Magnum Hunter Resources Corp (OTCMKTS:MHRC) as a massive decliner during Monday’s trading session. The stock declined by close to 22% on the back of above average volumes, which is considered to be a bearish signal. The stock formed a bearish engulfing pattern during the trading session indicative of the strong selling momentum. The momentum oscillators have given a fresh signal and continue to trend in bearish territory pointing towards the fact that bears are in total control. The stock trades below daily moving averages, which is a bearish signal. Traders believe the stock could head to levels of $0.018 in the near term.
Magnum Hunter Resources Corp (OTCMKTS:MHRC) has decided to recruit a couple of advisors that can help it form strategies and implement them in an effective way. According to reports, it has hired PJT Partners LP (NYSE:PJT) as its financial advisor. Additionally, it has also hired Kirkland & Ellis LLP as its special legal advisor.
Both the companies will help Magnum Hunter board and senior management team to take strategic alternatives, which can further enhance its liquidity and strengthen the current capital structure.
Insights of Matter
PJT Partners LP is a conglomerate between PJT Capital and Blackstone’s advisory businesses and was founded by Paul J. Taubman a few years back. Magnum Hunter sold certain assets and took many other decisions to keep its debt under control.
The addition of these two advisors will further help it maintain a strong capital structure in the future. There’re various strategic decisions that Magnum can take under the guidance of these two market leaders and make the best use of the prevailing market opportunities.
Not long ago, Magnum BOD suspended the monthly dividend payable on the 10.25% Series C Cumulative Perpetual Preferred Stock, 8.0% Series E Cumulative Convertible Preferred Stock and 8.0% Series D Cumulative Preferred Stock. With this announcement, the monthly cash dividend that would be paid to all the shareholders got suspended.
The Series E Preferred Shares are represented by depository shares i.e. each depository stock carries 1/1,000th interest of a stock belonging to Series E Preferred Share. As per the terms announced by the company for its Series C, Series D and Series E preferred shares, the unpaid dividend, including that of October, will accumulate in the future.
The procedure is complicated and may create confusion among shareholders if not paid attention at the right moment. To avoid any such situation, the management had to come up with the idea of appointing two external advisors that could guide the company in an effective manner. Magnum believes that this decision will pay off in the long run.