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| Preferred Stock |
Note 9 - 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 $1.22149381 per share (the "Purchase Price"), for aggregate proceeds of approximately $23.5 million. Subject to certain conditions, the shares of Series A Preferred Stock and any related unpaid accumulated dividends are convertible into shares of the Company's Common Stock, par value $0.01 per share, using a face amount per share of the Series A Preferred Stock based on the Purchase Price, and dividing by a conversion price of $9.77586545 per share, which conversion price has been adjusted to reflect the one share for eight shares reverse split of the Company's Common Stock effective July 10, 2015. Please refer to Note 10 - Preferred Stock of the Notes to the Consolidated Financial Statements in the Company's 2015 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 are 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, 2015, nor during the year ended June 30, 2015.
On August 3, 2015, pursuant to a First Amendment to the Series A Purchase Agreement (the "Series A First Amendment"), Magellan and One Stone agreed to amend and extend the standstill provisions of the Series A Purchase Agreement to December 31, 2015. In addition to extending the duration of the standstill provisions, which have now expired, the Company agreed to provide One Stone with all material information with respect to the Company's properties and assets and related activities thereto at Poplar, and with any material updates thereto, it being also agreed that such information need not include any information regarding the status or other aspects of the Company's strategic alternatives review process. Certain definitions were also updated in the Series A First Amendment.
For the six months ended December 31, 2015 and 2014, the Company recorded preferred stock dividends of $913 thousand and $859 thousand, respectively, related to the Series A Preferred Stock. The preferred stock dividends for the six months ended December 31, 2015, were paid in kind. Accordingly, the value of these dividends of $913 thousand was recorded and added to the preferred stock balance on the Company's balance sheet at December 31, 2015.
The activity related to the Series A Preferred Stock for the six months ended December 31, 2015, and the fiscal year ended June 30, 2015, is as follows:
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