GreenHunter Energy Eliminates All Outstanding Convertible Preferred Shares

GreenHunter Energy, Inc. (NYSE MKT: GRH and GRH.PRC), a diversified water resource, waste management and environmental services company specializing in the unconventional oil and natural gas shale resource plays, announced today that it has eliminated all outstanding GreenHunter Energy Series A and Series B Convertible Preferred Shares with the existing institutional investor that exclusively held these securities.

Pursuant to the terms of the Securities Exchange Agreement, $8.6 million of Series A 8% Preferred Stock will be exchanged for 345,000 shares of Series C Preferred Stock (non-convertible), and $9.8 million of Series B Preferred Stock will be converted at a price of $4.00 per share into 2,450,500 shares of Common Stock of the Company. Final closing of the Securities Exchange Agreement is expected as soon as necessary regulatory approvals have been received from the NYSE.

As a result of this exchange and conversion of securities, potential dilution to Common Stock shareholders has been significantly reduced. Additionally, by removing $18.5 million of liquidation preference that was previously senior to the Series C 10% Cumulative Preferred Stock (non-convertible), the Series C shares are now the only outstanding preferred securities of the Company. Both the Series C and Common Stock issued in this exchange transaction are subject to certain restrictions on future resale.

Commenting on this development, Jonathan D. Hoopes, President and COO, stated, “Management is very pleased with this exchange and conversion agreement. Electing to convert $9.8 million of Series B Preferred Stock into Common Stock at a 95% premium to the 30-day average share price of GRH sends a strong message that our largest institutional shareholder has high confidence in both our business plan and our anticipated growth prospects. This transaction completely removes the full-ratchet anti-dilution rights associated with any outstanding securities of the Company. We have significantly improved and simplified GreenHunter’s capital structure, which has enhanced our flexibility to finance the company’s future growth.”

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