PetroQuest Energy (PQ) Enters Amended Support Agreements Related to Private Exchange Offers

September 13, 2016 7:32 AM EDT

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PetroQuest Energy, Inc. (NYSE: PQ) announced that it has entered into an amendment to the support agreements (the "Support Agreements") in favor of its previously announced private exchange offers (the "Exchange Offers") and consent solicitation (the "Consent Solicitation") to Eligible Holders (as defined below) of its outstanding 10% Senior Notes due 2017 (CUSIP No. 716748 AA6) (the "2017 Notes") and its outstanding 10% Second Lien Senior Secured Notes due 2021 (CUSIP 716748 AE8 / U7167U AB0) (the "2021 Notes" and together with the 2017 Notes, the "Old Notes") for up to (i) $280.295 million aggregate principal amount of its newly issued 10% Second Lien Senior Secured PIK Notes due 2021 (the "New Notes"), and (ii) 3,517,000 shares of its common stock (the "Shares"). In the Consent Solicitation, the Company is soliciting consents from the holders of the 2021 Notes to adopt certain amendments to the indenture governing the 2021 Notes (the "2021 Notes Indenture") and the registration rights agreement with respect to the 2021 Notes (the "2021 Registration Rights Agreement").

As previously announced, the Company has entered into Support Agreements with certain institutional holders, representing approximately 80% of the total aggregate principal amount of the Old Notes. The amendment to the Support Agreements provides that such Support Agreements became effective upon the receipt of Support Agreements signed by holders that collectively hold no less than 78.5% of the total aggregate principal amount of the Old Notes.

In addition, the Company is waiving the condition to the Exchange Offers and Consent Solicitation requiring the valid tender of at least 90% of the total combined outstanding aggregate principal amount of the 2017 Notes and the 2021 Notes. All other terms of the Exchange Offers and Consent Solicitation, as previously announced, remain unchanged.

The Company also entered into an amendment to its previously announced commitment letter for a $50 million four-year multi-draw term loan facility reducing the minimum required percentage of Old Notes exchanged in the Exchange Offers and Consent Solicitation from 87% to 85.9%.

Withdrawal rights previously expired on September 8, 2016 at 5:00 p.m. New York City time. Accordingly, Eligible Holders who have previously tendered their Old Notes can no longer validly withdraw those notes from the Exchange Offers and Consent Solicitation, except to the extent required by law.

As of 5:00 p.m., New York City time, on September 12, 2016, approximately $240.8 million in aggregate principal amount of the Old Notes, representing 85.9% of the outstanding aggregate principal amount of Old Notes, had been validly tendered (and not validly withdrawn), and holders of approximately $127.8 million in aggregate principal amount of the 2021 Notes, representing 88.4% of the outstanding aggregate principal amount of the 2021 Notes, had consented to the amendments to the 2021 Notes Indenture and 2021 Registration Rights Agreement.

For each $1,000 principal amount of Old Notes validly tendered and not validly withdrawn prior to 5:00 p.m., New York City time, on September 13, 2016 (the "Early Tender Date"), Eligible Holders will be eligible to receive the "Total Exchange Consideration" set forth in the table below, which includes the "Early Tender Premium." For each $1,000 in principal amount of the Old Notes validly tendered after the Early Tender Date, Eligible Holders will be eligible to receive only the "Exchange Consideration" set forth in the table below.

The following table sets forth the exchange consideration for the Old Notes:

Title/CUSIP Number of Old Notes

Maturity Date

Aggregate Principal Amount Outstanding

Exchange Consideration(1)

Early Tender Premium(1)

Total Exchange Consideration(1)(2)

10% Senior Notes due 2017 / 716748 AA6

September 1, 2017

$135.6 million

$1,000 principal amount of New Notes

Portion of 3,517,000 shares of common stock on a pro rata basis with all Eligible Holders who validly tender 2017 Notes and 2021 Notes prior to the Early Tender Date, rounded down to the nearest whole share(3)

$1,000 principal amount of New Notes and portion of 3,517,000 shares of common stock on a pro rata basis with all Eligible Holders who validly tender 2017 Notes and 2021 Notes prior to the Early Tender Date(3)

