Gastar USA has commenced a consent solicitation of holders of its $100 million 12¾% Senior Secured Notes due 2012 to obtain majority noteholders approval to eliminate or modify certain covenants in the related indenture for the primary purpose of permitting Gastar USA to borrow $25 million under a proposed first lien term loan facility. The new term loan facility will be in addition to Gastar USA's current bank loan credit facility. The proposed amendments and modifications to the indenture will also enable the Company to enter into previously negotiated related collateral documents, including, among others, an amended and restated intercreditor agreement and amended and restated first lien mortgages.
The amendments to the indenture governing the Senior Secured Notes will be made on the terms and subject to the conditions set forth in a consent solicitation statement that is being mailed to all noteholders of record on February 10, 2009 and beneficial owners of the Senior Secured Notes who have been identified through The Depositary Trust Corporation system.
Holders of Notes representing a majority in aggregate principal amount of the currently outstanding Notes have indicated that they intend to consent to the proposed amendments and modifications to the indenture. Immediately following the Company’s receipt of the consents, Gastar and Gastar USA expect to enter into the previously negotiated transaction documents, and receive net proceeds from the $25 million term loan. The Company intends to use the net proceeds from such incurrence under the Term Loan primarily to fund current and future capital commitments and well operating costs. While the Company believes that the consents will be obtained and the term loan transaction will close within two weeks, there is no assurance that the term loan transaction will close as anticipated.
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