Gastar Exploration Inc. (fka GSTCQ)

[56Chevy]

As expected and predicted GSTC could not avoid bankruptcy. Expect the filing very soon.

RSA = Restructuring Support Agreements

Current Report Filing (8-k)
Date : 10/29/2018 @ 7:03AM
Source : Edgar (US Regulatory)
Stock : Gastar Exploration Inc. (GSTC)
Quote : 0.0155 -0.0295 (-65.56%) @ 11:56AM

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Item 1.01 Entry into a Material Definitive Agreement.

Restructuring Support Agreements

After an extensive private marketing process, beginning in August 2018, Gastar Exploration Inc. (“ Gastar ”) embarked on a public marketing process to try to address its balance sheet liabilities. On August 21, 2018, Gastar publicly filed a process letter that again invited proposals and informed the public how any interested party could participate and make a proposal. The process letter established the bid deadline of October 1, 2018 (the “ Bid Deadline ”). Gastar received three bids on the Bid Deadline, none of which provided a basis for repaying Gastar’s indebtedness described below. Gastar’s board of directors (the “ Board ”) determined that none of these proposals presented an actionable alternative.

In parallel with the foregoing marketing process, Gastar engaged with funds affiliated with Ares Management LLC (“ Ares ”) regarding a comprehensive financial restructuring transaction. On October 26, 2018, Gastar and its subsidiary (collectively, the “ Company ”) entered into a restructuring support agreement (the “ RSA ”) with (i) AF V Energy I Holdings, L.P., an affiliate of Ares (the “ Consenting Term Lender ”) and party to the Third Amended and Restated Credit Agreement, dated March 3, 2017 (as amended, restated, modified, or supplemented form time to time, the “ Term Credit Agreement ”) (ii) certain holders affiliated with Ares (the “ Consenting Noteholders ”) of the Company’s Convertible Notes due 2022 issued pursuant to the indenture dated March 3, 2017 (as amended, restated, modified or supplemented from time to time, the “ Second Lien Indenture ”), by and among Gastar, as issuer, the guarantors specified therein and Wilmington Trust, National Association, as trustee and collateral agent and (iii) certain holders affiliated with Ares (the “ Ares Equity Holders ” together with the Consenting Term Lender and the Consenting Noteholders, the “ Consenting Parties ”) of Gastar’s outstanding common shares (the “ Existing Common Equity ”), to support a restructuring (the “ Restructuring ”) on the terms set forth in the term sheet annexed to the RSA (the “ Restructuring Term Sheet ”). The RSA contemplates that the Company will file for voluntary relief under chapter 11 (the “ Chapter 11 Cases ”) of the United States Bankruptcy Code (the “ Bankruptcy Code ”) in a United States Bankruptcy Court (the “ Bankruptcy Court ”) to implement the Restructuring pursuant to a “prepackaged” plan of reorganization (the “ Plan ”) and the various related transactions set forth in or contemplated by the Restructuring Term Sheet, the DIP Term Sheet (defined below) and the Exit Facility Term Sheet (defined below). Shortly after entering into the RSA, the Company commenced solicitation of the Plan consistent with section 1126(b) of the Bankruptcy Code, which solicitation the Company anticipates will conclude on or about October 30, 2018. After the conclusion of such solicitation, the Company intends to commence the Chapter 11 Cases to implement the transactions contemplated by the RSA and Plan.

Pursuant to the terms of the RSA and the Restructuring Term Sheet, the Consenting Parties and other interest holders will receive treatment under the Plan summarized as follows:

• holders of claims under the DIP Facility (defined below) arising on account of the New Money Loans (defined below) will receive pro rata participation in the First Lien Exit Facility (defined below) in an amount equal to such claims arising on account of New Money Loans;

• holders of claims under the DIP Facility, other than claims arising on account of the New Money Loans, will receive (a) pro rata participation in the Second Lien Exit Facility (defined below) up to an aggregate amount of $200 million and (b) to the extent any such claims exceed $200 million, such excess will receive a pro rata share of 100% of the common equity in the reorganized Company (the “ New Common Equity ”);

• holders of claims under the Term Credit Agreement will receive (a) to the extent there is remaining availability under the Second Lien Exit Facility, pro rata participation in the Second Lien Exit Facility in an equal face amount not to exceed $200 million and (b) to the extent any such claims remain outstanding, their pro rata share of 100% of the New Common Equity, subject to dilution upon the issuance of common stock upon exercise of the New Warrants described below and pursuant to a new management incentive plan to be entered into at the discretion of the board of the reorganized Company following emergence from bankruptcy (the “ Management Incentive Plan ”);

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Source:
https://ih.advfn.com/p.php?pid=nmona&article=78556630