Tag Archives: Delisting notice

Houston company delisted after reverse takeover snafu

Stabilis Energy has been delisted by Nasdaq as the company didn’t meet the initial listing requirements after its reverse takeover of American Electric Technologies Inc (AETI).

The deal was originally announced in January 2019 and completed in July. AETI, based in Bellaire, was a provider of power systems to the Energy sector but had sold off its main businesses. It just had a business in Brazil and a China JV left. Stabilis, based in the Westchase area of Houston, is a small-scale producer and distributor of Liquefied Natural Gas.

Stabilis is owned by Casey Crenshaw, who had also been a director and shareholder of AETI since 2012. The shareholders of Stabilis ended up owning 90% of the combined company.

Immediately after the transaction was completed, the company received a delisting notice from Nasdaq because it neither had a minimum of 1 million publicly-held shares nor a minimum market value of $15 million for the publicly-held shares. That’s due to Crenshaw owning 77% of the combined company.

On September 10, the company filed a prospectus to sell 2.8 million shares for $17.1 million. Shareholders, other than Crenshaw, are selling. Once completed, this would make Stabilis compliant. Unfortunately, after a hearing, Nasdaq has now determined the company is not currently in compliance and has delisted the shares.

It’s not clear whether or how the delisting will impact the proposed sale of the shares.

The company believes it already meets the listing requirements on other exchanges and plans to regain a listing as soon as this month.

In August the company appointed Andy Puhala as CFO of the combined group. He had been the CFO of Stabilis since November 2018. Ironically he was also the CFO of AETI between January 2013 and September 2015.

SEC filing – Stabilis delisting

Houston E&P company gets another delisting notice

 

Cobalt International Energy (CIE), an exploration and production company with its head office in West Houston was warned by the New York Stock Exchange (NYSE) that it could be delisted as the overall value of its shares has dropped below the exchange’s $50 million market capital threshold.

The company says it will submit a plan to the NYSE within 45 days detailing its plan to return to compliance within 6 months.

Back in March, it received a notice from the NYSE because its share price dropped below the requirement of a $1 minimum average closing share price. It resolved that by completing a 1-for-15 reverse stock split in June. After that split, the shares traded at $3.15 per share. They closed today at $1.17 per share.

Cobalt is heavily in debt and has been trying to sell assets in deepwater Gulf of Mexico and offshore Angola to avoid Chapter 11. At the end of June, the company had $600 million of cash and cash equivalents It has long-term debt with a face value of $2.5 billion, though bonds are trading at nearly a 50% discount to that. It has to maintain a cash balance of at least $200 million to comply with one of the debt covenants. If it doesn’t sell any assets, the company expects to breach that covenant in early 2018.

The financial prospects for the company suffered a big setback in August 2016 with the collapse of its deal to sell its 40% interest in fields in offshore Angola to Sonangol, the state oil company for $1.7 billion. The deal was terminated because the Angolan government didn’t approve the deal. The company is now suing Sonangol.

Don’t feel sorry for the CEO Tim Cutt and CFO David Powell though. In August 2017, the CEO received a $4 million lump sum cash payment and the CFO $1.5 million. These are retention payments designed to keep the executives at the company for the next year. Both executives joined the company in July 2016. Cutt has an annual salary of $1 million and received a bonus for 2016 (paid in March 2017) of $875,000 while Powell has an annual salary of $510,000 and received a cash bonus of $322,000.

When the CEO joined the company he was granted stock worth $4 million. With the drop in the share price, that stock is only worth around $250,000 now, so it appears the retention payment is, in effect, a make-whole payment.

Other key employees received retention payments of $10.6 million.

Cobalt-International-Energy-Receives-Continued-Listing-Standard