PetroQuest holders tender for exchange 61% of 10% notes by early date

By Susanna Moon

Chicago, Feb. 3 – PetroQuest Energy, Inc. holders had tendered for exchange $214.4 million principal amount, or 61%, of its $350 million of outstanding 10% senior notes due 2017 as of 5 p.m. ET on Feb. 2, the extended early tender date, according to a company notice.

PetroQuest said on Jan. 29 that holders had tendered more than a majority of the notes for exchange by that time and extended the early tender deadline from 5 p.m. ET on Jan. 28.

The company said it had received the needed consents to amend the notes and planned to execute a supplemental indenture to the notes indenture.

As previously announced, the company is soliciting consents to eliminate or waive substantially all of the restrictive covenants contained in the notes indenture.

The exchange offer and consent solicitation will continue until 11:59 p.m. ET on Feb. 11. The offer began Jan. 14.

Tendered notes may no longer withdrawn as of 5 p.m. ET on Jan. 28, the initial early tender date.

In exchange for up to $300 million principal amount of the 10% notes, the company is offering up to $75 million of cash, $202.5 million principal amount of newly issued 10% second-lien senior secured notes due 2021 and 6 million shares of common stock.

For each $1,000 principal amount of 10% notes exchanged, holders will receive $250 of cash, $675 principal amount of new notes and 20 shares. This payment includes an early tender premium of $22.50 principal amount of new notes for each note tendered by the early deadline.

The new notes will be guaranteed by some subsidiaries of the company. They will be secured by second-priority liens on some of the company’s and the guarantors’ assets that secure debt, including under the company’s existing senior secured bank credit facility.

Old notes that remain outstanding after the exchange offer and consent solicitation will be effectively subordinated to the new notes to the extent of the value of the collateral for the new notes.

If the offer is oversubscribed, notes will be accepted for exchange on a pro rata basis. Old notes tendered by the early tender date will be given priority over notes tendered after the early tender date, as previously noted.

Holders may not tender their notes in the exchange offer without delivering the related consents and vice versa.

The exchange offer was being made only to noteholders in the United States who are qualified institutional buyers under Rule 144A and those outside the United States who are non-U.S. persons under Regulation S.

PetroQuest previously said it had entered into support agreements with some institutional holders who have participated in recent exchange transactions in favor of the exchange offer and consent solicitation.

The information agent is D.F. King & Co., Inc., (212 269-5550, 866 620-0678 or http://www.dfking.com/petroquest).

PetroQuest Energy is an oil and natural gas explorer and producer based in Lafayette, La.

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