10% Second Lien Senior Secured Notes due 2021 / 716748 AE8 / U7167U AB0

February 15, 2021

$144.7 million

$1,000 principal amount of New Notes

Portion of 3,517,000 shares of common stock on a pro rata basis with all Eligible Holders who validly tender 2017 Notes and 2021 Notes prior to the Early Tender Date, rounded down to the nearest whole share(3)

$1,000 principal amount of New Notes and portion of 3,517,000 shares of common stock on a pro rata basis with all Eligible Holders who validly tender 2017 Notes and 2021 Notes prior to the Early Tender Date(3)

_____________________

(1) For each $1,000 principal amount of Old Notes accepted for exchange.

(2) Includes Early Tender Premium.

(3) Assuming the valid tender (without valid withdrawal) of 100% of the total combined outstanding aggregate principal amount of the Old Notes prior to the Early Tender Date, each Eligible Holder would receive approximately 12.547495 shares of common stock for each $1,000 principal amount of Old Notes accepted for exchange, with the total aggregate amount of shares of common stock received by each such Eligible Holder rounded down to the nearest whole share. Assuming the valid tender (without valid withdrawal) of 90% of the total combined outstanding aggregate principal amount of the Old Notes prior to the Early Tender Date, each Eligible Holder would receive approximately 13.941661 shares of common stock for each $1,000 principal amount of Old Notes accepted for exchange, with the total aggregate amount of shares of common stock received by each such Eligible Holder rounded down to the nearest whole share. Assuming the valid tender (without valid withdrawal) of 85% of the total combined outstanding aggregate principal amount of the Old Notes prior to the Early Tender Date, each Eligible Holder would receive approximately 14.761758 shares of common stock for each $1,000 principal amount of Old Notes accepted for exchange, with the total aggregate amount of shares of common stock received by each such Eligible Holder rounded down to the nearest whole share.

The Exchange Offers and Consent Solicitation are being made upon the terms and subject to the conditions set forth in the Confidential Offering Memorandum and Consent Solicitation Statement (as it may be amended, modified or supplemented from time to time, the "Offering Memorandum") and related letter of transmittal and consent (the "Letter of Transmittal"), each dated August 25, 2016.

The Exchange Offers and Consent Solicitation will expire at 11:59 p.m., New York City time, on September 22, 2016, unless extended (the "Expiration Date"). The closing of the Exchange Offers and Consent Solicitation is subject to, and conditioned upon, the satisfaction or waiver of conditions set out in the Offering Memorandum and Letter of Transmittal. If the Company is successful in consummating the Exchange Offers and Consent Solicitation based on the current Expiration Date, it expects to pay the interest payment due on the 2017 Notes prior to the end of the 30-day grace period for payment of interest under the indenture governing the 2017 Notes.

The New Notes and the Shares have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or with any securities regulatory authority of any State or other jurisdiction. The New Notes and the Shares may not be offered or sold in the United States or to or for the account or benefit of any U.S. persons except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The Exchange Offers will be made, and the New Notes and the Shares are being offered and will be issued, only to holders of Old Notes (1) in the United States, who are "qualified institutional buyers" as defined in Rule 144A under the Securities Act ("QIBs"), in a private transaction in reliance upon the exemption from the registration requirements of the Securities Act provided by Section 4(a)(2) thereof and (2) outside the United States, who are persons other than U.S. persons as defined in Rule 902 under the Securities Act in offshore transactions in compliance with Regulation S under the Securities Act. The complete terms and conditions of the Exchange Offers and Consent Solicitation, as well as the terms of the New Notes and the Shares, are described in the Offering Memorandum and Letter of Transmittal, copies of which may be obtained by "Eligible Holders" by contacting D.F. King & Co., Inc., the information agent for the Exchange Offers and Consent Solicitation, at 48 Wall Street, 22nd Floor, New York, New York 10005, (212) 269-5550 (collect) or (800) 848-3409 (toll free) or via the following website: http://www.dfking.com/petroquest.



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