NGAS Resources Inc

NGAS Resources Inc deregistered its securities, ending its obligation to file reports with the SEC.

listing compliance notice

On April 13, 2011, the Magnum Hunter arrangement closed and NGAS became a wholly owned subsidiary of Magnum Hunter. Each NGAS share was converted into the right to receive 0.0846 Magnum Hunter share, and former shareholders kept no shareholder rights other than that payment. Magnum Hunter paid off the KeyBank credit agreement and the 2012 convertible notes, and about $6.8 million of Seminole note installments were cancelled. Nasdaq filed to delist the shares and NGAS said it will file to deregister them. All the old directors and executive officers resigned and Magnum Hunter's designees replaced them, including Gary C. Evans as CEO. Severance was paid to Daugherty, Barr, Wallen and Windisch in Magnum Hunter stock: $1,282,736, $1,015,385, $1,041,750 and $803,700. This resolves the pending acquisition, the debt deadlines and the Nasdaq bid-price problem.

business combination

NGAS Resources Inc's exchange filed to remove a class of its securities from listing.

listing compliance notice

At the April 8, 2011 special meeting, NGAS shareholders approved the Magnum Hunter arrangement, with 30,509,330 votes for and 1,886,111 against, above the two-thirds needed. The fixed ratio of 0.0846 Magnum Hunter share per NGAS share would mean roughly 6.6 million Magnum Hunter shares issued to NGAS holders. A final British Columbia Supreme Court order is still needed, so the deal has not yet closed. This is the shareholder vote that earlier filings said was required.

business combination

On March 10, 2011, NGAS, Magnum Hunter and Seminole signed an Omnibus Agreement that settles the Seminole gas gathering restructuring, a closing condition of the Magnum Hunter deal. It takes effect only if the deal closes. NGAS Production would get lower gathering fees and a higher monthly operating fee; Magnum Hunter would pay Seminole $10.275 million in cash or restricted stock at its choice; NGAS Production and Magnum Hunter would commit at least $20 million of drilling a year in 2011 and 2012; and about $6.8 million of Seminole's promissory note installments to NGAS would be cancelled. The agreement ends if the deal is terminated or does not close by April 30, 2011. This resolves the Seminole restructuring thread in the pending deal.

business combination

NGAS filed its final proxy statement for the Magnum Hunter deal. The special shareholder meeting is set for April 8, 2011 in Vancouver, for holders of record on March 8, 2011, and approval needs two-thirds of the votes cast plus British Columbia court approval. Each NGAS share would convert into 0.0846 Magnum Hunter share, and the filing says NGAS holders would own about 6.7% of Magnum Hunter afterward, assuming the maximum conversion of convertible notes into NGAS shares. This continues the pending deal and fills in the dates and ownership percentage left blank in the January draft; the board recommends a yes vote and the vote has not yet happened.

business combination

NGAS filed a preliminary proxy statement for a special shareholder meeting, planned for March 2011 in Vancouver, to vote on the Magnum Hunter arrangement. Holders of record on February 4, 2011 may vote. Approval needs two-thirds of votes cast, plus British Columbia court approval; the board recommends voting for it. Each share would convert into 0.0846 of a Magnum Hunter share, and registered holders get dissent rights to be paid fair value. The filing's fee calculation uses 78,416,385 NGAS shares (up from 33.5M in January 2010, though the cause is not stated here) at $0.575, a deal value of about $45.1 million. Dates and the expected post-deal ownership percentage are left blank in this draft. This continues the pending deal; the vote has not happened.

business combination

On December 23, 2010, NGAS agreed to be acquired by Magnum Hunter Resources in an all-stock deal: each NGAS share would get 0.0846 of a Magnum Hunter share, valued at $0.55 per share (a 41% premium to the December 23 close) at a $6.50 Magnum Hunter price, with the ratio fixed. This is the qualifying transaction that KeyBank and the note holders required, and it answers the strategic-alternatives search. Closing needs Canadian court approval, a two-thirds shareholder vote, Magnum Hunter paying off the unconverted 6% notes and all credit-facility debt, a restructured gas transportation agreement with Seminole Energy Services, and reduced executive severance paid in Magnum Hunter stock. NGAS cannot solicit other offers and owes a $4 million termination fee in specified circumstances (including a board recommendation change), or expense reimbursement up to $4 million if shareholders vote it down. Certain shareholders signed support agreements to vote in favour. The lender deadline is March 31, 2011, which NGAS will try to extend to April 15. The deal is not yet completed, so shareholders' position is unresolved.

