Item 1.01 Entry into a Material Definitive Agreement.
On November 18, 2021, Viking Energy Group, Inc. ("Viking"), a majority-owned
subsidiary of Camber Energy, Inc., entered into a Membership Interest Purchase
Agreement (the "MIPA") with RESC Renewables Holdings, LLC (the "Seller") to
acquire all of the membership interests (collectively, the "Acquired Interests")
of New Rise Renewables, LLC ("New Rise"). New Rise owns all of membership
interests in each of New Rise Renewables Reno, LLC ("New Rise Reno") and New
Rise Processing Reno, LLC ("New Rise Processing" and, together with New Rise and
New Rise Reno, the "Acquired Entities"). The Acquired Entities are in the
process of engineering, developing, constructing and bringing into commercial
operations a processing plant located in Reno, Nevada, that is designed to
produce renewable diesel (the "Plant").
The purchase price (the "Purchase Price") for the Acquired Interests is to equal
the appraised value of the Acquired Interests (as determined by a third party
appraisal firm agreed to by Viking and the Seller) less the amount of the Viking
Bond, which is defined in the MIPA as the face value of the bond financing or
other credit facility arranged by Viking to complete the purchase of the
Acquired Interests, facilitate the payment of New Rise liabilities as set forth
in the MIPA and to complete the remainder of the Plant to and beyond the date
that the Plant commences commercial operations. The face value of the Viking
Bond is estimated to be $250 to $275 million depending on marketing conditions.
The Purchase Price, subject to permitted adjustments, is to be paid as follows:
(i) $8,000,000 in cash on the Closing Date; and (ii) as to the balance, via
issuance of shares of convertible preferred stock of Viking with the following
features: (i) no voting rights; (ii) a dividend rate of 7.25% per annum, with
dividends payable semi-annually in cash or in shares of common stock of Viking,
or combination of both, in each case at Viking's option, with dividends to start
accruing on the first day of the month immediately following the date that the
Plant commences commercial operations; (iii) conversion rights with the
preferred shares convertible into shares of common stock of Viking at a fixed
conversion price equal to the volume weighted average price of Viking's common
stock during the period commencing on the date which the terms of the MIPA are
disclosed by Viking through a Current Report on Form 8-K filed with the
Securities and Exchange Commission and ending on the date that is the 10th
business day following the Closing Date; (iv) all conversions shall be subject
to a 9.99% equity blocker, and the conversion rights with respect to 40% of the
preferred shares shall not apply until the date that the Plant commences
commercial operations; and (iv) redemption rights and other features of the
preferred stock to be determined by Viking's accounting consultants such that
the preferred shares may be characterized as "permanent equity" on Viking's
balance sheet.
Viking's obligation to purchase the Acquired Interests is conditioned on a
number of items set out in the MIPA, including, without limitation: (i) Viking
having obtained the Viking Bond, on terms and conditions satisfactory to Viking
in its sole discretion; and (ii) Viking having completed its due diligence
investigation of the Acquired Entities and the Plant, and, in its sole
discretion, being satisfied with the results of such due diligence
investigation. There is no guaranty the conditions will be satisfied.
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The Closing Date of the acquisition of the Acquired Interests is to be no later
than two business days after the last of the conditions to closing set out in
the MIPA have been satisfied or waived (other than conditions which, by their
nature, are to be satisfied on the Closing Date).
Concurrent with the execution of the MIPA, New Rise Processing executed and
delivered in Viking's favor a promissory note in the principal amount of
$1,500,000 (the "Note"), and Viking advanced $1,500,000 to New Rise Processing
on November 19, 2021, under the Note. New Rise Processing's obligations under
the Note are secured by: (i) a Guaranty executed by the Seller (RESC Renewable
Holdings, LLC) in favor of Viking (the "Guaranty"), and (ii) a Security
Agreement-Pledge executed by RESC, LLC (the owner of the Seller) in favor of
Viking, granting Viking a first position and perfected security interest in 20%
of the membership interests of the Seller (the "Pledge Agreement"). Each of the
Note, Guaranty and Pledge Agreement are dated November 18, 2021. The Note bears
interest at a rate of 10% per annum, and all principal and accrued interest due
thereunder are payable on the earlier of: (i) Viking's acquisition of the
Acquired Interests; or (ii) June 30, 2022.
The foregoing descriptions of MIPA, Note, Guaranty, and Pledge Agreement do not
purport to be complete and are qualified in their entirety by reference to the
form of MIPA, Note, Guaranty, and Pledge Agreement, copies of which are filed as
Exhibits 10.1, 10.2, 10.3, and 10.4 to this Current Report on Form 8-K and
incorporated in this Item 1.01 by reference in their entirety.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
10.1 Membership Interest Purchase Agreement, by and between Viking
Energy Group, Inc., and RESC Renewable Holdings, LLC, dated November
18, 2021
10.2 Promissory Note, by New Rise Processing Reno, LLC, in favor of
Viking Energy Group, Inc., dated November 18, 2021
10.3 Guaranty, by and between Viking Energy Group, Inc., and RESC
Renewable Holdings, LLC, dated November 18, 2021
10.4 Security Agreement-Pledge, by and between Viking Energy Group,
Inc., and RESC, LLC, dated November 18, 2021
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