Andrew Linden
3
All posts from Andrew Linden
Andrew Linden in Your News,

The reason why LEI soars today

Lucas Energy, Inc. announced that it has entered into a series of agreements with an institutional investor whereby it will receive $10.0 million of equity capital, subject to meeting certain conditions. The initial investment is structured as a Redeemable Convertible Subordinated Debenture which will automatically convert into common stock at an initial conversion price of $3.25 per share upon certain of the conditions described below being met. At closing, this placement will provide $500,000 of funding immediately, and the balance of $4.5 million through the exercise of a Warrant upon (i) the closing of the announced transaction with Segundo, (ii) shareholder approval to issue the common shares for NYSE MKT purposes, (iii) registration of the underlying common stock and (iv) a dollar volume trading requirement of $5 million in the previous 20 trading days. Lucas also agreed to issue an additional $5.0 million of a newly designated Series C Redeemable Convertible Preferred Stock of which $500,000 will be funded upon closing of the announced Segundo Transaction, and the balance upon achieving certain milestones. The Series C Redeemable Convertible Preferred Stock will also be convertible into common stock at an initial conversion price of $3.25 per share.

Basically, Lucas Energy raised $15M from an institutional investor in a form of a Convertible loan. That's all you need to know about the deal. This is a game-changer for the company. In their most recent filling they had the following note:

The Company’s total current liabilities of $11.0 million exceeded its total current assets of $0.6 million, resulting in a working capital deficit of $10.4 million, while at March 31, 2015, the Company’s total current liabilities of $10.3 million exceeded its total current assets of $0.6 million, resulting in a working capital deficit of $9.7 million.

As you can see due to this investment the company can solve all the problems with its liquidity. Nicely done deal by the management. What trump do they have in the pocket?