5 Oct 2016capital raising announcement● NeutralMajor
On October 4, 2016 the company agreed to buy Delaware Basin properties in Reeves County, Texas, from Firewheel Energy, LLC for $135M: $90M in cash plus about 2,114,523 new common shares worth $45M, with closing expected October 7, 2016. To help fund it, it agreed to sell 55,000 shares of 8⅛% Series B convertible preferred stock ($1,000 liquidation preference each, convertible at about $29.53 per common share) to BMO Capital Markets, with an option for 7,500 more. Existing shareholders face dilution from the new shares and the convertible preferred. The revolver was also amended on September 30, 2016 to allow preferred dividends within set limits. This is a shift from selling assets to adding Delaware Basin acreage.