Each one in plain English, with the numbers worked through for a shareholder.
4 Dec 2007debt financing● NeutralMajor
On November 29, 2007 Gastar's subsidiary Gastar USA closed a $100 million private offering of 12¾% senior secured notes due 2012 (issued at 99.50) and entered a new bank credit facility of up to $250 million with an initial borrowing base of $19.375 million (Amegy Bank, maturing Oct 15, 2009). It used the proceeds to fully repay the 2005 senior secured notes: $78.0 million in total ($73.0 million principal, $3.6 million prepayment penalty, $1.4 million interest), which resolves the amendment from earlier in November. The new notes carry a second lien behind the bank, and the press release says about $76.7 million of the $92.8 million net proceeds went to repaying existing debt.
On November 7, 2007 Gastar amended its 2005 senior secured notes due 2010 held by Field Point, SPF CDO, Cyrus and Wayzata funds. The interest margin rises to LIBOR plus 6.5% (from 6.0%; 11.73% at Oct 1, 2007), a 1.5% premium is added at maturity, and an amendment fee of about $821,000 is payable. In return the reserve-coverage covenants are replaced with a 1.5:1.0 proved-reserves PV(10) test, Gastar may keep the first $40.0 million of non-Texas property sale proceeds, and it may invest an extra $50.0 million in Australia.
Gastar closed the sale of 1,757,195 new shares at $2.00 each ($3,514,390) to Chesapeake Energy on May 23, 2007. Chesapeake used its right to buy shares to keep its percentage after the Navasota share issue in the East Texas sale; it now owns 16.4% of 207,098,570 basic shares. This follows Chesapeake's open-market purchase reported on May 25 (the filing itself describes it as a preemptive-rights purchase from the company).
What it means for a shareholder
1.8m new shares at $2.00 to raise about $3.5m. Shares on issue before the raise aren't in the record, so the dilution can't be worked out.
15 May 2007asset acquisition disposition▲ GoodMajor
On May 9, 2007, Gastar closed the sale of part of its undeveloped East Texas leasehold to Navasota Resources, L.P. for $92.2 million before costs, including Navasota buying 10 million newly issued Gastar shares at $2.00 ($20.0 million). About $88.2 million was funded at closing and about $4.0 million is due by July 9, 2007 if title work is completed. Navasota exercised rights of first refusal; the sold interests had no proved reserves or historical revenues. Gastar says it will use proceeds for East Texas deep Bossier drilling and Australian coal bed methane development, and Navasota holds about 4.9% of the shares.
Gastar told the American Stock Exchange on March 15, 2007 that it does not meet the rule requiring an audit committee of at least three independent members, because one independent member did not stand for reelection at the 2006 annual meeting, leaving two. The company says it had no warning notice from the exchange, is searching for a new director and expects to fill the seat before its annual meeting expected in June 2007.
15 Nov 2006capital raising announcement● NeutralMajor
Gastar priced a private placement of 25,000,000 common shares at $2.00 each, about $50.0 million gross and an estimated $47.9 million net, to fund drilling in East Texas, Wyoming and Southeastern Australia and for general corporate purposes. Chesapeake, which first invested in November 2005, took part using its preferential right and is expected to own about 16.6% afterwards. Existing shareholders are diluted; the issue price of $2.00 compares with the CDN$4.50 per-share value used in the March 2006 GeoStar issuance (different currency, so not directly comparable).
What it means for a shareholder
25.0m new shares at $2.00 to raise about $50.0m. Shares on issue before the raise aren't in the record, so the dilution can't be worked out.
On March 31, 2006, Gastar issued 548,128 common shares (0.3% of its shares, valued at $2.1 million at CDN$4.50 per share) to GeoStar to settle post-closing adjustments on the June 2005 purchase of Hilltop (East Texas) and Powder River Basin properties. The filing also includes audited revenue and operating-expense statements for those acquired properties; for 2004 they show gas sales of $3.4 million (in thousands: $3,366) against direct costs of $1.6 million. This continues the GeoStar acquisition thread; GeoStar was already a 10%+ owner.
Gastar gave a drilling update on PEL 238 in New South Wales, Australia, where it holds a 35% working interest (partners Eastern Star Gas 32.5% as operator, Hillgrove Resources 32.5%). Drilling of the first of nine new coal seam gas wells began March 7, 2006, with the program expected to run to mid-year and the new wells on production test by mid-2006. Reserves certification is still pending, and gas sales depend on partner agreement on pricing and gathering spending.
Gastar appointed BDO Seidman, LLP as its auditor for the year ending December 31, 2005, replacing BDO Dunwoody LLP, which resigned the same day. The filing says the earlier audit reports had no adverse opinion and there were no disagreements. The company's press release describes BDO Seidman as the U.S. affiliate of BDO Dunwoody and the move as following its becoming a U.S. reporting company.
