Gastar Exploration USA does small deal in apathetic primary; traders watch RBS paper weaken

By Andrea Heisinger and Stephanie N. Rotondo

New York, June 20 - Traders and others in the preferred stock market were watching the unfolding story of Greece on Monday along with the rest of the markets.

A small sale was announced by Gastar Exploration USA Inc. The Houston-based company sold $15.02 million of perpetual series A cumulative preferred stock. The deal size was increased from $13.95 million since it was first announced last week.

Meanwhile, some trading was seen in Friday's $100 million offering of $25-par 30-year senior notes from Maiden Holdings North America Ltd.

Other than watching for trading in the new deals, the market is "watching Greece to see what banks [a sovereign default would affect]," one source said.

Paper from National Bank of Greece SA was "down a quarter of a point," a source said, adding that there was lower volume.

Royal Bank of Scotland Group plc has "a decent amount of exposure," he added.

A trader said the bank's no-pay paper - without a dividend - was slightly lower.

"The whole complex was hit in the last week and a half," he said of RBS' paper as a whole. "They're just down more than most."

Among the paper trading at the highest volume at the close was a Citigroup Inc. series N preferred with 666,000 shares traded. RBS had 578,000 of its series E paper traded.

"There's more red than green across the board," the trader said. "It's kind of an apathetic tone."

Gastar's small deal

Gastar Exploration USA priced a discounted sale of 8.625% perpetual series A cumulative preferred stock, according to an FWP filing with the Securities and Exchange Commission.

The $15.02 million of preferreds are being sold for $23.25 each.

"There's lots of juice in that one for those that are selling it," a market source said, alluding to the issue being sold at a discount.

There weren't any trading markets for the shares.

The deal was originally announced on June 14. Parent company Gastar Exploration Ltd. is guaranteeing the preferreds.

The liquidation preference is $25 per share. Dividends are payable monthly, on the last day of the month. There is a clause that allows for the dividends to be upped to 10.625% in the case of certain events.

McNicoll, Lewis & Vlak LLC is the bookrunning manager.

Proceeds will be used to repay borrowings under Gastar Exploration USA's revolving credit facility, which were incurred to pay for capital expenditures and for general corporate purposes. Any remaining funds will be used for additional capital expenditures or to provide working capital for general corporate purposes.

Gastar is a Houston-based independent natural gas exploration and production company.

Maiden moves out

The $25-par 8.25% senior notes due 2041 sold by Maiden Holdings North America were trading early in the day but then dropped out of view, a trader said.

He "saw markets early this morning, and that was it," the trader said.

The paper was offered at $24.75 - an increase from the $24.50 commanded Friday. There were no bids.

The deal had originally been announced on Thursday. The company was expected to issue $75 million of the notes (BBB-).

Maiden Holdings is a Hamilton, Bermuda-based reinsurance company.

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