business combination

On December 14, 2010, NGAS signed agreements with all holders of its 2012 convertible notes to deal with the cross default (triggered by the KeyBank covenant breach) that followed the November default notice. After redemption and rescission notices, holders had asked for 3,231,575 shares on conversion of $1,197,000 of notes at an average reset price of $0.37. Conversions are now capped at 32 million shares in total, and holders will disregard stock prices below $0.37 when setting the reset price. This is conditional on NGAS meeting the KeyBank deadlines (possibly extended to Dec 31, 2010 and April 15, 2011). A qualifying deal must pay at least 10% above the reset price and repay all remaining notes in full at 125% of principal plus 12% interest and charges. This continues the note default thread: it caps dilution, but a buyer must pay the notes at the default premium. The filing also says holders of $7.5M principal gave a redemption notice on December 10.

debt financing

On November 19, 2010, NGAS signed a Limited Waiver and Fifth Amendment with KeyBank, waiving its September 30 leverage covenant breach. Lenders cut commitments to the $35.8 million outstanding, now due March 31, 2011, and the interest rate rose to 4.25% over prime. NGAS must sign a definitive agreement for a qualifying transaction (a sale, merger or other deal to retire or replace the facility) by December 15, 2010. Separately, on November 15 the holder of $15.3 million of the roughly $21.5 million of 2012 convertible notes served a default notice, which allows cash redemption at 125% of principal. NGAS says it lacks cash for the roughly $14.5 million called and cannot assure the negotiations will succeed.

debt financing

On September 27, 2010, Nasdaq told NGAS its stock was below the $1.00 minimum bid price. The filing says this has no effect on listing or trading for now. Holders of the amortizing convertible notes waived the share-payment restriction through November 2010, and further waivers would be needed if the deficiency is not cured.

listing compliance notice

On May 11, 2010, NGAS agreed with Lazard Capital Markets and Wunderlich Securities to sell 3,960,000 units at $1.31, for about $5.2 million gross ($4.7 million net). Each unit is one share plus a warrant for 0.4 share at $1.61, exercisable for four and a half years. This is another equity raise at a lower price than the August 2009 one ($1.90), diluting existing holders.

material agreement

The note exchange closed: on January 12, 2010 NGAS issued $28.7 million of new 6% notes due May 1, 2012, extinguishing the old $37 million notes, and paid about $2.7 million cash. It also issued warrants for 1,285,038 shares and, on January 15, 3,037,151 new shares, bringing shares outstanding to 33,521,512. This resolves the exchange agreed on January 11.

capital raising announcement

On January 11, 2010, NGAS agreed to swap the $37 million 6% convertible notes (due December 2010) for $28.7 million of new 6% amortizing notes due May 1, 2012, plus 3,037,151 shares, warrants for 1,285,038 shares at $2.37, and about $2.7 million cash. The new notes convert at $2.18 per share and require 24 monthly payments from June 2010, which NGAS may pay in shares. KeyBank agreed a Fourth Amendment, taking the borrowing base from $55 million with monthly $1 million cuts from February 2010 and limiting cash passed up from the operating subsidiary. This extends the debt maturity but increases dilution risk; the filing says the share issuance above 19.99% needs shareholder approval at the next annual meeting.

capital raising announcement

On December 31, 2009, NGAS said its unaudited 2009 quarterly results should not be relied on, because it is restating how it accounts for the 6% convertible notes after SEC staff review comments. The restatement is non-cash: it adds about $2.9 million of interest expense, raising the nine-month 2009 net loss to about $4.5 million ($0.16 per share), and the conversion price on the notes had already fallen from $14.34 to $11.16 after the 2007 and 2009 share sales.

financial restatement

On August 10, 2009, NGAS replaced the August 5 BMO deal with a smaller one: 3.48 million units at $1.90, for about $6.6 million before fees, on the same warrant terms. The earlier 5.4 million-unit deal was not completed. The filing says the resizing was done to ensure compliance with Nasdaq listing standards; it gives no further reason.

