Lucas Energy enters into line of credit and amendment of senior secured note

Lucas Energy Inc. (NYSE MKT: LEI) has entered into a line of credit and an amendment of its senior secured note, effective Aug. 28. Pursuant to the line of credit, and subject to various closing conditions, including the company's common stock continuing to trade on the NYSE MKT exchange, the company has the right to $2.4 million in funding ($200,000 per month for 12 months). 

Any funding raised pursuant to the line of credit is to be evidenced by convertible promissory notes accruing interest at the rate of 6% per annum, with a conversion price of $1.50 per share. The exercise of the conversion option is subject to Lucas' shareholder approval. Should the facility be fully drawn and conversion approved, the note will convert into 1.6 million common shares, or approximately 52.4% of the outstanding shares.

The company also entered into an amendment of its senior secured note to extend the due date to Oct. 31, 2016. The amendment also provided that the senior lender waive all prior defaults under the senior loan to date.

As disclosed previously, Lucas Energy was notified of its failure to meet certain of the NYSE MKT's continued listing requirements in February 2014. The company subsequently submitted a plan of compliance to the Exchange, which was thereby accepted, and the company was granted various extensions in which it was required to regain compliance with the continued listing standards. The last of these extensions expired on Aug. 28.

The NYSE MKT had previously advised the company that its failure to regain compliance with the continued listing standards by Aug. 28 would result in the company's common stock being delisted from the NYSE MKT. 

Lucas Energy has been in discussions with the Exchange regarding the transactions contemplated by the line of credit and whether it meets the required listing standards under the conditions of the line of credit. However, no decision has been made by the NYSE MKT to date, and in the event the NYSE MKT decides the company does not comply with the required additional listing standards, the company's common stock will be delisted from the NYSE MKT and the line of credit will be automatically terminated. 


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