Vivakor (NASDAQ: VIVK) announced on Monday that it has signed a term sheet with a counterparty to provide up to $23 million in capital by issuing a new series of convertible preferred stock.
The contemplated transaction can accelerate the growth of Vivakor's crude oil marketing and remediation businesses while strengthening integration across its trucking and transportation operations in the Permian and Eagle Ford Basins.
Under the proposed terms, Vivakor would issue $25 million in Series B Convertible Preferred Stock.
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The securities would be convertible into common stock one year after the execution of definitive agreements, subject to a maximum conversion price of $0.75 per share.
Vivakor has agreed to an exclusivity period with the investor through December 31, 2025, with a target year-end closing date.
Vivakor Chairman and CEO James Ballengee said the proposed transaction directly supports two of its fastest-growing segments, crude oil marketing and remediation, while driving additional volumes across its trucking fleet.
He noted that aligning new customer commitments with existing infrastructure created synergies across all of its operating divisions, including its network of facilities that provide crude oil injection and terminaling services.
How Will Capital Be Used?
Under the transaction, Vivakor's marketing segment, Vivakor Supply & Trading, would obtain immediate access to $15 million in liquidity to establish a credit facility for its crude oil marketing and trading activities, while also receiving $3 million in unrestricted working capital to support near-term operational needs.
The company's remediation segment would benefit from the contribution of $5 million in assets and facilities, including land, equipment, and crude oil inventory.
In addition, the counterparty has agreed to exclusively utilize Vivakor's trucking fleet for three years in the Permian and Eagle Ford Basins, further strengthening utilization and throughput across the company's transportation network.
The added trucking volumes and expanded marketing activities will likely drive incremental demand across Vivakor's network of crude oil injection and terminaling facilities, supporting integration across all four of the company's operating segments.
Price Action: VIVK stock closed lower by 5.42% at $0.3490 on Friday.
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