11 Mar 2010listing compliance notice▼ BadMajor
QUEST RESOURCE CORP deregistered its securities, ending its obligation to file reports with the SEC.
Announcements, explained
Each one in plain English, with the numbers worked through for a shareholder.
5 Mar 2010listing compliance notice● NeutralMajor
QUEST RESOURCE CORP's exchange filed to remove a class of its securities from listing.
8 Feb 2010business combination● NeutralMajor
Quest filed its definitive joint proxy statement, first mailed around February 8, 2010, for a March 5, 2010 stockholder meeting and a QELP unitholder meeting to vote on the PostRock recombination. After the deal, former QRCP stockholders would own about 23% of PostRock, QELP common unitholders (other than QRCP) about 33%, and QMLP common unitholders about 44%. The boards say the three companies are in difficult economic circumstances and that the recombination would substantially improve their ability to avoid bankruptcy. Stockholders will also vote on a PostRock incentive plan and re-elect four directors. This moves the recombination thread forward, and the proxy and the SEC review are no longer outstanding. The filing text is truncated.
11 Jan 2010listing compliance notice▼ BadMajor
On January 5, 2010 Nasdaq told Quest its stock is subject to delisting because it did not hold its 2009 annual meeting by December 31, 2009. Quest says it expected the letter, will request a hearing by January 12 (which stays the delisting), and delayed the meeting to combine it with the recombination vote, to be held after the SEC declares the PostRock S-4 effective. This is a new listing problem on top of the earlier bid price deficiency.
21 Dec 2009debt financing● NeutralMajor
On December 17, 2009 Quest and its subsidiaries signed amendments to four credit facilities, which resolve the repeated short second lien extensions and the Cherokee borrowing base shortfall. The Cherokee revolver became a term loan with no new borrowing, maturing March 31, 2011 (July 11, 2010 if the recombination has not closed by July 10, 2010), with required principal reductions from $141 million at March 31, 2010 down to $134 million at December 31, 2010, and a cap on capital spending. The borrowing base was reset at $145 million, leaving a $15 million deficiency that Quest Cherokee repaid on December 17. The second lien loan got the same maturity, 2% more interest (deferred), and a 2.10% fee. The Quest Midstream facility also became a term loan maturing on the same dates, with looser ratios for the March 2010 quarter and capital spending caps. Quest will guarantee the partnership loans after the recombination and pledge its equity interests, and a change of control of PostRock would become an event of default. The filing text is truncated.
1 Dec 2009material agreement● Neutral
On November 30, 2009 Quest and RBC amended the company's own credit agreement to move the deadline from November 30, 2009 to January 15, 2010. By that date a joint proxy statement must be filed, the Quest Energy and Quest Midstream lenders must approve the recombination, and the boards must approve the new or amended credit facilities, or an event of default occurs. This delays, rather than resolves, the November 30 default trigger from the September credit agreement.
25 Nov 2009debt financing▼ BadMajor
On November 20, 2009 the Quest Cherokee second lien loan maturity was pushed again, from November 20 to December 7, 2009 (sixth amendment, effective November 23). Separately, on November 19 RBC cut the Quest Cherokee revolver borrowing base from $160 million to $136.9 million, leaving borrowings $23.1 million over the limit. Quest Cherokee has until December 19, 2009 to choose between repaying the shortfall within 30 days, paying it in four monthly installments of $5.8 million, or pledging more oil and gas properties as collateral. This continues the string of short second lien extensions and adds a new pressure on the Cherokee revolver.
20 Nov 2009material agreement● Neutral
On November 16, 2009 a fifth amendment extended the Quest Cherokee second lien loan maturity from November 16 to November 20, 2009, a four-day extension. It also lists STP Newco, Inc. as an additional guarantor, and the filing gives no fee or other terms. The loan has now been extended repeatedly since the September 30, 2009 date.
2 Nov 2009material agreement● Neutral
On October 30, 2009 Quest Cherokee and Quest Energy Partners signed a fourth amendment moving the second lien loan maturity from October 31 to November 16, 2009, and the Partnership paid a $37,250 fee. This is another short extension and the filing does not say whether a refinancing is near.
