Nytex Energy may amend series A convertible preferreds and warrants

Company seeks to eliminate dividends and anti-dilution provisions

By Devika Patel

Knoxville, Tenn., June 29 - Nytex Energy Holdings, Inc. plans to restructure its series A convertible preferred stock and related warrants, according to an 8-K filed Friday with the Securities and Exchange Commission.

The company must receive approval from its shareholders and the holders of the warrants in order to make the changes.

The proposed amendments include eliminating the 9% dividend paid on the preferreds, effective June 15. As compensation for giving up their dividends, investors would be paid one common share for each $1.00 of unpaid dividends owed to them. As a result, the company would issue about 767,570 common shares.

Currently, if the company liquidates, the preferred holders are entitled to be paid $1.50 per preferred out of Nytex's available assets, plus dividends. As part of the restructuring, the base liquidation amount would be reduced to $1.00 per preferred from $1.50, which was the initial purchase price of the preferreds. In consideration for this concession, investors would receive common stock at a rate of 0.42735 common shares for each preferred held. As a result, the company would issue about 2,461,978 common shares.

The company also would be able to redeem the preferreds at $1.00 apiece and also would eliminate the anti-dilution provision for the preferreds, which prevents Nytex from issuing shares at prices lower than the conversion price, which is currently $1.00.

In addition, the related warrants would be amended to remove the anti-dilution protection, which prevents Nytex from issuing shares at prices lower than the strike price, which is currently $2.00.

Investors would also be paid a restructuring fee equal to 0.0075% of the original $1.00 purchase price of the preferreds.

The energy company is based in Dallas.

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