material agreement

On August 5, 2009, NGAS agreed with BMO Capital Markets to sell 5.4 million units at $1.90 each, for about $10.3 million before fees. Each unit is one share plus a warrant for half a share at $2.35, exercisable for four years starting six months after issue. This is new equity raised at a much lower price than the $6.00 of the November 2007 offering, so existing shareholders are diluted. (The next filing shows this deal was not completed.)

material agreement

On July 15, 2009, NGAS completed the sale of a 50% interest in its Appalachian gas gathering system to Seminole Gas for $28 million and used the proceeds to cut its revolving credit borrowings to $52 million. This closes the sale agreed in May and approved by KeyBank in June. Seminole's parent, Seminole Energy Services, holds a six-month option to buy the other 50% for $22 million ($7.5 million cash, $14.5 million over 30 months at 8%), and NGAS keeps 30,000 Mcf/day of firm capacity for 15 years and will keep operating the system under a five-year contract. It also added fixed-price gas sales at $5.94 per MMBtu (plus regional basis adjustments) for one year from April 2010.

asset acquisition disposition

On June 2, 2009, NGAS amended its KeyBank credit agreement to allow the sale of a 50% interest in its Appalachian gas gathering system to Seminole Gas under a May 11, 2009 agreement. The $28 million proceeds go to debt: the borrowing base falls from $80 million to $65 million (a further $10 million cut when the gathering assets are released from collateral), the maximum rate rises to 1.75% over prime, and a covenant is waived to September 30, 2009. Borrowings of $80 million fall to $52 million, leaving $3 million of availability; Seminole's parent has a six-month option to buy the other 50% for $22 million, of which $7.5 million is paid in cash. This partly reverses the gathering assets bought from Duke in 2006 and adds to the KeyBank facility from 2006.

material agreement

On November 19, 2007, NGAS agreed with BMO Capital Markets to sell 4.2 million common shares for gross proceeds of $25.2 million, issued under its existing shelf registration. This adds new shares, diluting existing holders; the filing does not say how the money will be used.

material agreement

On September 8, 2006, NGAS and Daugherty Petroleum signed a new five-year senior secured revolving credit agreement with KeyBank, replacing the prior facility (borrowing base $35 million, due July 31, 2007). It allows up to $125 million in total with a current borrowing base of $50 million, and $35 million was outstanding at signing; it is secured by the producing wells and field-wide gathering systems and guaranteed by NGAS.

material agreement

On January 17, 2006, NGAS Gathering, a subsidiary, agreed to buy from Duke Energy Gas Services a 116-mile gas gathering system in southeastern Kentucky and southwestern Virginia for $18 million. Closing depends on customary conditions including Federal Energy Regulatory Commission approval of a related notice filing, and funding is expected to come from part of the December 2005 convertible note proceeds.

material agreement

NGAS agreed on December 13, 2005 and issued on December 14 $37 million of 6% convertible notes due December 15, 2010 to institutional investors, convertible at $14.34 per share, plus warrants for up to 945,809 shares at $13.04. Terms include price-adjustment protection for investors if shares are later sold cheaper, repayment at 125% on default and at least 110% on a change of control, and a promise to seek shareholder approval at the next annual meeting; this is much larger than the $6.1 million note of October 2004 and could dilute existing holders if converted.

capital raising announcement

On October 12, 2004, the operating subsidiary Daugherty Petroleum completed buying substantially all the oil and gas assets of Stone Mountain Energy Company in Bell, Harlan and Leslie Counties, Kentucky, and Lee County, Virginia, for $27 million. It was paid for with working capital, $15 million drawn on the secured credit facility and part of the 7% convertible note proceeds from earlier in the month; this completes the deal under the agreement dated August 18, 2004.

asset acquisition disposition

Daugherty Resources (the company's name at this point, trading on Nasdaq SmallCap as "NGAS") filed to move its legal home from British Columbia to Delaware. Each existing common share would automatically become one Delaware share ($.001 par value), the ticker would stay the same, and the plan needs two-thirds approval at a special meeting in 2004 (date left blank), with dissent rights for objecting holders; the same meeting would also vote on a new stock award and option plan. The filing registers 9,932,102 shares, priced at $4.19 (the Oct 30, 2003 price) for fee purposes.

business combination