(Source: PRNewswire)
FT. LAUDERDALE, Fla., July 7 /PRNewswire-FirstCall/ -- SMF ENERGY CORPORATION, (Nasdaq: FUEL) today announced that it has completed a comprehensive and highly beneficial $40 million recapitalization program that restructured all of its debt and equity, providing substantial short term and long term financial benefits to the Company. Management currently estimates that the recapitalization has reduced its short term debt by $9.5 million, the total debt on its balance sheet by $4.4 million and the annual servicing expense for interest and dividends by over $1 million, while increasing shareholders' equity by at least $4 million.
(Logo: http://www.newscom.com/cgi-bin/prnh/20090513/ SMFENERGYCORPLOGO )
On June 29, 2009, the Company entered into various agreements with dozens of the Company's existing debt and equity investors that extinguished all of its existing non-bank debt and outstanding preferred stock, including: (a) the $8.859 million in outstanding August 2007 11-1/2% Senior Secured Convertible Promissory Notes (the "Secured Notes"); (b) the $725,000 in outstanding September 2008 12% Unsecured Convertible Promissory Notes ("Existing Unsecured Notes"); (c) the $2.263 million in 12% Cumulative Dividend Convertible Series A Preferred Stock ("Series A Preferred"); (d) the $1.787 million in 12% Cumulative Dividend Convertible Series B Preferred Stock ("Series B Preferred"); (e) the $149,000 in 12% Cumulative Dividend Convertible Series C Preferred Stock ("Series C Preferred") and (f) $617,000 in accrued but unpaid interest and dividends on the Secured Notes, the Existing Unsecured Notes and the Series A, Series B and Series C Preferred Stock.
On the same date, the Company and its principal lender, Wachovia Bank, agreed to convert the Company's existing $25 million revolving line of credit into a new, significantly more favorable, $25 million loan facility, comprised of a three year $20 million revolver coupled with a new $5 million 5.5% 60 month, fully amortized term loan. The proceeds of the term loan were then applied to pay down $4.867 million of the Secured Notes and $125,000 of the Unsecured Notes. The Eighteenth Amendment to the Loan and Security Agreement between the Company and its principal lender also extended the renewal date of the revolving line of credit to July 1, 2012, added the Company's vehicles and field operating equipment as additional collateral for the bank, and modified several covenants in the loan agreement in a manner favorable to the Company. The Bank's extension of the term loan and the other beneficial terms of the Eighteenth Amendment were the foundation upon which the Company was able to build the various transactions comprising the recapitalization.
To complete the extinguishment of its existing debt and senior equity securities, the Company's agreements with the current holders of its debt and preferred equity securities provided for the exchange of their 11.5% and 12% high yield securities for lower yield 5.5% debt or equity securities or shares of Common Stock. As a result, the Company issued (i) 3,228 shares of a new 5.5% Cumulative Dividend Series D Preferred Stock ("Series D Preferred") at $400 per share, or $0.40 per common share equivalent, for $1.291 million, (ii) 19,251,119 shares of Common Stock for $0.38 per share, or $7.315 million, and (iii) a 5 year $0.8 million 5.5% Unsecured Note (the "New Unsecured Note"); and paid an additional $43,934 in cash, which eliminated all of its outstanding Series A Preferred, Series B Preferred, Series C Preferred, Existing Unsecured Notes and Secured Notes.
The $400 original purchase price of the new Series D Preferred is convertible by the holder into 1,000 shares of Common Stock based on a conversion price of $0.40 per share of Common Stock and ranks senior to the Common Stock and on a parity with any future series of preferred stock as to payment of dividends and distribution of assets. Holders of Series D Preferred Stock are entitled to one vote per share at meetings of stockholders, voting together with the Common Stock as a single class. The 5.5% cumulative annual dividend on the $400 original purchase price of the Series D Preferred Stock will be paid when, as and if declared by the Board of Directors, in cash or such other form of compensation as permitted by the Certificate of Designation for the Series D Preferred, subject to the terms of the Loan Agreement, including potential deferral thereunder.
The only non-bank debt owed by the Company after the Recapitalization is the New Unsecured Note, a five year, 5.5% interest only subordinated promissory note for $800,000 issued to an existing institutional investor in exchange for $800,000 of its $1 million Secured Note. The institutional investor exchanged the $200,000 balance of the Secured Note for shares of Common Stock at $0.38 per share.
