Business Context and Reporting Period
This Form 8-K Current Report, dated February 2, 2017, details Ramaco Resources, Inc.'s entry into a Master Reorganization Agreement and an Underwriting Agreement in connection with its Initial Public Offering (IPO). The filing covers events occurring on February 1 and February 2, 2017, with the offering expected to close on February 8, 2017.
Key Financial Metrics and Transaction Details
- Offering Size: 6,000,000 shares of Common Stock (3,800,000 by the Company; 2,200,000 by Selling Stockholders).
- Offering Price: $13.50 per share to the public ($12.555 net of underwriting discounts).
- Expected Proceeds: Approximately $43.7 million to the Company (net of discounts and estimated expenses).
- Over-Allotment Option: Underwriters granted a 30-day option to purchase up to 900,000 additional shares.
- Use of Proceeds: Pay in full a four-year promissory note held by Ramaco, LLC; develop/expanding Knox Creek and Elk Creek properties; and fund future acquisitions.
- Equity Reserve: 6,937,425 shares reserved for the Long-Term Incentive Plan (LTIP).
Note: This filing does not provide historical revenue, profit, cash flow, margin, or debt metrics for the Company.
Material Changes and Corporate Actions
- Reorganization: Ramaco Development, LLC will become a wholly-owned subsidiary of Ramaco Resources, Inc. following a merger with Ramaco Merger Sub, LLC.
- Equity Conversion: Holders of Series A Convertible Preferred Units in Ramaco Development will convert units into common units, which will then be exchanged for Company Common Stock.
- Debt Repayment: Net proceeds will be used to extinguish a specific promissory note held by an entity controlled by existing owners.
Outlook, Risks, and Management Commentary
- Strategic Focus: Management intends to utilize IPO proceeds to expand operations at specific coal properties (Knox Creek and Elk Creek) and pursue acquisitions.
- Underwriter Relationships: The underwriters (Credit Suisse, Jefferies, BMO Capital Markets) and their affiliates engage in various financial activities, including trading and research, which may involve the Company's securities.
- Closing Conditions: The transaction is subject to customary closing conditions.
Investor Verification Checklist
- Verify the final closing date and actual proceeds received versus the estimated $43.7 million.
- Confirm the full repayment of the promissory note held by Ramaco, LLC.
- Review the full text of the Master Reorganization Agreement (Exhibit 2.1) for specific terms regarding the conversion of preferred units.
- Monitor the exercise of the 900,000 share over-allotment option by underwriters.
- Examine the Long-Term Incentive Plan (LTIP) details for potential dilution impacts.