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Preferred Stock
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Dec. 31, 2014
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| Preferred Stock |
Note 10 - Preferred Stock
Series A Convertible Preferred Stock Financing
On May 10, 2013, the Company entered into a Series A Convertible Preferred Stock Purchase Agreement (the "Series A Purchase Agreement") with One Stone Holdings II LP ("One Stone"), an affiliate of One Stone Energy Partners, L.P. Pursuant to the terms of the Series A Purchase Agreement, on May 17, 2013 (the "Closing Date"), the Company issued to One Stone 19,239,734 shares of Series A Convertible Preferred Stock, par value $0.01 per share (the "Series A Preferred Stock"), at a purchase price of approximately $1.22 per share (the "Purchase Price"), for aggregate proceeds of approximately $23.5 million. Subject to certain conditions, each share of Series A Preferred Stock and any related unpaid accumulated dividends are convertible into one share of the Company's Common Stock, par value $0.01 per share, at an initial conversion price equal to the Purchase Price. Please refer to Note 10 in the Company's 2014 Form 10-K for further information regarding key terms and registration rights applicable to the Company's Series A Preferred Stock.
The Company has analyzed the embedded features of the Series A Preferred Stock and has determined that none of the embedded features is required under US GAAP to be bifurcated from the Series A Preferred Stock and accounted for separately as a derivative. The Company recorded the transaction by recognizing the fair value of the Series A Preferred Stock at the time of issuance in the amount of $23.5 million. The Company will accrete the Series A Preferred Stock to the redemption value if events or circumstances indicate that redemption is probable. No accretion was recorded during the six months ended December 31, 2014, nor during the year ended June 30, 2014.
For the six months ended December 31, 2014, the Company recorded preferred stock dividends of $0.9 million related to the Series A Preferred Stock. The preferred stock dividend for the three months ended December 31, 2014, was paid in kind. Accordingly the value of this dividend of $0.4 million was recorded and added to the preferred stock balance on the Company's balance sheet at December 31, 2014. In addition, during the three months ended December 31, 2014, the Company paid the cash dividend accrued at the prior quarter end in the amount of $0.4 million.
The activity related to the Series A Preferred Stock for the six months ended December 31, 2014, and the fiscal year ended June 30, 2014, is as follows:
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