Camber Energy (CEI) Stock: Why The Price Jumped Today (UPDATED)

By Amit Chowdhry ● Nov 22, 2021
  • This article has been updated with more information
  • The stock price of Camber Energy Inc (NYSEAMERICAN: CEI) increased by over 15% pre-market today. This is why it happened.

Investors appear to be responding positively to Camber Energy announcing that on November 19, 2021 it received a letter from the NYSE American in response to the Company’s request for an extension of the date by which the Company is to file outstanding financial reports.

The company is not in compliance with the Exchange’s continued listing standards as set forth in Section 1007 of the NYSE American Company Guide given its failed to timely file (the filing delinquency) the following reports (collectively, the delayed reports): (i) Form 10-K for the 9-month transition period ended December 31, 2020; (ii) Form 10-Q for the period ended March 31, 2021; and (iii) Form 10-Q for the period ended June 30, 2021. The Filing Delinquency will be cured via the filing of the Delayed Reports.

Camber originally intended to remedy the Filing Delinquency on or before November 19, 2021. But due to certain circumstances the company requested the Exchange grant the company a brief extension of time by which to file the Delayed Reports. And the Exchange accepted the company’s request and has allowed them until December 17, 2021 to file the Delayed Reports.

If Camber is unable to cure the delinquency by December 17, 2021, the company may request an additional extension up to the maximum cure period of May 20, 2022. And the NYSE Regulation staff will review the company periodically for compliance with adherence to the milestones in the plan.

If Camber does not make progress consistent with the plan during the plan period or if the company does not complete its delayed filings and any subsequently delayed filings with the SEC by the end of the maximum 12-month cure period on May 20, 2022, the Exchange staff will initiate delisting proceedings as appropriate. The Company may appeal a staff delisting determination in accordance with Section 1010 and Part 12 of the Company Guide.

Last week, the company also announced that Viking Energy Group — a majority-owned subsidiary of Camber Energy — entered into a Membership Interest Purchase Agreement with RESC Renewables Holdings, LLC (the seller) to buy all of the membership interests (collectively, the acquired interests) of New Rise Renewables, LLC. 

New Rise owns all of membership interests in each of New Rise Renewables Reno, LLC and New Rise Processing Reno, LLC (And together with New Rise and New Rise Reno, known as the acquired entities). The acquired entities are in the process of engineering, developing, constructing and bringing into commercial operations a processing plant located in Reno, Nevada, that is designed to produce renewable diesel.

The purchase price for the acquired interests is to equal the appraised value of the acquired interests (as determined by a third party appraisal firm agreed to by Viking and the seller) less the amount of the Viking Bond, which is defined in the MIPA as the face value of the bond financing or other credit facility arranged by Viking to complete the purchase of the acquired interests, facilitate the payment of New Rise liabilities as set forth in the MIPA and to complete the remainder of the Plant to and beyond the date that the Plant commences commercial operations. The face value of the Viking Bond is estimated to be $250 to $275 million depending on marketing conditions.

The Purchase Price, subject to permitted adjustments, is to be paid as follows:

(i) $8,000,000 in cash on the Closing Date; and 

(ii) as to the balance, via issuance of shares of convertible preferred stock of Viking with the following features: (i) no voting rights; (ii) a dividend rate of 7.25% per annum with dividends payable semi-annually in cash or in shares of common stock of Viking (or combination of both) in each case at Viking’s option with dividends to start accruing on the first day of the month immediately following the date that the Plant commences commercial operations;

(iii) conversion rights with the preferred shares convertible into shares of common stock of Viking at a fixed conversion price equal to the volume weighted average price of Viking’s common stock during the period commencing on the date – which the terms of the MIPA are disclosed by Viking through a current report on Form 8-K filed with the SEC and ending on the date that is the tenth business day following the Closing Date;

(iv) all conversions shall be subject to a 9.99% equity blocker, and the conversion rights with respect to 40% of the preferred shares shall not apply until the date that the Plant commences commercial operations; and

(v) redemption rights and other features of the preferred stock to be determined by Viking’s accounting consultants such that the preferred shares may be characterized as “permanent equity” on Viking’s balance sheet.

Viking’s obligation for buying the acquired interests is conditioned on a number of items set out in the MIPA, including, without limitation: (i) Viking having obtained the Viking Bond (on terms and conditions satisfactory to Viking in its sole discretion; and (ii) Viking having completed its due diligence investigation of the acquired entities and the plant, and – in its sole discretion – being satisfied with the results of such due diligence investigation. There is no guaranty the conditions will be satisfied.

The closing date of the acquisition of the acquired interests is to be no later than 2 business days after the last of the conditions to closing set out in the MIPA have been satisfied or waived (other than conditions which, by their nature, are to be satisfied on the Closing Date).

Concurrent with the execution of the MIPA, New Rise Processing executed and delivered in Viking’s favor a promissory note in the principal amount of $1.5 million (the note), and Viking advanced $1.5 million to New Rise Processing on November 19, 2021, under the Note. New Rise Processing’s obligations under the Note are secured by: (i) a Guaranty executed by the Seller (RESC Renewable Holdings, LLC) in favor of Viking, and (ii) a Security Agreement-Pledge executed by RESC, LLC (the owner of the seller) in favor of Viking, granting Viking a first position and perfected security interest in 20% of the membership interests of the seller. Each of the Note, Guaranty and Pledge Agreement are dated November 18, 2021. The Note bears interest at a rate of 10% per annum, and all principal and accrued interest due thereunder are payable on the earlier of: (i) Viking’s acquisition of the acquired Interests or (ii) June 30, 2022.

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.