8 Oct 2009business combination● NeutralMajor
On October 2, 2009 the parties amended the July merger agreement, which now names the new holding company PostRock Energy Corporation. The amendment mainly restructures the merger steps, replaces Edward Russell with Gabriel Hammond as a proposed director, and cancels any PostRock shares Quest holds after closing. It also allows a distribution of extra QMLP common units to correct an exchange-ratio error caused by an investor abandoning units, so the exchange ratios stay unchanged. Alerian joined the support agreement, bringing holders of about 73% of QMLP common units committed to vote in favor, so the filing says QMLP unitholder approval is assured unless that agreement is terminated. PostRock filed its S-4 on October 6, 2009. Quest stockholder and QELP approvals are still needed. The filing text is truncated.
1 Oct 2009material agreement● Neutral
On September 30, 2009 Quest Cherokee, Quest Energy Partners and Quest Cherokee Oilfield Service signed a third amendment pushing the maturity of the second lien term loan from September 30 to October 31, 2009. This is another short extension of the loan that was due on the September 30 date set in the November 2008 amendment, and the filing gives no other changes or reasons.
17 Sept 2009listing compliance notice▼ BadMajor
On September 11, 2009 Quest signed a Second Amended and Restated Credit Agreement with RBC. It adds a revolver of $5.6m (rising to $8.0m after November 30, 2009) for West Virginia wells and corporate costs. The term loan maturity moves from July 2010 to January 11, 2012, with $6m of deferred payments due July 11, 2010, and its interest rises to base rate plus 10%. Instead of interest the revolver carries a $2.0m facility fee due July 11, 2010, and lenders get a 2% overriding royalty on Quest Eastern's and Quest Oil & Gas's properties, which is returned if conditions are met by July 11, 2010. Financial covenants and the equity-proceeds repayment requirement are removed, and the planned recombination is not a default, but it is an event of default if by November 30, 2009 a joint proxy statement is not filed, the Quest Energy and Quest Midstream lenders have not approved it, and the boards have not approved new credit facilities. Separately, on September 15 Nasdaq warned that the share price had been under $1 for 30 business days, with until March 15, 2010 to regain compliance. The filing gives no price level beyond that threshold.
17 July 2009listing compliance notice▲ GoodMajor
On July 15, 2009 the Nasdaq hearing panel granted Quest's request to stay listed, on condition that it files its September 30, 2008 and March 31, 2009 quarterly reports by August 15, 2009. The press release says the 2008 10-K was filed June 3, 2009 and amended 2008 quarterly reports for March and June were filed July 14, 2009. Delisting remains possible if the August 15 deadline is missed. This resolves the June 3 appeal but leaves a new deadline open.
7 July 2009business combination● NeutralMajor
On July 2, 2009 Quest signed a merger agreement with its two partnerships, Quest Energy Partners and Quest Midstream Partners, to combine all three under a new company, New Quest Holdings. Each Quest share would receive 0.0575 New Quest share; QELP common units (other than those Quest owns) get 0.2859 and QMLP common units get 0.4033 New Quest shares, while the partnerships' subordinated units and incentive rights are cancelled for nothing. Closing needs approval from Quest stockholders and the partnership unitholders, an effective S-4 registration, Nasdaq listing, lender consents and new credit facilities, and either side can terminate if it has not closed by March 31, 2010. The filing lists a nine-member board expected to include Lawler as chief executive and Pittman as chairman, and Quest also amended its shareholder rights plan so the deal does not trigger it. The filing text is truncated, so further terms are not covered.
23 June 2009material agreement● Neutral
On June 18, 2009 Quest Cherokee signed a Third Amendment to its RBC-led credit agreement allowing its oil and gas hedging obligations with BP to be secured by the same liens, on equal footing with the bank loans. A new intercreditor agreement among RBC, BP and Quest Cherokee sets out the relative rights of the revolver lenders, BP and the second lien lenders. The filing gives no amounts or other changed terms.
