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RAM Energy (RAM) Enters $550M Recap; Will Issue 220M Common in Deal

December 22, 2011 6:52 AM EST
RAM Energy Resources, Inc. (Nasdaq: RAM) has reached agreement with Halcon Resources, LLC, a newly-formed company led by Floyd C. Wilson, former Chairman and Chief Executive Officer of Petrohawk Energy Corporation (NYSE: HK), for a transformational capital investment in RAM. The investment is comprised of $275 million in new common stock, a $275 million five-year convertible note, and warrants for the purchase of an additional 110 million shares of common stock. A majority of RAM’s current shareholders have agreed to approve the transactions contemplated by the agreement through action by written consent of stockholders. The transaction is expected to close in Q112.

Wilson will become the Chairman and Chief Executive Officer of RAM immediately following the closing of the transaction, and the Company’s name will change to Halcon Resources Corporation.

Upon closing of the transaction, RAM will issue 220 million shares of common stock to Halcon, representing approximately 74% of RAM’s pro forma outstanding common stock. The $275 million convertible note will bear interest at 8% per annum and may be converted by the holder into shares of common stock at any time subsequent to two years from the closing date, subject to earlier conversion under certain circumstances. The conversion price will be $1.50 per share, subject to adjustment upon certain events. The warrants will be exercisable for five years from the closing date at an exercise price of $1.50 per share, subject to adjustment upon certain events.

The investor group partnering with Halcon is led by EnCap Investments, L.P. and includes Liberty Energy Holdings LLC and Mansefeldt Investment Corp. Mitchell Energy Advisors represented Halcon, and Jefferies & Company, Inc. acted as advisor for RAM in the transaction.


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