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Equity Transactions
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9 Months Ended |
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Sep. 30, 2013
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| Equity [Abstract] | |
| Equity Transactions |
Equity Transaction
On May 30, 2013, the Company issued $75,000 of 10.0% Series A Cumulative Preferred Stock (the “Preferred Stock”) and received $70,000 net proceeds after deducting the underwriting commissions and offering expenses. The sale consisted of 1.6 million shares of Preferred Stock, par value $0.01 per share, public offering price of $47.50 per share and liquidation preference of $50.00 per share in an underwritten public offering. The Preferred Stock ranks senior to the Company’s common stock with respect to the payment of dividends and distribution of assets upon liquidation or dissolution. The Preferred Stock has no stated maturity and is not subject to mandatory redemption or any sinking fund. The Preferred Stock will remain outstanding indefinitely unless repurchased by the Company or converted into Callon common stock in connection with certain changes in control as defined in the Preferred Stock prospectus.
Holders of the Preferred Stock are entitled to receive, when, as and if declared by our Board of Directors (the “Board”), out of funds legally available for the payment of dividends, cumulative cash dividends at a rate of 10.0% per annum of the $50.00 liquidation preference per share (equivalent to $5.00 per annum per share). Dividends are payable quarterly in arrears on the last day of each March, June, September and December when, as and if declared by our Board. The first dividend date for the Preferred Stock was June 30, 2013, and these dividends were paid on June 28, 2013 (as June 30 fell on a weekend) in the amount of $0.43 per share or $680 for the stub period beginning with the issuance on May 30, 2013 through the dividend date on June 30, 2013. On September 3, 2013, the Board of Directors declared a dividend of $1.25 per share, or a total of $1,974, on the Company’s Preferred Stock to stockholders of record at the close of business on September 13, 2013, and the dividends were paid on September 30, 2013. To date in 2013, the Company has recognized dividend expense of $2,654.
Beginning on May 30, 2018, the Company may, solely at its option, redeem the Preferred Stock in whole at any time, or in part from time to time, for cash at a redemption price of $50.00 per share, plus accrued and unpaid dividends (whether or not declared) to the redemption date. The Company may redeem the Preferred Stock following certain changes of control as defined in the Preferred Stock prospectus, in whole or in part, within 120 days after the date on which the change of control has occurred, for cash at $50.00 per share, plus accrued and unpaid dividends (whether or not declared) to the redemption date. If the Company elects not to exercise this option, the holders of the Preferred Stock have the option to convert each share of Preferred Stock into a predefined number of Company common shares, subject to certain adjustments. As defined in a provision of the Preferred Stock prospectus, the common shares reserved for issuance vary based on the number of authorized common shares. Based on the Company’s 60 million currently authorized shares, 16.8 million shares are reserved for a potential conversion.
The number of reserved common shares increases to a maximum of 42.2 million at such time as the Company’s authorized common shares increase. Except as required by law, holders of the Preferred Stock will have no voting rights unless dividends fall into arrears for six or more quarterly periods (whether or not consecutive). In that event and until such dividends in arrears are paid in full, the holders will be entitled to elect two directors to the Board, which will increase in size by that same number of directors.
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