26 May 2009material agreement● NeutralMajor
On May 19, 2009 Quest, Quest Energy Partners and Quest Midstream Partners settled the lawsuits over the $10 million of questionable transfers to an entity controlled by former CEO Jerry Cash. Quest received about $2.4 million in cash plus 60% of the entity's interest in a Louisiana gas well and a Texas landfill gas project, and Quest Energy Partners received the stock of a company owning Oklahoma oil-producing properties. The President said the company would have preferred assets equal to the transfers and investigation costs. The filing gives no values for the non-cash assets, so recovery is well short of $10 million in cash terms. This resolves the lawsuit part of the Cash thread.
18 May 2009listing compliance notice▼ BadMajor
On May 12, 2009 Nasdaq issued a staff determination that Quest's stock is subject to delisting, because the September 2008 quarterly report and the 2008 annual report were still unfiled, and the March 2009 quarterly report was also late. Nasdaq had not granted Quest's request for an extension to May 31, 2009. Quest requested a hearing on May 18, which automatically holds off delisting until June 3, 2009, and asked the panel for more time. The company says there is no assurance of success. This is the escalation of the filing-delay problem flagged in November 2008 and April 2009, and the May 11 target was missed.
3 Apr 2009listing compliance notice▼ BadMajor
On March 30, 2009 Nasdaq told Quest it was also out of compliance because the 2008 annual report was not filed on time, adding to the November 2008 notice over the late September 2008 quarterly report. Nasdaq had already extended the deadline for that quarterly report to May 11, 2009, and Quest must give Nasdaq an updated compliance plan by April 14, 2009. Quest says it aims to file re-audited and restated 2005-2007 accounts and audited 2008 accounts, being done by UHY, by May 11, 2009. Delisting remains a risk if that is missed.
28 Jan 2009auditor change● Neutral
This amendment to the August 1, 2008 auditor-change report only clarifies the description of how Eide Bailly took over the operations of the previous auditor, Murrell, Hall, McIntosh & Co. (MHM), at the request of both firms. It attaches MHM's January 26, 2009 letter to the SEC, and the filing states there were no disagreements and no reportable events with MHM. It adds no new business developments. Note that the 2005-2007 accounts MHM audited have since been declared unreliable (see the December 31, 2008 filing), though this filing does not say so.
2 Jan 2009financial restatement▼ BadMajor
On December 31, 2008 the board decided that Quest's audited accounts for 2005-2007 and its unaudited accounts for the first two quarters of 2008 can no longer be relied on, and will be restated. The restatement reflects the roughly $10 million of transfers to entities controlled by former CEO Jerry Cash, which began in June 2004 and ran to July 1, 2008 (extra expense of $2m in 2005, $6m in 2006 and $2m in 2007), and cash is reduced and the accumulated deficit increased by $10 million. The investigation began after an inquiry from the Oklahoma Department of Securities. Separate errors were also found in derivative accounting, stock compensation, depreciation and impairment, with size not yet estimated, and the board concluded the company has material weaknesses in internal controls. Quest is seeking restitution from Cash with no assurance of recovery, and cannot say when the restated accounts will be ready. This explains the late filings and Nasdaq notices, and the earlier mention of possible restatements.
25 Nov 2008listing compliance notice▼ BadMajor
On November 19, 2008 Nasdaq told Quest it no longer met listing rules because it had not filed its September 30, 2008 quarterly report on time (a late-filing notice had been made November 12). Quest has until January 21, 2009 to submit a compliance plan, and Nasdaq can allow up to May 11, 2009 to regain compliance; otherwise it faces delisting, which Quest could appeal. This follows the auditor turnover and the investigation of the former CEO's transfers, though the filing itself does not state why the report was late.
7 Nov 2008material agreement▼ BadMajor
On November 4, 2008 Quest and its partnerships signed further lender amendments, again to waive possible breaches from the transfers by former CEO Cash and unsettled intercompany accounts. Quest's own $6m extra loan commitment is clarified to shrink dollar for dollar as Quest keeps asset-sale proceeds. Quest Cherokee's $45m second lien loan was extended from January 11, 2009 to September 30, 2009 at LIBOR plus 9.0% (3.5% floor), with $3.8m quarterly repayments, a $0.40 per unit cap on Quest Energy's quarterly distribution, minimum liquidity of $14m at March 31, 2009 and $20m at June 30, 2009, 2009 capex capped at $30m, and Quest Energy required to raise equity or debt or refinance by mid-2009. The Cherokee revolver had a $190m borrowing base with $183m borrowed and now costs LIBOR plus 4.0% in a transition period. Bluestem had $128m of $135m drawn, also at LIBOR plus 4% in transition. Intercompany amounts Quest owes Quest Energy must be repaid by February 27, 2009. These follow up the October waivers, and the subsidiaries' debt is now much costlier and more tightly restricted than the 2007-2008 terms. The filing text is truncated, so further Bluestem terms are not covered.
