Gastar Exploration leaves Chapter 11 bankruptcy as private company

By Caroline Salls

Pittsburgh, Jan. 22 – Gastar Exploration Inc. announced Tuesday that the conditions to effectiveness of its Chapter 11 plan of reorganization have been satisfied, and the company has emerged from bankruptcy as a private company.

According to a news release, the plan was confirmed on Dec. 20 by the U.S. Bankruptcy Court for the Southern District of Texas.

Through the restructuring process, the company said it has significantly enhanced its financial position by eliminating more than $350 million of debt and preferred equity obligations from its balance sheet.

Under the plan, the company also converted its corporate form from a Delaware corporation to a Delaware limited liability company and, therefore, is now known as Gastar Exploration LLC.

Gastar said it completed an effective balance sheet restructuring that involved a debt-for-debt exchange, a debt-to-equity conversion and a cash payment to holders of existing preferred and common equity.

“We are pleased to be emerging from Chapter 11 and moving forward with a solid financial foundation to continue to build our business,” chief financial officer Michael A. Gerlich said in the release.

Under the plan, holders of Gastar’s 8 5/8% series A cumulative preferred stock and 10¾% series B cumulative preferred stock received their share of $150,000, and the existing preferred equity was canceled and retired.

Holders of Gastar’s outstanding common shares, other than Ares Management LLC affiliate AF V Energy I Holdings, LP, received their share of $150,000.

The payout rate for the existing preferred equity is $0.02425222 per outstanding share, and the payout rate for the existing common equity eligible for the payment is $0.00092469 per share, the release said. The expected payment date is Jan. 23.

Holders of administrative claims, priority claims and general unsecured claims will be paid in full in cash.

All drawn amounts under the new money component of the company’s debtor-in-possession financing will roll over into a new exit facility, with all undrawn commitments remaining available to fund Gastar’s post-emergence cash needs.

Holders of all obligations related to the company’s pre-bankruptcy hedging program will receive payment in cash in equal monthly installments under a new secured note through December 2019.

Gastar Exploration is Houston-based oil and natural gas company. The company filed for bankruptcy on Oct. 31 under Chapter 11 case number 18-36057.

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