| | | Celtictrader,
Osage got some relief from their loan covenants with Apollo on August 12th. They were in violation of the June 30th covenants for Interest Coverage Ratio and Minimum Production. They had an interest coverage ration of about 1.03 vs the covenant's minimum of 1.10. They produced about 21.5 Mbls vs. the covenant's minimum of 35 Mbls.
Apollo extracted some concessions from Osage for the waiver. Here's the text of the concessions below.
6.21 Additional Capital.
(a) On or prior to the date that is 75 days subsequent to the Second Amendment Effective Date, the Issuer shall either (i) sell Property owned by the Issuer and its Subsidiaries located in the country of Colombia in a transaction with a minimum Net Asset Sale Proceeds amount of $8,000,000 or (ii) issue additional Capital Stock in a transaction that results in aggregate net proceeds (after giving effect to any underwriting commissions or other offering expenses or fees) of at least $5,000,000; provided that any dividends or distributions paid with respect to the Capital Stock issued pursuant to clause (ii) may only be paid in kind with additional Capital Stock.
and if they don't raise the capital . . .
(b) In the event that the Issuer fails to comply with clause (a) above, the Issuer shall issue to the Holders additional Holder Warrants, which, in the aggregate, shall permit the Holders to acquire three percent (3%) of the Issuer’s Capital Stock on a fully-diluted basis.
One good thing from the amended agreement is that Osage received $2,000,000 draw on the loan. That will help a lot.
Problem I see, is that they will be back in the fire at the end of September. The September 30th Interest Coverage Ratio is 1.75 and the Minimum Production is 50 Mbls.
Last I saw, Osage had a bunch of wells waiting completion, but I doubt they will be brought on line quick enough to bring production for the quarter up to 50 Mbls, much less increase the Interest Coverage Ratio by 75%. If they had 50 Mbls, they would not be having any trouble with the loan covenants.
I still own a bunch of Osage.
The next two and a half months will tell what's going to happen to these guys.
Good luck. |
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