Houston-based Yuma Energy Inc. has received notice from its lender, YE Investment LLC—an affiliate of Red Mountain Capital Partners—that all outstanding payments under its credit agreement are due and that its restructuring arrangement with Red Mountain has been terminated.
In a March 20 statement, Yuma disclosed that it was not in compliance with the various terms of the arrangement, and no further funds were available to Yuma under the facility.
The April 3 notice highlighted Yuma’s failure to pay interest within the time provided and failure to comply with other covenants. Consequentially, Red Mountain terminated all loan commitments and has accelerated the payments including accrued interest, fees and other obligations.
In September 2019, YE Investment purchased all of Yuma’s bank debt and related liabilities under the company's senior credit facility. The credit facility was then modified to reduce the outstanding balance from $32.8 million to $1.4 million. Yuma then entered into a restructuring agreement which was later amended in December 2019.
"Despite our efforts to remedy our financial distress and evaluate strategic alternatives over the past few months, we have not come to a mutually agreeable understanding with Red Mountain regarding the extension/modification of the restructuring agreement, modified note and related agreements,” Anthony C. Schnur, Interim Chief Executive Officer and Chief Restructuring Officer of Yuma said in a written statement.
“Our ability to make timely interest payments has been hampered by the dramatic collapse in oil prices, certain well failures, and economic uncertainty caused by the COVID-19 virus. The acceleration of all outstanding payments demanded by Red Mountain at this time will likely force the company to cease our business plan, sell assets or possibly take other remedial steps such as seeking bankruptcy protection."
Historically, the company's activities have focused on inland and onshore properties, primarily located in central and southern Louisiana and southeastern Texas.
To contact the author, email bertie.taylor@rigzone.com.
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