Yuma Energy retains Seaport Global to explore alternatives, liquidity options
Yuma Energy announced that it has retained Seaport Global Securities, an investment banking firm, to advise the company on its strategic and tactical alternatives, including possible mergers, acquisitions and divestitures. The company also reported on its liquidity as well as its financial results for the quarter ended September 30. The company plans to take further steps to mitigate its limited liquidity which may include, but are not limited to, further reducing or eliminating capital expenditures; selling additional assets; further reducing general and administrative expenses; seeking merger and acquisition related opportunities; and potentially raising proceeds from capital markets transactions, including the sale of debt or equity securities. There can be no assurance that the exploration of strategic alternatives will result in a transaction or otherwise improve the company's limited liquidity. On October 9, 2018, the Company received a notice and reservation of rights from the administrative agent under its credit facility advising that an event of default has occurred and continues to exist by reason of the company's noncompliance with the liquidity covenant requiring it to maintain cash and cash equivalents and borrowing base availability of at least $4M. As a result of the default, the lenders may accelerate the outstanding balance under the credit facility, increase the applicable interest rate by 2.0% per annum or commence foreclosure on the collateral securing the loans. As of the date of this release, the lenders have not accelerated the outstanding amount due and payable on the loans, increased the applicable interest rate or commenced foreclosure proceedings, but they may exercise one or more of these remedies in the future. The Company intends to commence discussions with the lenders under the credit facility concerning a forbearance agreement or waiver of the event of default; however, there can be no assurance that the company and the lenders will come to any agreement regarding a forbearance or waiver of the event of default. As of September 30, the Company had outstanding borrowings of $35M under its credit facility, and its total borrowing base was $35M, leaving no undrawn borrowing base. Due to drilling activities and other factors, the Company had a working capital deficit of $41.07M and a loss from operations of $6.89M for the nine months ended September 30.