Gastar plans to sell $70 million floaters at Libor plus 600 bps

By Paul A. Harris

St. Louis, June 16 - Gastar Exploration, Ltd. plans to sell $70 million of senior secured floating-rate notes, which are expected to pay a coupon of Libor plus 6%, the company said in a news release Thursday.

The company added that the deal is expected to close "in the next few days."

The notes will become callable at 105 after one year, with the call premium declining by one percentage point annually thereafter to par.

Holders will also receive C$18 to C$20 million of stock to be issued in installments at closing, after six months, after 12 months and after 18 months.

Gastar will be able to require the investors to buy a further $20 million of notes from the third month to the 24th month.

Proceeds will be used to finance the acquisition of additional interests in Gastar's existing leasehold and working interests in East Texas and the Powder River Basin from Geostar, to refinance Gastar's existing 15% senior unsecured notes, to fund its drilling in East Texas and for general corporate purposes.

The notes sale is subject to the closing of the company's previously announced acquisition of additional interests in East Texas and the Powder River basin from Geostar Corp.

No bookrunning names or further structural details were disclosed in the news release, and the company did not return a telephone call from Prospect News.

Gastar is a Houston, Texas-based exploration and production company focused on finding and developing natural gas assets in North America and Australia.

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