PostRock Announces $60 Million Investment by White Deer Energy
02 Settembre 2010 - 6:30PM
PostRock Energy Corporation (Nasdaq:PSTR)
("PostRock or the "Company") today announced that White Deer Energy
L.P. ("White Deer") has agreed to invest $60 million of equity in
the Company. White Deer is a recently formed energy private equity
firm. In connection with the investment, PostRock's debt will
be reduced and its credit agreements restructured.
White Deer will purchase $60 million of the Company's 12%
cumulative redeemable preferred stock. The preferred stock has
a 7 ½ year term and is callable after one year at par plus
10%. The Company has the option to pay the preferred dividends
in cash or in kind until July 2013. In addition, White Deer
will receive 7 ½ year warrants to purchase $60 million of common
stock. The exercise price of the warrants was set at $3.15 per
share, which represents an approximate 5% premium to PostRock's
closing stock price on September 1, 2010.
PostRock will use the proceeds to reduce debt and fund future
growth. The investment and the debt restructuring are expected to
close simultaneously in approximately three weeks, subject to the
satisfaction or waiver of various closing conditions. As part
of the transaction, White Deer has reserved an additional $30
million to invest in PostRock on mutually acceptable terms to fund
future growth.
White Deer will be entitled to vote with the common stock on all
matters based on its pro forma interest in the Company giving
effect to the exercise of its warrants. However, it has agreed
to limit its vote to 45% for a period of time. White Deer will
designate Thomas J. Edelman, James D. Bennett and Nathan M. Avery
as directors, expanding the Board to twelve. NASDAQ granted
the Company a financial viability exception from the requirement to
obtain shareholder approval of the transaction. PostRock's Audit
Committee approved the exemption request and the Board obtained a
fairness opinion on the transaction.
After the transaction, the Company's debt will be comprised of
approximately $200 million drawn against $225 million of current
availability under a revolving credit facility, a $15 million
amortizing term loan secured by the KPC Pipeline and a $43.5
million loan secured solely by certain Appalachian assets and
non-recourse to PostRock. Robert W. Baird & Co. has
been retained to sell those Appalachian assets. The
revolver will mature June 30, 2013 and bear interest at LIBOR +
3.5% to 4.0%, depending on utilization. The pipeline loan will
amortize over 18 months and bear interest at LIBOR + 3.75%. The
non-recourse loan will mature June 30, 2013 and bear interest at
LIBOR + 4.0%.
Commenting, David C. Lawler, the Company's President and CEO,
said, "We are delighted with White Deer's pending investment and
our debt restructuring. The transaction represents the
conclusion of a two-year effort to restructure and recapitalize the
Company. During this challenging period, we reduced operating
costs, kept our capital projects on budget and maintained a strong
production base. We have now partnered with a world class team
of investors whose capital enables us to materially improve our
financial position. We want to thank our banks for their
support throughout this effort. White Deer's principals have a
long and impressive track record in guiding the profitable growth
of independent oil and gas companies. With their support, we
can now begin to aggressively pursue long-term growth opportunities
and the creation of meaningful shareholder
value. Specifically, we will seek to become the most efficient
producer in our focus area and then start to pursue
acquisitions."
Thomas J. Edelman, Managing Partner of White Deer, said, "We are
very pleased with this investment and to be associated with
PostRock and its management team. David Lawler has done an
exceptional job in preserving shareholder value and providing
leadership under extraordinarily difficult circumstances. We
look forward to working closely with him, his officers and the
Board. Given the Company's strategic position in the Cherokee
Basin and its ability to focus on becoming a low cost and
profitable producer, we have every confidence that our investment,
and that of all PostRock shareholders, will have the opportunity to
provide exceptional returns."
PostRock Energy Corporation is engaged in the acquisition,
exploration, development, production and transportation of oil and
natural gas primarily in the Cherokee Basin of Kansas and
Oklahoma. The Company owns and operates over 2,800 wells and
nearly 2,200 miles of gas gathering lines in the Basin. In
addition, it owns 1,100 miles of interstate gas pipelines in
Oklahoma, Kansas and Missouri.
The PostRock Energy Corp. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=7221
White Deer Energy is an energy private equity fund focused on
the exploration & production, oilfield service and equipment
and midstream sectors of the oil and gas industry. With $821
million of capital commitments, the Fund is a long-term investor
targeting equity investments of $50 to $120 million in 8 to 10
portfolio companies. With offices in Houston and New York,
White Deer has a combination of industry expertise and capital that
makes it an exceptionally attractive partner for rapidly growing
North American energy companies.
Opinions, forecasts, projections or statements, other than
statements of historical fact, are forward-looking statements that
involve risks and uncertainties. Forward-looking statements in this
announcement are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Although PostRock
believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such
expectations will prove to be correct. Actual results may differ
materially due to a variety of factors, some of which may not be
foreseen by PostRock. These risks and other risks are detailed in
PostRock's filings with the Securities and Exchange Commission,
including risk factors listed in PostRock's Annual Report on Form
10-K and other filings with the SEC. You can find PostRock's
filings with the SEC at www.pstr.com or www.sec.gov. By making
these forward-looking statements, PostRock undertakes no obligation
to update these statements for revisions or changes after the date
of this release.
CONTACT: PostRock Energy Corporation
Jack Collins, Chief Financial Officer
(405) 702-7460
North Whipple, Manager, Corporate Development
& Investor Relations
(405) 702-7423
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