Camber Energy Inc (NYSE American:CEI) announced yesterday that the company has finalised a $25 million loan deal from an undisclosed investor.
The loan will be spent on three different priorities.
The first will be to redeem convertible preferred stocks. Second will be paying off debt that is due in March 2022.
The third and perhaps most important direction the funds will be used for is working capital.
This is not unusual when funds have been raised at private companies, but in the case of Camber it has additional significance.
The cash injection has the potential to change the narrative behind the company and its recent stock performance.
From a speculative play that can rise or fall in multiples, its now starting to look more and more like a company with a plan and some solid backing for it.
Camber investor rewards
The loan has a maturity date set for January 2027 and has an interest rate of 3.25%. But there’s also one unusual condition attached to it – interest on the loan isn’t due until the date of maturity.
This can be interpreted as a show of faith from the investor (or investors) in Camber’s ideas and roadmap.
The incentive for the investor seems to be the conversion rate. The loan itself can be converted into common shares at $1.50 each. This would be a 69% premium compared to yesterday’s closing price of $0.89.
The company also released an SEC filing on Monday that shareholders approved an increase in authorized shares by 750 million (reaching a 1 billion total).
It remains to be seen if Camber’s carbon capture intentions and investment in Viking Energy (OTCMKTS:VKIN) will pay off in the long-term, but for now investors seem to have reacted positively to the news and the CEI stock price is up 0.96% in pre-market trading.