PostRock Energy Corp (PSTRQ): announcements explained, share price

Announcements, explained

Each one in plain English, with the numbers worked through for a shareholder.

10 Oct 2014capital raising announcement● NeutralMajor

Swapped $35.0 million of White Deer's redeemable preferred, due for cash redemption in 2018, for 32.1 million new shares at $1.09. It removed a hard cash obligation from a company that could not have met it, at the cost of handing the fund 43.1 million shares outright; $5,075 of preferred still remained.

What it means for a shareholder

32.1m new shares at US$1.09 to raise about US$35.0m. That's 51% dilution: every existing holder's slice gets 51% smaller. If you held US$1,000 of shares (917 at the issue price), your slice goes from 0.00296% to 0.00145% of the company. To keep it you'd need 951 more shares - about US$1,037 at the issue price.

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4 Dec 2013capital raising announcement▲ GoodMajor

Bought back the accumulated dividend warrants: White Deer gave up warrants over 22.2 million shares, struck at an average $3.23 and far out of the money with the stock at $1.31, for 1.1 million shares. It cut the fund's fully diluted stake from about 69% to 57% and its voting power from 64% to 51%, the first reduction since 2010, though it stayed in control.

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8 July 2013capital raising announcement▼ Bad

The third quarterly preferred dividend of the year paid in warrants again, over about 1.8 million shares. Four quarters of this, and the fund's fully diluted stake was approaching 70%.

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5 Apr 2013capital raising announcement▼ Bad

Another quarterly preferred dividend paid to White Deer in warrants rather than cash, over about 1.6 million shares. The exercise prices track the falling share price down, so the same coupon buys more shares each time.

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4 Jan 2013capital raising announcement▼ Bad

Announced its 2013 capital budget and paid the year-end preferred dividend in kind again, this time across three separate White Deer investments, issuing warrants over 1.7 million shares. The fund had put in more money during 2012 than the single February placement suggests, and every dividend date compounded its position.

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5 Oct 2012capital raising announcement▼ Bad

Paid the October preferred dividend to White Deer in warrants and voting preferred rather than cash, as it had done in December. Each quarter's unpaid coupon buys the fund more of the company.

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15 Feb 2012capital raising announcement● NeutralMajor

White Deer put in a further $7.5 million for 2.2 million shares at $3.44, and the filing also records that the December preferred dividend was paid not in cash but in more warrants and voting preferred stock. Its 12% coupon was compounding into ever more of the company rather than leaving the building as cash, which is the mechanism by which its ownership climbs towards 70%.

What it means for a shareholder

2.2m new shares at US$3.44 to raise about US$7.5m. That's 18% dilution: every existing holder's slice gets 18% smaller. If you held US$1,000 of shares (291 at the issue price), your slice goes from 0.00293% to 0.0024% of the company. To keep it you'd need 64 more shares - about US$220 at the issue price.

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3 Sept 2010capital raising announcement● NeutralMajor

Sold control to private equity: White Deer Energy put in $60 million for preferred stock paying a 12% compounding dividend, mandatory redemption in seven and a half years, and warrants that could take it to about 70% of the common at $3.15 a share. It was the rescue the over-levered post-merger balance sheet needed, but it made an outside fund both the company's largest owner and the holder of a redeemable claim ahead of every ordinary shareholder.

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