By Wendy Van Sickle
Columbus, Ohio, March 8 – Forbes Energy Services Ltd. issued $51,767,900 of 5% subordinated convertible PIK notes due June 30, 2020 on March 4, according to an 8-K filing with the Securities and Exchange Commission.
The convertibles were issued as a result of a rights offering to purchase up to $54,392,400 distributed to holders of the company’s common stock on Jan. 22.
Each holder of the company’s common stock as of the record date received one right for each 10 shares of common stock owned, and each right entitled a holder to purchase $100 principal amount of notes.
The total amount of convertibles issued represents the amount necessary to repay outstanding obligations under the company’s bridge loan.
Of the total amount, $27,528,100 was issued to Ascribe II Investments LLC and Ascribe III Investments LLC; $20,272,100 was issued to Solace Forbes Holdings, LLC; and $3,967,700 in aggregate principal amount of notes was issued to other stockholders. Ascribe and Solace collectively hold about 38% of the company’s outstanding common stock.
Payment of principal, interest and any premiums under the convertibles is subordinated to payment of all of the company’s present and future senior debt.
The indenture provides for mandatory conversion of at maturity or any earlier redemption, or upon a marketed public offering of the company’s common stock or a change of control, at a conversion rate per $100 principal amount of notes into a number of shares of the company’s common stock calculated based on the fair market value of a share of the company’s common stock at such time, in each case less a 15% discount per share.
The company may call the convertibles at any time at par plus accrued interest.
Proceeds were used to repay the bridge loan, which accrued at a rate of 14%, consisting of 5% cash interest and 9% PIK interest. Wilmington Trust, NA was the agent.
Forbes Energy is an independent oilfield services contractor based in Houston. Cretic is a Montgomery, Texas-based provider of large-diameter, extended-reach, coiled tubing services to oil and gas producers predominantly in the Permian Basin.
| Issuer: | Forbes Energy Services Ltd.
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| Issue: | Subordinated convertible PIK notes
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| Amount: | $51,767,900
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| Coupon: | 5%
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| Maturity: | June 30, 2020
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| Call option: | Any time at par
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| Issue date: | March 4
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