Goodrich Petroleum $75 million perpetual convertibles talked to yield 5.125%-5.375%, up 20%-25%

By Ronda Fears

Nashville, Dec. 15 - Goodrich Petroleum Corp. launched late Thursday $75 million of perpetual convertible preferreds talked with a dividend of 5.125% to 5.375% with a 20% to 25% initial conversion premium via bookrunner Bear Stearns & Co.

BNP Parabas is co-manager of the Rule 144A deal, which is slated to price before Friday's open.

The company can force conversion of the issue after five years if its stock is trading 130% above the conversion price.

Goodrich Petroleum said it intends to use proceeds to redeem all of the outstanding shares of its series A preferred stock for about $9.5 million, with the balance of proceeds earmarked to fund the continued acceleration of its drilling program.

The Houston-based independent oil and gas exploration company also Thursday announced a preliminary capital expenditure budget for 2006 of $195 million, about $160 million of which is scheduled for the Cotton Valley Trend. The company said the convertible proceeds will be applied temporarily to repay $47.5 million outstanding under its revolving senior credit facility.

On Nov. 18, Goodrich Petroleum announced a revised senior credit agreement and a new $30 million second-lien term loan that will expand its borrowing capabilities and extend its credit facility for another two years. Together, the company said, the bank transactions would provide borrowing capacity up to $105 million until March 2006 when the borrowing base of the senior revolver is re-determined.

The amended bank credit facility was boosted to $200 million from $50 million, with a revolver borrowing base established at $75 million, and maturity extended to Feb. 25, 2010 from Feb. 25, 2008. As of Nov. 18, the company said borrowings outstanding under the amended credit facility were $40 million. Interest on the revolver was set at either the bank base rate plus 0.00% to 0.50%, or Libor plus 1.25% to 2.00%, at the option of the company.

BNP Paribas was the lead lender and administrative agent for the amended credit facility with Comerica Bank and Harris Nesbit Financing, Inc. as co-lenders.

The second-lien term loan agreement provides for a five-year non-revolving loan of $30 million, which was funded on Nov. 17, and is due in a single maturity on Nov. 17, 2010, via BNP Parabas. Optional prepayments of term loan principal can be made in amounts of not less than $5 million during the first year at a 1% premium and without premium after the first year. Interest on term loan borrowings accrues at either base rate plus 3.50% or Libor plus 4.50%, at the option of the company.

Goodrich Petroleum shares closed Thursday off 2 cents, or 0.08%, at $26.13.

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