Trident lenders agree to backstop $200 million rights offering

By Caroline Salls

Pittsburgh, Feb. 1 - Trident Resources Corp. requested court approval to enter into a commitment letter with a group of its largest stakeholders for a $200 million equity rights offering, according to a Friday filing with the U.S. Bankruptcy Court for the District of Delaware.

According to the motion, parties to the commitment letter and related plan support agreement include holders of roughly 90% in principal amount of the 2006 credit agreement claims and 95% in principal amount of the 2007 credit agreement claims.

Trident said the group has agreed to backstop the $200 million rights offering, under which 60% of the new common stock to be issued by the reorganized company will be offered to holders of the 2006 and 2007 credit agreement claims.

Holders of 2006 credit agreement claims will be entitled to purchase $150 million of the new common stock, and holders of 2007 credit agreement claims will be entitled to purchase $50 million of the stock.

Under the company's proposed plan of reorganization, Trident's consolidated funded debt would be reduced to $400 million from $1.2 billion, in part through complete satisfaction of the obligations under its 2006 and 2007 credit agreements.

Trident is also requesting court approval to pay a $20 million equity put fee to the backstop parties if the commitment letter is terminated. Any amounts paid under an up to $5 million expense reimbursement will be credited against the put fee.

If the company receives a commitment for at least $400 million in exit financing, the expense reimbursement will be increased to $8 million.

Trident said it will solicit investment bids in two stages. First, letters of intent from prospective investors must be received by March 31, and final investment bids must be submitted by May 28.

If necessary, an auction would be held on June 7. Bids at auction must be made in minimum increments of $10 million.

A hearing on approval of the commitment letter is scheduled for Feb. 18.

Trident, a Calgary, Alta.-based natural gas production company, filed for bankruptcy on Sept. 8. Its Chapter 11 case number is 09-13150.

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