By Jennifer Chiou
New York, July 29 - GeoMet, Inc. announced that it is distributing at no charge to shareholders transferable subscription rights to purchase up to $40 million of its series A convertible redeemable preferred stock.
Holders will receive one subscription right for every 9.8656905 common shares held as of the close on July 26, subject to adjustment to eliminate fractional subscription rights.
The company said it is distributing subscription rights exercisable for up to 4 million preferreds at $10 per preferred.
The subscription rights will expire if they are not exercised by 5 p.m. ET on Aug. 18.
There is no minimum subscription floor.
GeoMet said it entered into an investment agreement with Sherwood Energy, LLC, under which Sherwood will purchase up to $40 million of GeoMet's convertible preferreds if the rights offering is not fully subscribed by stockholders.
In April, the company announced that it had received commitment letters from NGP Capital Resources Co. and North Shore Energy, LLC, an affiliate of its largest stockholder, to subscribe for any remaining convertible preferreds.
As already reported, the preferreds will be convertible into GeoMet shares at a conversion price of $1.30 per share.
Terms of the proposed preferreds include:
• Dividends payable quarterly either in cash at 9.6% per year or, until the fifth anniversary of the closing date, in kind at an annual rate of 12.5%, at the option of GeoMet;
• After five years, the company may elect, subject to certain limitations, to convert portions of the preferreds if the average trading price of its common stock exceeds 225% of the conversion price, which would be $2.93 based on a conversion price of $1.30; and
• Preferreds will be redeemable at par plus accrued dividends at the option of the holder upon the earlier of a liquidation event or the eighth anniversary of the closing date.
GeoMet is an independent energy company based in Houston.
| Issuer: | GeoMet, Inc.
|
| Issue: | Series A convertible redeemable preferred stock
|
| Amount: | Up to $40 million
|
| Dividend: | 9.6% per year in cash or, until the fifth anniversary of the closing date, in kind at an annual rate of 12.5%, at company's option
|
| Price: | $10.00
|
| Conversion price: | $1.30
|
| Call option: | After five years if stock exceeds 225% of the conversion price
|
| Pricing date: | July 29
|
| Stock symbol: | Nasdaq: GMET
|
| Stock price: | $1.02 at close July 29
|
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