Magnum Hunter redeems, converts all $15 million in series B preferreds

By Devika Patel

Knoxville, Tenn., June 8 - Magnum Hunter Resources Corp. announced that it has redeemed or converted all $15 million of its series B redeemable convertible preferred shares.

The company had the right to redeem all of the preferreds if its stock's average trading price equaled or exceeded $4.74 per share for five consecutive trading days. The company's share price met these criteria on May 14. The company's stock (AMEX: MHR) closed at $5.21 on May 14.

Consequently, the company converted 1 million preferreds into restricted common stock and the remaining 3 million preferreds were redeemed for $3.75 per share in cash, plus accrued dividends, on June 7.

The preferreds were issued to the three senior bank lenders to Triad Energy Corp. and affiliates on Feb. 12.

"The redemption of our series B convertible preferred stock is one more step in our continuing effort to simplify and strengthen our balance sheet, while at the same time, reduce the potential dilution to our common shareholders from the conversion of the series B convertible preferred stock," vice president and chief financial officer Ron Ormand said in a press release.

"The substantially improved liquidity position of the company has allowed us to undertake the series B stock redemption at this time, which is similar to a stock buyback.

"As a result of Magnum Hunter's redemption of the series B preferred stock completed yesterday and the company's successful capital raising efforts to-date, our balance sheet at June 30, 2010 will reflect significantly improved liquidity and leverage ratios."

Magnum Hunter is a Houston-based independent exploration and production company.

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