Each one in plain English, with the numbers worked through for a shareholder.
31 Aug 2016debt financing▼ BadMajor
Amendment No. 2 restated the whole prospectus three days before the 2 September 2016 deadline, and it covers all three legs: the 10% secured notes swap into new senior secured toggle notes plus warrants, the 7.75% 2019 notes into convertible secured payment-in-kind notes, and the 9.5% 2020 notes likewise. The cover puts the choice in capital letters -- a holder who declines and then sees Comstock file for bankruptcy may find the old notes worthless, because they will rank behind every new note issued to those who accepted.
Comstock swapped in a new trustee (American Stock Transfer, replacing BNY Mellon) across its note indentures ahead of closing its debt-for-equity exchange.
Amendment No. 1 states its own purpose: to update the fee table, the exhibit index and the exhibits, without touching the prospectus, which is not included. What the fee table shows is the offer getting bigger -- $16.9 million more of senior secured toggle notes, taking them to $791.9 million, and 875,500 extra warrants struck at $4.05 on top of the original 1,050,000 at $3.60, alongside $352.1 million of 7.75% convertible secured payment-in-kind notes due 2019 and $249.5 million of 9.5% convertible secured notes due 2020. The prices are stated after the one-for-five reverse split that took effect on 29 July 2016.
Comstock updated the terms of its proposed debt-for-equity exchange (noteholders now converting into about 72.3% of pro forma equity, minimum participation lowered to 90%, collateral enhanced) as it worked to finalize the restructuring.
Facing insufficient 2017 cash flow to cover debt payments after idling its drilling rigs, Comstock proposed a debt-for-equity exchange offer: unsecured noteholders would convert into new second-lien convertible notes worth up to about 73.5% of the pro forma stock, funding a restart of drilling.
Comstock exchanged another $3.0 million of its 9% 2020 notes for 1.5 million shares, continuing the same debt-for-equity restructuring pattern through mid-2016.
Alongside its Q1 2016 earnings, Comstock disclosed three more note-for-equity exchanges completed in April and early May -- $9.0 million of 2019 notes and $1.0 million of 9% 2020 notes swapped for a combined 1.9 million-plus shares -- continuing the restructuring.
The NYSE warned Comstock it had fallen below continued-listing standards (stock price, market cap and stockholders' equity all too low) as the 2015-16 gas price crash hit the stock -- the company must submit a compliance plan.
Comstock began exchanging distressed debt for equity, swapping $40.0 million of 7% notes due 2019 for 4.6 million shares plus cash for accrued interest with holder Oasis Management -- the opening move of its 2016 debt restructuring during the gas-price downturn.
Comstock closed the $700 million sale of 10% senior secured notes due 2020, completing the refinancing announced days earlier and replacing its old bank facility.
Comstock lined up a major refinancing: a $700 million private offering of 10% senior secured notes due 2020 plus a new $50 million revolving credit facility, with proceeds earmarked to retire its existing bank facility.
Comstock declared its regular $0.125/share dividend and announced the election of two new directors, Dr. Elizabeth Davis and Jim Turner, at its annual meeting.
Comstock priced a $100 million add-on to its existing 7.75% Senior Notes due 2019, using the roughly $103 million in proceeds to pay down its bank credit line.
