Camber Energy (CEI) Stock: Refinancing Is a Huge Win

Camber Energy Inc (NYSEAMERICAN: CEI) is heading up in the market this morning with plenty of online chatter surrounding its ticker. All the hype is for good reason. The company announced a financing update that puts it on a more solid financial foundation. 

Here’s the scoop:

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CEI Closes $25 Million Loan

In a press release issued early this morning, Camber Energy announced that it closed a $25 million loan transaction that it disclosed in a recent 8-K. However, this particular loan isn’t like what we normally see. Here are a few features of the loan that have investors buzzing:

  • Maturity. The maturity date on the loan will be January 1, 2027. This is an important factor because it was used to pay debt that was set to mature in March of this year. We’ll get into what the proceeds of the loan were used for in a bit. 
  • Interest. The interest rate on the loan is the Wall Street Journal Prime Rate, which currently sits at 3.25%. That’s not only a great rate, the terms of interest are interesting too. Interest on the loan isn’t payable until maturity. 
  • Conversion. Finally, the loan is convertible into common shares CEI stock at a price of $1.50 per share. That’s a nice premium considering the fact that even after gains thus far today, the stock is currently trading under $1 per share. 

Looking at all the information here, it’s clear the investor(s) that took part in this loan have quite a bit of faith in the company. Not only did they close on a long-term prime-rate loan, interest isn’t payable until maturity of that loan, which doesn’t happen for about five years! 

Not only is this great news for the books at CEI, it’s great news for investors. 

What Camber Energy Plans to Do With the Money

In the press release, CEI outlined three uses of the proceeds of the loan. Here’s how they said they’d be using the funds:

  1. Redeem Convertible Preferred Stock. First and foremost, the company plans on redeeming all issued and outstanding shares of Series C Redeemable Convertible Preferred Stock that’s not beneficially owned by the lender or its affiliates. 
  2. Secured Loan Payoff. The company also plans on paying off a secured loan that would have been due on March 8, 2022. 
  3. Working Capital. Finally, CEI said it would use the funds for working capital, which is standard when funds are raised at public companies. 

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The Bottom Line

The bottom line here is simple. Camber Energy has closed a very important deal. The deal will not only alleviate the company of coming maturity dates and interest payments, it has closed at a great interest rate with interest that’s not payable until maturity five years from now. Not only is this great for the company’s books, it shows that the lender has incredible faith in what the company’s doing. All in all CEI stock is one to watch closely. 

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