Lucas Energy Inc. (NYSE MKT: LEI) has entered into a series of agreements with an institutional investor whereby Lucas is to receive $10 million under current commitments while an additional $5 million is to be made available through the exercise of an additional warrant upon mutual consent.
Lucas will receive $10 million of equity capital, subject to meeting certain conditions. The initial investment is structured as a redeemable convertible subordinated debenture that 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 the closing of the company's transaction with Segundo Resources for the purchase of Segundo assets, shareholder approval to issue the common shares for NYSE MKT purposes, registration of the underlying common stock, and a dollar volume trading requirement of $5 million in the previous 20 trading days.
Lucas also agreed to issue an additional $5 million of a newly designated Series C redeemable convertible preferred stock of which $500,000 will be funded upon closing of its 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.
On Dec. 31, 2015, Lucas signed a purchase agreement to acquire, from 21 different entities and individuals, working interests in producing properties and undeveloped acreage. The assets being acquired include varied interests in two largely contiguous acreage blocks in the US Mid-Continent region. The properties currently produce in excess of 1,200 net barrels of oil equivalent per day (boe/d). Once the transaction closes, Lucas will rebrand and change its name to Camber Energy Inc.
ROTH Capital Partners acted as exclusive placement agent on this transaction.