31 Oct 2008debt financing▼ BadMajor
On October 24, 2008 Quest and RBC amended the July 2008 term loan to waive possible covenant breaches tied to 'questionable transfers of funds' by Jerry Cash, described as the company's former Chairman and CEO, and to late settling of intercompany accounts. The press release puts the transfers at about $10 million to an entity controlled by the former CEO. RBC added a $6m term loan due November 30, 2008 ($2m drawn, $4m conditional on amending the Quest Energy and Quest Midstream credit agreements). Interest rises to LIBOR plus 10% (3.5% floor), which the release puts at 13.5% on the existing loan and 14.35% on the new one. Quest also announced the sale of about 22,600 net undeveloped acres in Somerset County, Pennsylvania for about $6.8m, with proceeds going to repay the $2m and speed up principal payments. This reveals the departure of Cash, who led the company in prior filings, and much costlier borrowing; the filing does not say how or why he left.
29 Oct 2008auditor change● Neutral
On October 23, 2008 Quest's board approved appointing UHY LLP as auditor for the year ending December 31, 2008, and an engagement letter was signed October 28. This ends the search that began when Eide Bailly resigned. The filing says UHY had not been consulted on accounting or audit matters beforehand.
2 Oct 2008auditor change● Neutral
This amendment repeats the October 1 report of Eide Bailly's resignation and adds only the October 1, 2008 press release (issued jointly with Quest Energy Partners and Quest Midstream Partners) announcing the resignation and the search for a new auditor. It adds no new facts beyond that.
1 Oct 2008auditor change▼ BadMajor
Eide Bailly, engaged only on August 1, 2008, told Quest on September 25 that it is resigning as auditor, effective on the earlier of the filing of the September 30, 2008 quarterly report or November 10, 2008. The filing says there were no disagreements and no reportable events from its review of the June 2008 quarter, and that Quest is still looking for a new auditor to audit future periods and 'any restated financial statements relating to prior periods'. The filing gives no reason for the resignation; the mention of possible restatements is stated but not explained.
3 Sept 2008listing compliance notice▼ Bad
QUEST RESOURCE CORP withdrew a registration statement, abandoning the offering it covered.
28 Aug 2008listing compliance notice● Neutral
On August 26, 2008 Nasdaq told Quest it no longer met the rule requiring three independent directors on its audit committee, after Bob Alexander resigned on August 22, leaving two members. Quest fixed this on August 27 by appointing existing director William H. Damon III (a director since April 2007), so the notice was resolved within days. The filing does not give a reason for Mr. Alexander's resignation.
7 Aug 2008auditor change● Neutral
Quest's auditor, Murrell, Hall, McIntosh & Co., merged into Eide Bailly effective August 1, 2008, and Quest engaged Eide Bailly as its auditor that day with Audit Committee approval. The filing reports no adverse or qualified opinions for 2007 and 2006 and no disagreements with the old auditor, so this is a change of name and firm rather than a dispute.
16 July 2008asset acquisition disposition▼ BadMajor
On July 11, 2008 Quest completed the PetroEdge WV purchase (renamed Quest Eastern Resource LLC) and immediately agreed to sell its wellbores and related assets for proved developed reserves in West Virginia and New York to Quest Cherokee for about $71.6m. Quest also converted its $50m RBC revolver into a $35m term loan due July 11, 2010 (LIBOR+5.0%, $1.5m quarterly payments from September 30, 2008, fully drawn, secured by Quest's assets other than the two partnerships) with covenants of interest coverage at least 2.5x and leverage at most 2.0x from September 30, 2008. Quest Cherokee also took a six-month $45m second lien term loan (LIBOR+6.5%, rising to 7.0% after October 11, 2008). The new debt is much more expensive than the Cherokee facility priced in November 2007.