HOUSTON, April 15, 2020 /PRNewswire/ -- Yuma Energy,
Inc. (NYSE American: YUMA) ("Yuma", "Company", "we" or "our"),
together with its subsidiaries Yuma Exploration and Production
Company, Inc., Davis Petroleum Corp., and The Yuma Companies, Inc.
(collectively, the Company and the filing subsidiaries, the
"Debtors"), announced today that they have filed voluntary Chapter
11 petitions for relief under the United States Bankruptcy Code in
the U.S. Bankruptcy Court for the Northern District of Texas (the "Bankruptcy Court"). During
the first quarter of 2020, Yuma's cash position deteriorated, and
its cash flow from operations is no longer sufficient to cover its
operating costs. The Company plans to continue to operate its
business in the normal course during the court-supervised
bankruptcy process.
The Debtors intend to use the Chapter 11 process to implement
the orderly liquidation of their assets in an effort to maximize
values and recoveries to stakeholders. The Debtors intend to
seek immediate court approval to conduct an auction for
substantially all of their assets, which primarily consist of
operating and non-operating interests in several properties in
Louisiana, Texas, Wyoming and Oklahoma. The auction is
expected to occur within the first 90 days of the bankruptcy
filings.
The Debtors may negotiate to obtain a new Debtor-in-Possession
("DIP") financing to provide working capital to support normal
operations and the sale of assets during the Chapter 11
process. However, it is not certain that these negotiations
to obtain DIP financing will be successfully completed.
Separately, effective on April 10,
2020, Anthony C. Schnur
resigned from his positions as Interim Chief Executive Officer,
Interim Chief Financial Officer, and Chief Restructuring Officer of
the Company. Shortly after with the effectiveness of Mr.
Schnur's resignations, the Company engaged Ankura Consulting Group,
LLC ("Ankura") as its financial advisor. Mr. Schnur was
recently hired by Ankura, and Mr. Schnur will oversee the operation
of the Debtors during the bankruptcy process as he provides his
services to the Company through Ankura.
Mr. Schnur commented, "In 2019 and early 2020, we took proactive
steps to recapitalize our Company's financial structure under a
Credit Agreement with our lender YE Investment, LLC ("YE") and a
Restructuring and Exchange Agreement (the "Restructuring
Agreement") with Red Mountain Capital Partners LLC ("Red Mountain")
and certain of its affiliates including YE. Unfortunately, YE
recently notified us that it was terminating the Credit Agreement
due to the Company's failures to make timely interest payments and
to comply with other covenants, and further, that it was also
accelerating all payments due under the Credit Agreement so that
all outstanding principal, accrued interest, fees and other
obligations under the Credit Agreement became immediately due and
payable. Simultaneous with the termination of the Credit
Agreement, Red Mountain notified us that it was terminating the
Restructuring Agreement.
"Our revenues and cash position have eroded to the point of
unsustainability primarily driven by the severe downturn in oil
prices. After much consideration, the Company's Board of
Directors came to the decision that the use of the Chapter 11
liquidation process was the best path forward to maximize values
and recoveries."
Mr. Schnur continued, "Although I am stepping down from my
executive positions at the Company, I intend to actively oversee
this restructuring process. Also, I want to express my
sincere gratitude to the employees for their continued dedication
and hard work during this time."
Effective as of April 13, 2020,
Ankura will be acting as the financial advisor to the Company,
including assuming the role of Chief Restructuring Officer,
responsible for leading the Company through the bankruptcy
process. The decision to retain Ankura was reached by the
Company's Board of Directors, who believe the selection is in the
best interest of all stakeholders of the Company.
Seaport Gordian Energy LLC, an affiliate of Seaport Global
Holdings LLC has been engaged as the investment banker for the
Company, and FisherBroyles, LLP will serve as legal advisors to the
Company.
Please refer to our prior press releases and prior filings with
the Securities and Exchange Commission for more comprehensive
information regarding the agreements and transactions.
Copies of all documents filed in this case can be accessed at no
charge through Stretto, the Debtors' claims & noticing agent
(at https://cases.stretto.com/yumaenergy). For questions, Stretto
can be contacted by email at TeamYumaEnergy@stretto.com or
toll-free at 855-303-9310. Stretto cannot give legal or financial
advice.
Upon Court approval, cash generated from the Debtors' ongoing
operations will be used to support our business during the
liquidation process. Yuma has filed several customary motions
with the U.S. Bankruptcy Court seeking authorization to operate its
business in the normal course during the Chapter 11 process,
including paying vendors and suppliers under normal terms for goods
and services provided on or after the filing date in the ordinary
course of business. Yuma expects to receive Court approval
for all of these requests.
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
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SOURCE Yuma Energy, Inc.