By Susanna Moon
Chicago, Oct. 17 – Ultra Petroleum Corp. said it entered into exchange agreements for $556.4 million principal amount, or 79.5%, of the 6 7/8% senior notes due 2022 and about $267.1 million principal amount, or 53.4%, of the 7 1/8% senior notes due 2025 issued by Ultra Resources, Inc., a wholly owned subsidiary.
The company agreed to issue new 9% cash/2% pay-in-kind senior secured second-lien notes due July 2024 and new warrants in exchange for the two series, according to a company announcement.
The agreement allows the company to exchange up to another $3.6 million of the 2022 notes and another $7.9 million of the 2025 notes.
For each $1,000 principal amount, holders of 2022 notes will receive $720 principal amount of new notes and holders of 2025 notes will receive $660 of new notes.
Holders of each series will also receive 14 warrants per $1,000 of notes.
The new notes will be senior secured obligations and will rank senior in right of payment to all of its existing and future unsecured senior debt, to the extent of the value of the collateral to be pledged under the indenture will be governed and related collateral arrangements, and senior in right of payment to all of its future subordinated debt.
The new notes will be secured by perfected second priority security interests in substantially all assets of the company.
Each warrant is exercisable for one common share at any time following the date on which the volume-weighted average price of the common shares is at least $2.50 for 30 consecutive trading days.
The exchange is conditioned on the company receiving consent from lenders under a credit agreement dated April 12, 2017 with Bank of Montreal as administrative agent and under a senior secured term loan agreement dated April 12, 2017 with Barclays Bank plc as administrative agent.
The agreement may be terminated by the company or the supporting noteholders owning at least a majority of each series of notes upon written notice of termination if the exchange does not close by Nov. 15 or by any single supporting noteholder if the closing has not occurred by Dec. 15, the release noted.
Under the agreement, upon the closing of the exchange, the company and some of the supporting noteholders plan to enter into an agreement providing for the nomination by the supporting noteholders of one member to the board of directors of the company at its annual meeting, subject to shareholder approval.
Ultra Petroleum is a Houston-based oil and gas exploration and production company.
Exchange issue
| Issuer: | Ultra Petroleum Corp.
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| Issue: | Cash, PIK senior notes due 2022
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| Maturity: | July 2024
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| Coupon: | 9% cash/2% PIK
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| Exchange value: | For each $1,000, $720 for 2022 notes and $660 for 2025 notes
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| Warrants: | 14 warrants per $1,000 of notes
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| Warrant exercise: | If stock VWAP is at least $2.50 for 30 consecutive trading days
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| Pricing date: | Oct. 17
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