Each one in plain English, with the numbers worked through for a shareholder.
2 June 2017capital raising announcement● NeutralMajor
On May 26, 2017 Lonestar agreed to buy two sets of Texas oil and gas properties: Battlecat's (Dewitt, Gonzales, Karnes Counties) for about $60M ($55M cash plus about 1.2M Class A shares) and Sanchez subsidiary SN Marquis's (Fayette, Gonzales, Lavaca Counties) for about $57M ($50M cash plus 1.5M Class A shares). To help fund them it agreed to sell Chambers Energy Capital III about $78M of new convertible preferred stock that ranks ahead of common stock, pays 9% dividends and gives Chambers a board seat. Shareholders face dilution from the new shares and the preferred, which carries conversion rights.
Lonestar closed a public offering on December 22, 2016 of 13,800,000 shares (12,000,000 plus the underwriters' full option of 1,800,000) at $5.75, for estimated net proceeds of about $74.5 million. The money is to reduce its revolving credit borrowings, redeem some second lien notes and repay Seaport's gap financing, with any rest for general purposes. This is the public equity offering contemplated in the Leucadia commitment and the amended Seaport deal, and it dilutes existing shareholders.
Lonestar said its cash flow statement for the nine months to September 30, 2016 should no longer be relied on, because the $29.4 million gain on disposal of bonds was misclassified. Operating cash flow was restated from $46,986 thousand to $17,623 thousand, with the offset in financing cash flow. The company reported a material weakness in its financial close process and filed an amended 10-Q.
1 Nov 2016capital raising announcement● NeutralMajor
Lonestar reworked its Seaport Global note-repurchase deal: Seaport's gap financing is now repaid in cash (105% before December 31, 2016, 111.1% from January 1, 2017) when a public stock offering happens, with shares issued (capped as before) only if the offering does not occur. It also gave majority holder EF Realisation the right to nominate up to two directors (while it owns 15% or more; one if 10% to 15%) and resale registration rights.
Lonestar agreed with Seaport Global to have it buy back 8.75% 2019 notes on the open market, with Lonestar paying in new common stock (up to the lesser of 460,000 shares or the amount that keeps majority holder EF Realisation above 50%) once stockholders approve. The press release says long-term debt was $284.4 million at September 30, 2016, down $35.0 million from June 30, and $68.2 million of the 2019 notes had been repurchased. It also says an agreement was signed to sell remaining conventional assets for $14.0 million, closing October 31, 2016; this continues the debt-reduction effort begun with the second lien notes.
3 Aug 2016capital raising announcement● NeutralMajor
Lonestar agreed to sell up to $49.9 million of 12% second lien notes due 2021, plus warrants for 998,000 shares at $5.00, to Juneau Energy and other purchasers, with Leucadia guaranteeing Juneau. The first $10 million was expected to close August 4, 2016, with proceeds for general purposes including buying back its 8.75% notes due 2019. Leucadia also committed to buy up to $20 million of stock in a public offering by December 31, 2016 (for a $1 million fee), and 500,227 shares go to Juneau for oil and gas interests it sold the company. This follows and uses the credit amendment that allowed second lien debt, and adds dilution from the warrants and shares.
Lonestar's bank lenders, led by Citibank, agreed to a third amendment of the July 2015 credit agreement. It lets the company take on second lien debt, raises borrowing costs by 0.75%, raises required mortgaged collateral from 80% to 90% of oil and gas property value, loosens the leverage limits for 2016 (4.75x for June 30, stepping down to 4.00x after 2016), and bars payments to the parent for general expenses after September 30, 2016.
