 shares. Its exercise price had been restated from $0.36 to $7.20 by the one-for-twenty share consolidation Carbon carried out in March 2017.
The warrant issued to Yorktown's affiliate when the Appalachian venture was formed was exercised in full, paid for in venture units rather than cash, and Carbon issued 432,051 shares.
The Appalachian venture made its first purchase, $21.5 million of West Virginia gas properties, and Carbon raised its own commitment more than tenfold - from $2 million to $23.6 million, and from 2% to 26.5% of every future capital call. Having proved the structure, Carbon was now putting real money behind it.
Carbon repeated the California structure in Appalachia: Carbon Appalachian Company was formed with two institutional investors and $100 million of equity commitments to buy producing southern Appalachian assets. Carbon put in only $2 million for 2% but manages the venture, holds a 1% carried interest and can earn up to a further 20% once the outside investors clear their return hurdle.
The lenders raised the borrowing base on the LegacyTexas revolver from $17 million to $23 million at the first scheduled review, six months after the EXCO purchase.
21 Feb 2017capital raising announcement▲ GoodMajor
Carbon opened a second front in California through a new vehicle, Carbon California Company: two institutional investors put in $22 million of equity plus up to $35 million of notes, and the venture bought Ventura Basin oil and gas assets from three sellers. Carbon took 17.8% of the venture and the manager's role for no cash, was paid $500,000 for doing the deal work, and issued its backers a warrant exercisable only with units of the venture itself.
