HOUSTON, March 3, 2017 /PRNewswire/ -- Gastar
Exploration Inc. ("Gastar" or the "Company") (NYSE MKT: GST)
announced today that it has closed its previously announced capital
and refinancing transactions with funds managed by affiliates of
Ares Management, L.P. (NYSE: ARES) ("Ares"). The transactions with
Ares include $425 million in new financing to the Company in
the form of a $250 million secured
term loan, the issuance of $125
million secured convertible notes and a $50 million purchase of Gastar common stock
(collectively, the "Ares Investment"). Proceeds from the Ares
Investment were used to fully repay Gastar's existing $69.2 million revolving credit facility and to
fund the redemption price of its $325
million 8.625% senior secured notes due May 2018, which have been irrevocably called for
redemption on March 24,
2017.
The Ares Investment key terms are as follows:
- $250 million first lien secured
term loan, 8.5% interest, maturing March
2022, which replaced the Company's prior bank revolving
credit facility;
- $125 million second lien secured
convertible notes, 6.0% interest, convertible, upon receipt of
stockholder approval, at an initial conversion price of
$2.21 per share at the option of the
holder, maturing March 2022; and
- 29,408,305 common shares issued at $1.7002 per share, the 30-day volume weighted
average trading price as of February 15,
2017, representing approximately 15.8% of the Company's
issued and outstanding common stock at March
1, 2017.
If the conversion rights of the convertible notes are not
approved by Gastar's stockholders within four months, the
convertible notes will not become convertible and will begin
bearing interest at 15.0% as a straight high-yield debt
obligation. In connection with the closing of the Ares
Investment, Gastar and its priority collateral agent also entered
into an intercreditor arrangement with certain hedging
counterparties to provide shared collateral coverage for the
Company's existing and future commodities hedging positions.
Ares was granted the right to nominate up to two directors to an
expanded board of eight directors subject to certain minimum stock
ownership requirements. The Company expects that Nate Walton and Ronnie
Scott will be Ares' designated nominees and added to its
Board of Directors in the next few weeks. The Company also granted
Ares certain preemptive rights to purchase its proportionate share
of additional equity securities in any future offerings by the
Company.
About Gastar Exploration
Gastar Exploration Inc. is a pure play Mid-Continent independent
energy company engaged in the exploration, development and
production of oil, condensate, natural gas and natural gas liquids.
Gastar's principal business activities include the identification,
acquisition, and subsequent exploration and development of oil and
natural gas properties with an emphasis on unconventional reserves,
such as shale resource plays. Gastar holds a concentrated acreage
position in what is believed to be the core of the STACK Play, an
area of central Oklahoma which is
home to multiple oil and natural gas-rich reservoirs including the
Meramec, Oswego, Osage,
Woodford and Hunton formations.
For more information, visit Gastar's website at www.gastar.com.
Forward Looking Statements
This news release also includes "forward looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward looking statements give our current
expectations, opinion, belief or forecasts of future events and
performance. A statement identified by the use of forward
looking words including "may," "expects," "projects,"
"anticipates," "plans," "believes," "estimate," "will," "should,"
and certain of the other foregoing statements may be deemed
forward-looking statements. Although Gastar believes that the
expectations reflected in such forward-looking statements are
reasonable, these statements involve risks and uncertainties that
may cause actual future activities and results to be materially
different from those suggested or described in this news
release. These include risks inherent in oil and natural gas
drilling and production activities, including risks with respect to
continued low or further declining prices for oil and natural gas
that could result in further downward revisions to the value of
proved reserves or otherwise cause Gastar to further delay or
suspend planned drilling and completion operations or reduce
production levels, which would adversely impact cash flow; risks
relating to the availability of capital to fund drilling operations
that can be adversely affected by adverse drilling results,
production declines and continued low or further declining prices
for oil and natural gas; risks regarding Gastar's ability to meet
financial covenants under its indenture or credit agreement or the
ability to obtain amendments or waivers to effect such compliance;
risks of fire, explosion, blowouts, pipe failure, casing collapse,
unusual or unexpected formation pressures, earthquakes or other
environmental hazards, and other operating and production risks,
which may temporarily or permanently reduce production or cause
initial production or test results to not be indicative of future
well performance or delay the timing of sales or completion of
drilling operations; delays in receipt of drilling permits; risks
relating to unexpected adverse developments in the status of
properties; borrowing base redeterminations by Gastar's banks;
risks relating to the absence or delay in receipt of government
approvals or third-party consents; risks relating to Gastar's
ability to realize the anticipated benefits from acquired assets;
risks related to the completion of any refinancing; and other risks
described in Gastar's Annual Report on Form 10-K, Quarterly Reports
on Form 10-Q and other filings with the SEC, available at the SEC's
website at www.sec.gov. By issuing forward looking statements
based on current expectations, opinions, views or beliefs, Gastar
has no obligation and, except as required by law, is not
undertaking any obligation, to update or revise these statements or
provide any other information relating to such statements.
Contacts:
Gastar Exploration Inc.
J. Russell Porter, Chief Executive
Officer
713-739-1800 / rporter@gastar.com
Investor Relations Counsel:
Lisa Elliott, Dennard▪Lascar
Associates:
713-529-6600 / lelliott@DennardLascar.com
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SOURCE Gastar Exploration Inc.