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Series A Convertible Preferred Stock | 3 Months Ended
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Mar. 31, 2026
Equity [Abstract] |
Series A Convertible Preferred Stock | Series A Convertible Preferred Stock On February 18, 2026, Infinity Natural Resources, Inc. (the "Company" or "INR") entered into a Securities Purchase Agreement with affiliates of Quantum Capital Group ("Quantum") and Carnelian Energy Capital Management ("Carnelian") pursuant to which the Company issued and sold an aggregate of 350,000 shares of Series A Convertible Preferred Stock (the "Series A Preferred Stock"), par value $0.01 per share, at an original purchase price of $1,000.00 per share, for total gross proceeds of $350.0 million on February 23, 2026 (the "Preferred Stock Transaction"). The Series A Preferred Stock carries an initial liquidation preference of $1,000 per share and ranks senior to the Company's Class A common stock with respect to dividend rights and rights upon liquidation. Holders of the Series A Preferred Stock are entitled to receive cumulative quarterly dividends at a rate of 8.0% per annum through the fifth anniversary of the initial issuance date, increasing to 12.0% per annum thereafter. Dividends accrue quarterly and may be paid in cash when declared or added to the liquidation preference if unpaid through the second anniversary of the initial issuance date. The dividend rate is subject to an automatic increase of 2.0% per annum if the Company is unable to pay dividends in cash due to restrictions under its Credit Agreement after the second anniversary of the initial issuance date. Each holder of Series A Preferred Stock has the right to participate in any dividends declared on the Class A common stock on an as-converted basis. The Series A Preferred Stock is convertible into shares of Class A common stock at the option of the holders at an initial conversion price of $21.39 per share, subject to customary anti-dilution adjustments for stock splits, stock dividends, tender offers, spin-offs, and rights distributions. Beginning three years after issuance, the Company has the right to require mandatory conversion of all or any portion of the Series A Preferred Stock into shares of Class A common stock, provided that the closing price of the Company's Class A common stock exceeds 140% of the conversion price for 20 of 30 consecutive trading days and certain liquidity conditions are met. The Company has the option to redeem the Series A Preferred Stock beginning on the fifth anniversary of the initial issuance date at a redemption price that will provide the holders with a 15.0% per annum internal rate of return ("IRR") based on the initial liquidation preference through the redemption date. Holders of the Series A Preferred Stock have the right to require the Company to repurchase their shares upon the occurrence of a Change of Control (as defined in the Certificate of Designation of the Series A Preferred Stock). A Change of Control is defined to include, among other events, the acquisition by a third party of more than 50% of the Company's voting stock, a sale of all or substantially all of the Company's assets, or a delisting of the Class A common stock from a national securities exchange. Upon a Change of Control, each holder may elect to either (i) convert at the then-current conversion price or (ii) require the Company to repurchase such shares at the Change of Control Repurchase Price (as defined in the Certificate of Designation), which is the greater of (a) an amount (together with all prior distributions) necessary to achieve a 13.0% per annum IRR on the initial liquidation preference or (b) a 1.30x return on the initial liquidation preference. The Series A Preferred Stock is classified as temporary (mezzanine) equity on the consolidated balance sheets because the instrument is redeemable for cash upon the occurrence of a Change of Control, an event that is not solely within the Company's control. The Company evaluated the Series A Preferred Stock for embedded derivative features, including certain dividend rate step-up provisions related to credit agreement restrictions and share issuance limitations. Based on this evaluation, the Company concluded that these features do not result in material derivative instruments requiring separate accounting as of the issuance date or as of March 31, 2026. The Series A Preferred Stock was initially recorded at approximately $334.0 million, representing $350.0 million in aggregate gross proceeds less approximately $16.0 million of directly attributable issuance costs. Issuance costs consisted of registration fees, filing fees, listing fees, legal and accounting fees, and other directly attributable costs, and were recorded as a direct reduction of the carrying amount of the Series A Preferred Stock within mezzanine equity. The Series A Preferred Stock had a carrying value of $337.1 million, including accrued dividends of $3.1 million, as of March 31, 2026. Stockholders' Equity and Noncontrolling Interest As of March 31, 2026, the Company’s equity structure consists of Class A common stock, Class B common stock and Series A Preferred Stock. Each share of Class A common stock entitles its holder to one vote per share and the right to receive dividends and other distributions when, as, and if declared by our board of directors. Class A stockholders are also entitled to share in any assets remaining upon liquidation, after satisfaction of all debts and liabilities. Holders of Class A common stock do not have preemptive or conversion rights. The Class A common stock is economically entitled to the results of operations of the Company, through its ownership interest in INR Holdings. Legacy Owners own an approximate 70.5% interest in INR Holdings and we own an approximate 29.5% interest in INR Holdings. Each share of Class B common stock entitles its holder to one vote per share on matters submitted to the Company’s stockholders but does not provide the holder with economic rights. Class B common stockholders do not participate in dividends or other distributions and have no rights to Company assets upon liquidation. Each share of Class B common stock is paired with one INR Unit and is cancellable upon exchange or redemption of the corresponding INR Unit for one share of Class A common stock or, at our option, the receipt of an equivalent amount of cash. INR Units represent economic interests in INR Holdings. Holders of Series A Preferred Stock generally are entitled to vote with the holders of the shares of Class A common stock on all matters submitted for a vote of holders of shares of Class A common stock (voting together with the holders of shares of Class A common stock as one class) on an as-converted basis, subject to certain limitations. Distributions by INR Holdings, if any, are made to the holders of INR Units on a pro rata basis, subject to applicable law and the INR Holdings LLC Agreement. Distributions, if any, are expected to be made to fund the Company’s payment of taxes, payments under the TRA, any dividends declared on Class A common stock, and other corporate purposes. As of March 31, 2026, the Company consolidates the financial results of INR Holdings in its unaudited condensed consolidated financial statements. The portion of net income and equity attributable to the INR Units held by the Legacy Owners is reported as a redeemable non-controlling interest within mezzanine equity in the unaudited condensed consolidated financial statements.

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