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Approach Resources offers to exchange remaining 7% notes for stock
By Angela McDaniels
Tacoma, Wash., Jan. 30 – Approach Resources Inc. began an offer to exchange common stock for its $99,768,000 of outstanding 7% senior notes due 2021, according to a company news release.
The company is offering 276 shares of common stock per $1,000 principal amount of notes.
The company will also pay accrued interest up to but excluding the settlement date.
If all currently outstanding notes are tendered for exchange, the company will issue 27,535,968 shares, giving the exchanging holders 25% of its outstanding shares.
The exchange offer will expire at 11:59 p.m. ET on March 17.
Prior exchange
As reported on Jan. 27, the company issued 39,165,600 shares in exchange for $130,552,000 of the notes under an exchange agreement with Wilks Brothers, LLC and SDW Investments, LLC, entities beneficially owned by the Wilks Family Office and collectively the largest holder of the company’s 7% notes.
That exchange was made at an exchange ratio of 300 shares per $1,000 principal amount of notes.
Immediately following the close of the exchange, Wilks held 48.6% of the company’s outstanding common stock.
As part of the exchange agreement, the Wilks holders consented to amendments to the note indenture to eliminate most of the restrictive covenants, any obligation to make an offer to repurchase the notes upon a change of control or certain asset sales and certain events of default.
These amendments became effective on Jan. 27.
If all of the notes are exchanged, it will reduce the company’s long-term debt by $230.3 million and its pro forma leverage to 4.3 times from 8 times.
The information agent for the exchange offer is Okapi Partners (855 305-0856).
Approach Resources is an oil and gas company based in Fort Worth, Texas.
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