Carbon Energy Corp

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).

business combination

Carbon Energy Corp deregistered its securities, ending its obligation to file reports with the SEC.

listing compliance notice

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.

business combination

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.

debt default or forbearance

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.

asset acquisition disposition

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.

asset acquisition disposition

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.

debt default or forbearance

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.

debt default or forbearance

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.

asset acquisition disposition

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.

material agreement

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.

asset acquisition disposition

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.

capital raising announcement

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.

material agreement

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.

capital raising announcement

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.

capital raising announcement

Carbon bought 2,334 producing Appalachian gas wells and more than 900 miles of gathering line from EXCO Resources and the BG Production companies for just $9 million - roughly 9,300 net thousand cubic feet a day of production at a distressed price. It funded the purchase and refinanced out of its Bank of Oklahoma facility with a new four-year, $100 million secured revolver from LegacyTexas Bank.

asset acquisition disposition

The deep-rights sale reached a preliminary closing, with the buyer flagging title defects that Carbon and Liberty had 75 days to cure or replace with other acreage before the price would be cut.

asset acquisition disposition

Carbon's Nytis subsidiary and Liberty Energy agreed to sell the rights below the base of the Clinton Formation under their Kentucky and West Virginia leases to a buyer the filing does not name, keeping everything from surface to the Clinton base, a minority working interest in some of the deep rights and an overriding royalty. Nytis's share of the cash is about $12 million, subject to title and environmental adjustments.

material agreement

Carbon bought out its second-largest shareholder, paying Cadent's RBCP Energy Fund $0.40 a share for all 8,153,777 shares - about $3.3 million - and cancelled them. The 17% holder that arrived with the 2011 Nytis merger was gone, leaving Yorktown clearly dominant.

material agreement

Carbon found an outside funder for its Kentucky drilling: Liberty Energy paid $3.66 million up front for a 40% working interest in a block of leases and agreed to carry part of the drilling cost. The company was choosing to sell down interests rather than borrow to drill.

material agreement

The company raised $30 million in a private placement of 44.4 million shares at $0.45 and $10 million of Series A preferred sold to Yorktown Energy Partners IX. It used the money to complete the Interstate Natural Gas purchase on 29 June, after net extension payments of $765,000 because the financing took longer than expected.

asset acquisition disposition

Nytis and The Interstate Natural Gas Company amended the $29.6 million asset purchase agreed on 14 February so it would close in two stages. About 45 wells, for no more than $1.52 million, were due by 22 April, and the rest by 23 May.

material agreement

This amended report confirms the Nytis merger closed on 14 February 2011: 47,000,003 shares, about 99% of the stock, went to Nytis (USA)'s former holders, and the company stopped being a shell. It describes the acquired business as interests in about 433 gross (176 net) producing wells and about 349,000 gross acres in the Illinois and Appalachian Basins, and it mentions a planned asset purchase from The Interstate Natural Gas Company. No cash was used in the merger.

business combination

The Nytis reverse takeover closed: 47,000,003 shares issued at 1,630.76 for each Nytis share, taking the count to 47.5 million and putting private-equity firm Yorktown Energy Partners' funds V and VI at a combined 75.5%, with Cadent Energy Partners' RBCP fund on 17.2%. Patrick McDonald became chairman and chief executive and Kevin Struzeski chief financial officer; the company formally stopped being a shell and became a working Appalachian gas producer.

business combination

The shell told shareholders that on a 31 January 2011 merger agreement, expected to close 14 February 2011, it would issue 47,000,003 new shares to the owners of Nytis Exploration (USA), about 98.9% of the company, turning it into an Appalachian and Illinois Basin gas and oil producer. Zimmerman, Berlin, Grier and Zlatniski would resign, with Patrick McDonald as chairman and CEO and Kevin Struzeski as CFO. Yorktown Energy Partners V and VI would hold 37.8% each in the filing's table (the 75.5% combined figure in the directors' table is Bryan Lawrence's and Peter Leidel's) and the RBCP fund 17.2%, leaving existing holders (518,736 shares) with about 1%.

business combination

The empty shell agreed to merge with Nytis Exploration (USA) Inc. of Denver, which held interests in about 375 gas wells across 264,000 mostly undrilled net acres in six Appalachian and midwestern states. Nytis holders would take roughly 47 million new shares - about 99% of the votes - and replace the entire board, so this was a reverse takeover in everything but name.

business combination

The company sold its entire stake in T3 Therapeutics back to the venture for $100,000, closing out the biotech investment it had held since 2002 and leaving an empty listed shell. The separate New York University research funding had already been written down to nothing; proceeds from both were earmarked for the Class A tracking-stock holders rather than ordinary shareholders.

material agreement

The Zimmerman deal closed on 31 August 2007 and the company reincorporated in Delaware by merging its Indiana parent into a new subsidiary. Zimmerman ended up with 14.5% of the shares - a change of control on the filing's own account - and named the board that went with it.

director officer appointment

The shell (then The St. Lawrence Seaway Corporation) told shareholders that when the January 2007 Bernard Zimmerman & Company deal closes, three of four directors (Brown, Greenblatt, Nir) will resign and Zimmerman, Duane Berlin and Ronald Zlatniski will join Edward Grier, with Zimmerman becoming chairman, CEO, president and principal financial officer. Zimmerman's firm would hold 325,000 shares (43.2%) counting its 250,000 warrants; this is the control change that the earlier Zimmerman investment terms set up. No shareholder vote is needed.

business combination

The company withdrew its audited accounts for the year to March 2005 after finding it had accounted wrongly for its share of T3 Therapeutics' research spending; the restated loss per share widened from 18 cents to 27 cents. For a shell whose only asset was that stake, this was the accounts of the whole business being redone.

financial restatement