HOUSTON - Battalion Oil Corp (NYSE American:BATL) has terminated its merger agreement with Fury Resources, Inc., the company announced today. The agreement, originally entered into on December 14, 2023, was concluded without completion of the proposed merger.
The announcement comes as Battalion's stock has declined over 74% year-to-date, with its market capitalization now standing at approximately $40 million. According to InvestingPro data, the company faces significant challenges with cash burn and short-term obligations exceeding liquid assets.
The decision to terminate the agreement was approved by Battalion's board of directors on Sunday, following a recommendation from a special committee. The termination was effected by delivering a notice to Fury Resources and Abraham Mirman, the guarantor of Fury Resources' obligations under the merger agreement.
Despite current challenges, InvestingPro analysis reveals that analysts predict the company could return to profitability this year, with an EPS forecast of $0.23 for 2024.
According to Battalion Oil, the termination was pursuant to its right under the agreement due to the transaction not closing by the agreed deadline of 11:59 p.m. Central Time on December 19, 2024. As a result, the company is entitled to retain a previously released amount of $9,999,999.99 as partial satisfaction of Fury Resources' obligation to pay a termination fee.
Moreover, Fury Resources is required to pay Battalion Oil the remaining fee amounting to $15,000,000 within two business days of receiving the termination notice.
Abraham Mirman, under a Limited Guarantee, had committed to ensuring the payment of Fury Resources' obligations up to a maximum of $2,000,000, which Battalion Oil is now demanding within two business days of Mirman receiving the termination notice.
The termination of the merger signals an end to the anticipated consolidation between Battalion Oil, a Houston-based crude petroleum and natural gas company, and Fury Resources. The detailed terms of the merger agreement and its amendments were disclosed in previous filings with the SEC and are incorporated by reference.
Battalion Oil has reserved all of its rights under the merger agreement and the Limited Guarantee. This development follows a series of amendments to the original merger agreement and waiver grants that extended the closing timeline for the merger.
This report is based on information from a press release statement and SEC filings. The company's stock currently trades near its 52-week low of $2.37, with an EBITDA of $103 million for the last twelve months. For deeper insights into Battalion Oil's financial health and exclusive analysis, InvestingPro subscribers have access to over 10 additional key insights and detailed financial metrics.
In other recent news, Battalion Oil Corporation has been navigating significant developments. The company has extended the deadline for completing its merger with Fury Resources, Inc., due to delays in securing alternative financing. In response to these delays, Battalion Oil has waived its right to terminate the merger agreement, providing Fury Resources with additional time to obtain the required financing.
Simultaneously, Battalion Oil has adopted a Merger Incentive Plan, granting Equity Grant Units to its employees upon the successful closing of a change of control transaction. This plan, established in September 2024, is set to expire on December 31, 2025.
Furthermore, Battalion Oil has amended its credit facility to allow for a Current Ratio of "0.90 to 1.00" for the fiscal quarter ending September 30, 2024. This indicates a potential shift in the company's capital structure.
These are all recent developments for Battalion Oil Corporation. The company's board of directors and the special committee are currently assessing the company's options in light of the financing efforts and potential refinancing of the company's existing credit facility. However, it's important to note that Battalion Oil reserves all rights and remedies under the agreement and applicable law.
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