NGAS Enters into Exchange Agreements for 6% Convertible Notes

NGAS Resources has entered into privately negotiated exchange agreements with the holders of its 6% Convertible Notes due December 15, 2010 in the aggregate principal amount of $37 million (the "Existing Notes"). The holders have agreed to exchange the Existing Notes for $28.7 million principal amount of 6% amortizing convertible notes due May 1, 2012 (the "New Notes"), together with approximately $2.7 million in cash, 3.0 million common shares and five-year warrants to purchase 1.3 million common shares.

William S. Daugherty, CEO of NGAS Resources, commented, "We are very pleased to have reached these agreements with our note holders. In addition to reducing the face amount of our convertible debt and extending its maturity, the exchange creates the potential for gradually replacing the debt with equity at a premium to the current stock price." Mr. Daugherty added, "This is an important step, along with last year's gathering system monetization and equity raise, to further strengthen our balance sheet and create a more appropriate capital structure to support the company's future growth."

The general terms of the exchange include:

  • Amortization of the New Notes in equal monthly installments from June 1, 2010 through maturity, payable at the company's election in cash or common shares;
  • Conversion price of $2.18 on the New Notes; and
  • Exercise price of $2.37 on the warrants.

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